Approve MaskDAO to pursue strategic swaps with holdings

Background

Mask is building a bridge between Web 2.0 social networks and Web 3.0 DApps. We have built a robust decentralized infrastructure that allows almost any dapp to be integrated on top of existing social networks without resorting to their APIs. We have also thought long and hard about what DApps we should bring to Web 2.0 social networks. More than 20 Dapps have gone live on Mask network, including Uniswap, Sushi, Opensea, Snapshot, Arweave, Gitcoin donation, etc.

You can use all of them without ever leaving Twitter as long as you have the Mask Browser extension installed. Mask is even compatible with Metamask and can be used alongside. In fact Mask is even sharing a seat with MetaMask in one of the major standard-setting organizations for the internet, ECMA.

Recently, we started the SocialFi Alliance with 15 founding partners from DeFi Apps, ecosystem partners, and community & media partners. 7 DeFi apps in the alliance, all running on Polygon, including Sushi, Quick, DODO, Pooltogether, Augur, dHEDGE and GoodGhosting, are ready to use since the start of the alliance and have won wild community support. It is worth noting that 4 of the 7 projects were integrated by Gitcoin bounty hackers. Mask is one of the largest donors and sponsors of Gitcoin. We will also expand the SocialFi Alliance to Multi-chain and Multi-apps.

We are also planning to start a Social NFT Alliance with even more features including NFT gallery, Verification for Twitter NFT avatar, NFT primary launch, NFT secondary marketplace, wrapping your social content into NFTs, NFT social games.

We are trying to bring outstanding DeFi/NFT projects or anything Web3.0 of utilities to the Mask extension and to billions of social network users.

With the ecosystem growing, we feel the increasing need to further strengthen partnerships with additional financial incentives, and the opportunity to expand our funding method beyond bounties and corporate venture style investments

Therefore, to further expand mask ecosystem, to increase $MASK’s use, to facilitate governance, and to enhance MASK’s influence within the DeFi, NFT and Web3.0 spaces, we are introducing the Mask ecosystem fund for token swaps, a Venture Capital fund, and Mask Grant. This post will focus on the token swap fund.

The Mask ecosystem fund for token swaps

The MaskDAO currently holds over 39% of the entire Mask token supply that is meant to be utilized to support and expand the MASK ecosystem. We believe an important way to do so is via strategic partnerships with crucial infrastructural protocols in the industry. We would like to pursue token swaps with our current/potential ecosystem partners as a way to accrue our utility of incentives to facilitate governance.

We propose a clear mandate allowing the DAO to pursue strategic swaps. Swaps may occur at par, a discount, or a premium, depending on additional factors involved with each deal. Tokens swapped will be at least subject to mutual lockups of at least a 12-month linear vesting schedule.

The size of the first fund for token swaps is set at x million $Mask, valued at roughly $xx million (30-day TWAP at ~$10, x% of total supply). We expect to support 30-80 listed projects over the next 2-3 years. Follow-on capital allocation from MaskDAO will depend on the performance and net effect on ecosystem growth of the first fund.

All major decisions would be voted upon prior to finalization. Approval here allows DAO members to initiate conversations with other DAOs and entities and structure terms that should be agreeable both to the counterparty and the MASK community. In other words, this provides permission to speak on behalf of the DAO during the legwork of these proposals.

First batch of potential partners could include 3 of our SocialFI Alliance partners: Sushi, dHEDGE, and Gitcoin.

SushiSwap

The SushiSwap community is building a comprehensive, decentralized trading platform for the future of finance. Sushi has long been the fan-favorite among the crypto community and has been a long-term partner of Mask. Mask has integrated Sushiswap on Ethereum mainnet, Polygon and BSC, will integrate Shoyu, the Sushi NFT platform at launch, and continue to add support for new Sushi endeavors.

dHEDGE

dHEDGE is a social trading Dapp where managers can operate a fund and followers can directly invest into the pool to enjoy the strategy. dHEDGE just launched its brand new V2 on Polygon. Social trading directly on major social networks is a huge upgrade over existing stand alone social trading sites and may as well be the birthplace of next generation Wall Street Bet.

Gitcoin

Gitcoin is our Developer Community Partner, a community of builders, creators, and protocols at the center of open web ecosystems. Gitcoin is the easiest way to leverage the open source community to incentivize or monetize work. Mask is one of the largest bounty sponsors of Gitcoin with 44 bounties to date. Mask’s long term vision of a decentralized app ecosystem directly on top of social networks can’t be built without Gitcoin.

Other candidates also include (but are not limited to):

Layer 1/2s: Polygon, Flow, Near, Solana, Avalanche, Fantom, Luna

NFT: Axie Infinity, Ygg, Rarible, Superare, Agld

Web 3.0: The Graph, Arweave, Filecoin, BAT, Radicle, Kp3r, Epns

DeFi: YFI, 0x, Rari Capital, Pooltogether, QuickSwap, AAVE, OlympusDAO, Perpetual.

We thank Polygon, Perpetual and Olympus for being the first few pioneers in the DAO token swap experiment

Concerns: DAO-owned $MASK would be introduced into the market. However, it would remain in the possession of those who are highly likely to remain long-term aligned with us.

Motion

For: Approve DAO to pursue strategic swaps with a $xx million first fund

Against: Do not approve DAO to pursue strategic swaps.

1 Like

Related proposals:

SushiSwap: Proposal to conduct a token swap with MaskDAO

dHedge: DCP-6: Mask Network Token Swap

Gitcoin: Proposal from Mask Network: Conduct token swap with MaskDAO

The amount of the token swap fund has not been decided yet as we want to hear from the community first. Some range to think about,

Small: 2-3m Mask, or $20-30m (30-day TWAP of $Mask is close to $10)
Mid-sized: 4-6m Mask, or $40-60m
Large: 6-10m Mask, or $60-100m

This potentially means 2%-10% of total Mask token supply will be dedicated to the first fund for token swaps.

Keep in mind that MaskDAO holds 39% of total Mask token supply. Token swaps with other partner projects with good upside is likely one of the best way to utilize such large war chest.

Also love to hear suggestions for swap target

Didn get that.The total number of mask is 100M?

yes, sorry I meant the dollar value. Have edited my reply above for clarity.

“…fund for token swaps, a Venture Capital fund, and Mask Grants”.

I like the idea a lot. It’s strategic investment in each other to encourage DAO’s to work together, yes? But the amount in this proposal is far more than a symbolic amount. It’s quite a lot of money. Timing large transactions of $MASK to go into a less volatile asset is a good idea. We’ll have problems without some more stable asset or higher marketcap, TVL, etc. If we do the swap on a bad market swing, we could be wasting a lot of money for no good reason. Timing is everything if this swap structure is approved. Deciding when to do the swap would determine whether it’s a good investment or a bad one.

For that reason, I’m conflicted about the number of tokens being suggested for unlock because these token swaps are strategic and not a simple investment for profit. This does not insulate us from market volatility. For such a high cost, I would want to know more details on the selection process. If we swap for a poor project or a token that drops in price, the community will see this as a waste of money/ a poor investment.

Mask DAO controls 39 Million $MASK. (39% of total $MASK token supply)
Circulating supply is around 30Mil right now. 2-3Mil is a lot. 10Mil is very high.

I’m wondering if the financial risk will encourage the DAO to make financial decisions to preserve the treasury rather than find good strategic partners. Since so much of this proposal depends on which projects we approach, the criteria and voting process for selecting DAO partners should include more than a simple Yes/No vote in my opinion-- similar to ITO committee. I would never vote to swap the $MASK token for a token I do not believe is more valuable than $MASK because it would be a loss. Better to unlock the tokens, swap for DAI, then make bounties that benefit both communities. Saves money and still uses the funds.

But once we receive fixed amounts of tokens which can swing up and down in value with the market, are we holding these tokens indefinitely? Are we selling them? I see this will tie the DAO communities together, but why a token swap? Why a vesting schedule?

Trading this way is zero-sum in bear market conditions. Now, it’s more like dumping on investors. Either we make a profit and they lose money or vice versa. That doesn’t encourage partnership as much as signal competition imo. Whether DAO to DAO or DAO to investors.

.

TLDR;
I think the price volatility of altcoins is a reason to consider an alternative agreement structure. One-time swaps with vesting schedule will lose Mask or the other DAO money so it’s not perfect for partnership.

We need more like-minded people in our community to use the 39% $MASK treasury effectively. Attracting experienced, skilled people for the DAO is needed. The percentage of total $MASK tokens suggested is very large, in my opinion, and unlocking so much is financially risky long-term. Short-term, I don’t care if it’s financially risky because we cannot waste time. I don’t see it as a 1:1 exchange though. Collective decisions on investing could be disastrous if the wrong decisions are made with this money and receive a Yes vote.

Possible ideas to preserve an investment:

-Since this proposal is to help community engagement, what do you think about pooling tokens with these DAO’s rather than a one time swap with vesting schedule? What if they receive Mask, we receive X token, and both parties agree to lock up the tokens until both communities agree on their use? This locks the tokens up so they’re not circulating-- no inflation in price for either community-- and insulates us from talk of price volatility ie “you sold $10Mil mask for $100K of X token”.

-Perhaps if multiple DAO communities opted to create a multi-DAO treasury that pools governance tokens, it could more equally benefit everybody.

-What if we simply unlock Mask tokens from the DAO treasury and swap for stablecoins that are then locked in the DAO treasury? This would hedge volatility and still let us fund whatever we want. Yes, it dumps tokens on the market, but it is a decent middleground.

-A token economic proposal could complement this idea and help reduce the inflation rate.

1 Like

Mask DAO controls 39 Million $MASK. (39% of total $MASK token supply)
Circulating supply is around 30Mil right now. 2-3Mil is a lot. 10Mil is very high.

The swap fund is going to be spent in the next 2-3 years, as mask total supply unlocks gradually to 100% (100mil Mask) as well. So even 10mil Mask is alright.

We actually envision a future where Mask indeed help billions of people access Web 3.0, and a very significant amount of valuable projects in the new world have a financial tie with Mask one way or another, likely token swaps. Think Tencent or Softbank. This needs both Mask core product to take off and a large war chest to form such ties.

Better to unlock the tokens, swap for DAI, then make bounties that benefit both communities. Saves money and still uses the funds.

We definitely don’t want more stables, we have enough stables to be quite honest. The swap fund is enabling us to do token swap or M&A, or in a simple sense, big and strategic deals that can hardly be done by stables. We will apply mutual lockups for the tokens we swap for.

If we do the swap on a bad market swing, we could be wasting a lot of money for no good reason. Timing is everything if this swap structure is approved. Deciding when to do the swap would determine whether it’s a good investment or a bad one.

This is a good question. In terms of timing and value relative to Mask,. We will likely enforce 30 day twap price for both parties in the deal but no one can predict price definitely. We will likely be looking for projects that has at least similar level of upside as Mask, and are good potential partners.

-Perhaps if multiple DAO communities opted to create a multi-DAO treasury that pools governance tokens, it could more equally benefit everybody.

The DAO idea actually sounds not bad. I think token swapped can definitely be used in each other’s governance. Putting a multidao could create next level cooperation if done well. Need more time to think this over.

emm, it’s not just a matter of diversification, it’s a matter of deeper cooperation. I think the cooperation with sushi, dHEDGE, and gitcoin needs to show a more detailed plan, including how to make the governance rights from the exchange work when the mask exchange is successful.

Just got featured on The Defiant as a pioneering case for token swaps!

haha I think they’ve all been laid out in individual posts with the other party. dHEDGE and Sushi integrated a while ago and working seamlessly inside Mask. A lot of the integration was done by Gitcoin bounty hackers.