This proposal aims to unlock the STURDY token and make it transferable.
Motivation
Sturdy TVL has been stagnating for a while as currently there is no price for the STURDY token. Making the token transferable will bring the following benefit:
Enable price discovery for the token which will then help reflect the real yield that the platform is providing.
Bring greater spotlight and visibility to the platform which will help bring fresh users to the platform.
Provide the dao with priced treasury to drive growth through grants, marketing and other proposals.
Specification
Strudy token is currently non-transferable and hence has no price. This makes it impossible for users of the platform to calculate real yield (which should be higher than the currently displayed yield as it does account for the yield from the token emission as that cannot be priced).
There was a previous vote on snapshot which signalled overwhelming support for this proposal but on technical grounds, that vote was void on arrival.
This proposal will be put for a formal vote by token holders on Snapshot after discussion here with the idea to make the token transferable within a maximum of 10 days from passage of the proposal.
Lastly, with regards to creating liquidity for the token, that can and should be handled in a separate proposal.
That said, Iâm a bit confused about how the proposal relates to the motivation. Making the token transferable accomplishes none of the referenced points without a corresponding plan for liquidity. Whatâs the rationale behind handling liquidity in a separate proposal?
Price discovery requires liquidity.
How would making the token transferable bring greater visibility to the protocol?
In order for the treasury to have a measurable âprice,â there must be liquidity.
We are in a decentralised ecosystem. How does PEPE go from 2ETH locked in Uniswap pool to getting listed on Binance. Go figure. Also this proposal does not block you, or the team, or any one else to make a proposal on creating liquidity. But all of that starts with making the token transferable. The markets will decide the other things. Any team member or not can make separate proposals to facilitate liquidity.
You already voided one snapshot vote on the flimsy ground of âpeople did not understand what the vote was forâ. And since then, there has been zero initiative to propose an alternative to unlocking the token or creating liquidity.
Lastly, there is always liquidity. Only question is how to get more liquidity. As said previously, it all starts from unlocking the token.
My question is why it makes sense to have the token transferable prior to it being liquid. Obviously it can be made liquid in the future, just curious if you had a rationale for not doing them in tandem. Generally speaking, illiquid and low float (currently ~2% OF $STRDY is circulating) tokens are seen as highly predatory. A contributor from Arrakis shared the following here:
"Even though our proposal to manage liquidity for STRDY has nothing to do with when the token should be transferable, as the author of the proposal, I wanna add some color to the discussion from the perspective of liquidity management.
Once the token becomes transferable, itâs very likely that someone is going to create a market for it, i.e. making a pool and LPing. The implication of no liquidity from the team/DAO is that the initial trading price, essentially also the initial valuation of Sturdy, will be solely decided by the market participants, without any indication from the team/DAO. One can argue that this is an organic process as it is decided by the market. However, unless the amount of liquidity and the number of unique traders are meaningfully large, the price of STRDY and its marketcap will be subject to huge volatilities, especially given the highly speculative nature of crypto market.
Then the question is whether this will have a negative impact to the mid-long term price action of STRDY. My take is yes. If made transferable without liquidity from the team/DAO, the only available STRDY to trade is from the airdrop, which makes it low float and even more likely to experience P&D. This kind of initial price action normally discourages newer participants from entering the market, on top of that, also creates some difficulty for the team/DAO to provide liquidity later as they are no longer in total control of setting up a more ârationally arguedâ price, unless the amount of liquidity they provide is absolutely dominant."
If we make $STRDY transferrable without a solid plan on liquidity, I think the resulting volatility and price action could actually be detrimental to the 3 items that you list. The initial liquidity will drive the narrative on $STRDY, and if its too low, its hard to overcome those initial impressions.
In my opinion, we need more time to establish Sturdy and grow TVL with new collateral offerings and marketing. Recent SIP and the Brick Gang were a good start. I would prioritize these over making $STDRY transferrable because I think being successful on those will make $STRDY more valuable in the future.
Taking exact points from the Arrakis post you shared to make the case to make the token transferable:
Once the token becomes transferable, itâs very likely that someone is going to create a market for it
essentially also the initial valuation of Sturdy, will be solely decided by the market participants, without any indication from the team/DAO. One can argue that this is an organic process as it is decided by the market.
Volatility will be high initially but that is common in crypto. The market will eventually find equilibrium.
As for liquidity, the team or anyone else is still free to make another proposal/discussion with regards to that. It should definitely be a separate exercise as liquidity is ever going challenge for the dao and has multiple steps and multiple dimensions.
It is exactly opposite of what you say - The TVL has been stagnant without the token being transferable so it is definitely not the token transferability which is keeping the TVL stagnant.
The token is the best tool for marketing. Having a liquid token would give the dao many more options to use it for marketing and attracting more TVL.
Sure the initial approach can always be revised, but itâs unclear why we wouldnât want to start with some sort of strategy to start with. As the Arrakis contributor shared, failing to do so will likely have negative long term consequences for the token and protocol.
If you think so, then you should definetly start a new proposal on startegy with regards to liquidity and both proposals can go up for vote one after another. The token holders can then vote and decide.
There are several parties working on proposals for liquidity, and given that the community will need time to discuss them, it seems unlikely that the votes will perfectly line up. If the intent is to have the token be liquid, Iâd suggest having liquidity be part of the proposal. Otherwise, the assumption should be that there will be a period where the token is transferable but illiquid.
Have the token unlock before is not a problem. There have been multiple projects which have had a token unlock and liquidity either through CEX or DEX only provided much later.
The token becoming unlocked will anyway begin the process of market creation and eventually more liquidity and incentives be added.
The point of what I said in my post is that, if there is no decent liquidity to start with, the chances that STRDY would go through absurd volatilities once it hits the market are high. Yes the market eventually can find the equilibrium, but why not do it right the first time instead of going through a potentially hideous self-healing process? To overly simplify my point, do we think that people would feel more reluctant to trade a token if it had memecoin kind of PA, even if the volatility eventually settled down? How long do we expect the volatility to settle before anyone, e.g. the team/DAO, can more comfortably inject decent sized liquidity? Is that a trade-off worth making or a risk worth taking to make the token transferrable before decent liquidity in the market?
As you said that is oversimplification - PA even after having a Arrakis pool can be equally volatile. If Arrakis was the answer to everything, then we wouldnât have multiple -90% charts on tokens with liquidity. Initial volatility is a function of multiple things - one of them being liquidity. Also just having an Arrakis pool does not guarantee a massive liquidity.
And again, as said multiple times, that can be put as a separate proposal today and put to vote pretty quickly.
There have been multiple tokens which were unlocked without an Arrakis proposal i.e. recent example i can remember from the top of my head - GEAR from Gearbox.
As for this proposal, token holders will decide when it is put on vote if they would like to make the token tradeable or not.
After reviewing the latest forum posts, I suggest that we take a cautious approach to key proposals that are currently being pushed.
Itâs surprising that people are signaling support for token transferability without a liquidity program in place. To ensure the safety of current holders and avoid causing panic, I believe that we should establish a liquidity strategy before enabling transferability. One option could be to consider a bonding â POL or acquire voting power tokens from decentralized exchange emission protocols like Aura.
Furthermore, having a transferable and liquid token will attract new talent, making it essential to have not only a liquidity strategy but also a governance strategy that incentivizes the best talent to help Sturdy grow.
Regarding the argument of incentivizing TVL growth without knowing the real yield, it is important to consider that this approach favors users who believe in the long-term success of the protocol, rather than attracting short-term mercenary capital.
The product itself is already competitive, and in theory, there is no need to artificially boost TVL. The current incentives should be sufficient to build trust (Lindy effect), which takes time to establish. The team has identified the current pain points and is actively working on solutions, which gives me confidence that Sturdy is on the right track. The team should be patient with current holders and clearly communicate the reasons why enabling token transferability at this point may not be the best idea.
I think the current token holders can decide for themselves when they vote on the proposal. It amazes me how so many people claim to work for token holders but have till now shown zero initiative after the last snapshot vote to make tokens was passed with overwhelming support from token holders and then voided by Sam by giving an excuse that people did not understand the vote and there was no proposal. SO here we have the proposal. Token holders can vote and decide what is safe and good for them.
This is delusional talk and not reflected by data. The protocol has been live for more then 6 months and still has only 12M in TVL. So yes the token will provide 1) more TVL through higher real yield 2) more eyes on Sturdy and marketing.
There are multiple tokens which unlocked and the pools were created after a period of time. And then there are also tokens which launched without any big liquidity like PEPE and the market decided where the price should be.
Firstly, my comment has nothing to do with using Arrakis or not. Itâs all about the timing between making token transferrable vs. launching sufficient liquidity on the market.
Secondly, since you brought up Arrakis, Iâm gonna add a little to that. PALM, which is the product from Arrakis, is all about creating high capital efficiency with limited resources. Itâs not a silver bullet that can magically rule out the need of liquidity, and a large enough size of liquidity on a full range UniV2 setup can still outdo PALM no matter how capital efficient we are. PALM is not about reducing the volatility, rather about capitalizing on it without high cost, e.g. giving away LM incentive, etc.
At last, again, Arrakis officially released PALM early this year, so obviously there had been thousands ERC20 token launch prior to that. We offer a better alternative, not a pre-requisite.
The main point here is whether Sturdy DAO should take the risk of making its token transferrable without knowing if there is going to be some liquidity to support it.