Welcome to a new series! As we entered 2024, I polled a few members of our Discord to ask what improvements they’d like to see from the DAO’s communications. Almost everyone asked for a bi-weekly or monthly summary of the happenings of the DAO. So here I am, delivering on your wishes! We’ll start monthly, and move to bi-weekly if there’s enough demand.
Here’s everything that happened this month in MetaDAO:
- Proposal 5, the proposal to execute a $75,000 fundraise, passed. META was sent out on February 11th and the Meteora liquidity pool was created on February 12th.
- Ben Hawkins, the Head of Staking Ecosystem for the Solana Foundation (although here acting independently of the foundation), created proposal 6. In it, he offered to buy $50,000 worth of META from the treasury at $33.33 per META, a ~40% discount to spot at the time. Ben spent about $250,000 trying to manipulate the markets in order to get the proposal to pass, but failed.
- In response, Pantera Capital created proposal 7, which was a similar deal but with a $100 per META price cap. Proposal 7 also failed.
- Proph3t and Nallok filed the papers with the Marshall Islands government to create a DAO LLC controlled by MetaDAO.
- Behind the scenes, fzzyyti, marie, and r0bre worked to get Vota ready for launch.
The spot market goes live; Ben and Pantera angle for tokens
Back in December, I talked to Robin Hanson to get his advice on how we could improve our fledgling futarchy. One suggestion he gave me was to create a spot market for the token.
The basic rationale is this: because we didn’t have a spot market, traders needed to speculate on both the intrinsic value of META and on the value a proposal would add or destroy. If we created a spot market though, traders could confine their attention to the value a proposal would add or destroy. That’s because they would be able to buy back from the spot market if they had sold in the conditional market or sell in the spot market if they had bought in the conditional market.
So that’s what we did. You can read proposal 3 and proposal 5 if you want the details, but the gist is that we raised $75,000 and used $35,000 of that to create a META/USDC liquidity pool on Meteora.
But not everyone wants to buy from an AMM pool. When you’re thinking about buying in size, AMMs start to look less attractive. One of these prospective buyers was Ben Hawkins, who happens to be the Head of Staking Ecosystem for the Solana Foundation. On February 13th, he created the most contentious proposal the DAO had seen: the infamous proposal 6.
The contents of his proposal were fairly simple; they fit on 3 lines of a GitHub gist. The DAO would transfer Ben 1,500 META, equal to 10.3% of supply. In exchange, Ben promised to send $50,000 in USDC. This priced each META at $33.3, which was a 38% discount to the spot price of $55.
Obviously, this was a pretty crappy deal. Given that most contributors preferred to get paid in META, there wasn’t a need to raise money. And even if we were going to raise money, we wouldn’t take a deep discount to spot without shopping our options. You would expect a proposal like this to fail.
There was a hitch, though: Ben was determined to win, even if it meant market manipulation. To tilt the scales in his favor, Ben spent more than $250,000 buying in the pass markets and selling in the fail markets. Proposal 6 saw an order of magnitude more volume than any proposal had seen before.
But despite Ben’s large amount of bid activity, the advantage was on our side. Because manipulators are “noise traders” and move prices without having any alpha, it’s in other traders’ interest to trade against them. In mature markets, statistical arbitrage firms trade against manipulators within milliseconds and render their attempts futile. We didn’t have statistical arbitrage firms, but we did have people like Barrett and 7Layer. They sold their META into Ben’s high bids in the pass market, figuring that they could buy back META for a cheaper price in the spot market if it were to pass. Eventually, the seemingly-impenetrable buy walls in the pass markets had been torn down and the DAO emerged victorious.
In the shadows, someone was watching this activity. Their name was Pantera Capital. And they were creating their own proposal. This one was a bit different: instead of a fixed price of $33.3, they would buy $50,000 worth of META at the lesser of $100 / META and the time-weighted average price over the proposal period. At the time, META was trading around $100.
So in this proposal, Pantera wouldn’t be given a discount to spot. At least, that held true until the price of META surged. But as META’s price broke through $1,000, the $100 per META cap no longer looked like such a good deal to MetaDAO. In the end, Pantera’s proposal failed too.
Still, Pantera provided some credibility to MetaDAO by raising their proposal. It will now be slightly easier for us to market our products and services and to bring on contributors. Since it is in the DAO’s interest to pay people and entities who provide value to it — this is what incentivizes them to provide value in the first place — I’m including a payment to Pantera as a part of my retroactive compensation proposal. If you work at Pantera and you’re reading this — thank you for playing, and I hope to make it worth your while!
Marshall Islands sees first futarchy
Nallok and I filed to create “MetaDAO LLC” with the Marshall Islands government. You can read MIDAO’s site or our operating agreement to understand what that means, but the main points are:
- The DAO LLC is completely managed by the DAO. There’s no board of directors or trustees, and the operating agreement recognizes the market-managed process as the arbiter of all decisions.
- If you own META, you are considered a member of the DAO LLC. This gives you limited liability, so if someone sues the DAO they can’t come after your personal assets.
- The domain names, the Discord server, the Twitter account, the GitHub organization, the Medium publication, and the logo are now the legal property of the DAO LLC.
- We can update the operating agreement via calls to the SPL Memo Program.
Vota getting close
Behind the scenes, fzzyyti and marie have been hard at work getting Vota close to launch. r0bre has just completed an audit of the core smart contracts. The launch video and promotional materials are done, completed by sushiswapsadboi. We plan to launch either March 8th or March 15th.
What’s planned for March
As we head into March, I expect to see the following happen:
- As mentioned, the DAO will be launching Vota.
- Durden will help fix the lack of the liquidity in the spot market through his recently-passed proposal 10.
- Nallok will commence work on a Futarchy-as-a-Service (FaaS) product offering.
- I will create a project management board that allows new contributors to easily figure out what they can work on and how.
- I will raise the first retroactive compensation proposal to the DAO.
Onward!
Proph3t
