[AGIP 64] Close the GHST Bonding Curve

CoreProp to Turn off the GHST Bonding Curve

Author: Jesse | gldnXross#6482 GotchiID: 4563 Quorum requirement: 20% (9M) Vote duration: 7 days

Final Discourse Thread: https://dao.aavegotchi.com/t/alternate-proposal-for-post-curve-allocation/4668

Original Discourse Thread: https://dao.aavegotchi.com/t/proposal-to-close-the-ghst-bonding-curve-and-allocate-curve-s-collateral/4628

INTRODUCTION AavegotchiDAO was summoned as a 100% on-chain DAO in September 2020 via the deployment of the GHST Bonding Curve. This proposal is based on a diligent risk assessment of the Curve and concludes that there is a strong case for closing the GHST Bonding Curve and freeing GHST from reliance on MakerDAO’s DAI stable coin.

Closing the Curve in effect concludes a 2.5+ year DAICO (DAO+ICO) token sale. All DAI in the GHST Bonding Curve at the time of closing will transform the DAI from being half of a simple liquidity pool into actual Aavegotchi funding. A second Signal Proposal follows this one proposing a 30/30/40 split of the DAI for the founding team at Pixelcraft Studios, AavegotchiDAO treasury, and an additional 40% for the DAO that is explicitly earmarked for liquidity provisions.

The Problem: Unnecessary Risk Underpins Aavegotchi Today “The Curve is forever” is a shorthand way of expressing how reliable GHST’s tokenomics have been up to this point. However, starting in 2022 turbulence in the macro crypto space has been growing, and our beloved bonding curve is potentially at risk of contagion.

While MakerDAO, the issuers of DAI, have delivered a stable stablecoin up to this point (DAI has never had a significant depeg from the USD) there is no guarantee that such success will continue indefinitely. Recent red flags include an inability for MakerDAO to remove the GUSD vault (a stablecoin issued by the recently bankrupt Genesis), the “Endgame” plan to depeg DAI from USD, growing exposure to real-world-assets (RWA) fraught with counterparty risk, and a general overexposure to (and vulnerability of) the USDC stablecoin in the MakerDAO asset pool.

Even if one concludes that DAI’s risk is only low to moderate, we must soberly assess whether such risk tolerance is acceptable to our DAO. Today, I put forth that not only is any risk from DAI’s depeg unacceptable, but such risk is also entirely avoidable.

Aavegotchi Is Ready to Secure Funds On Our Own AavegotchiDAO has already demonstrated that it can manage its own treasury. Likewise, two plus years of Pixelcraft Studios flawlessly managing all significant ecosystem multisigs and upgradeable contracts underscores the company’s readiness to also manage the DAI at scale.

With nearly 20M DAI in the curve, there is sufficient funding to continue development and enable deep liquidity at the same time. The Curve was KYC’d and never accessible to a large swath of Aavegotchi fans. Under this proposal, GHST with good liquidity would actually become more accessible to more people!

It is along this backdrop of benefits including derisking, securing funding, and improving GHST accessibility that I propose closing the GHST Bonding Curve.

Allocation of the Curve’s DAI Turning off the Curve is an opportunity to not only derisk from reliance on MakerDAO, but also secure significant funding for our ecosystems.

So far, the DAI in the Curve’s contracts has only served one purpose: to provide liquidity for the creation and destruction of GHST tokens. After the Curve’s closure, whatever DAI remains in that contract will be freed to go to work on behalf of the Aavegotchi protocol.

My originally paired Signal Proposal regarding allocation of DAI was voted down. However, another Signal Proposal written by Immaterial and Fantasma has passed with over 80% support. Titled “25/25/25/25 split for curve DAI”, that SigProp will be upgraded to CoreProp shortly after the publishing of this proposal you are now reading.

IF the 25/25/25/25 CoreProp passes alongside this proposal to close the curve, then DAI post-Curve closure shall be allocated in accordance with it.

IF the 25/25/25/25 CoreProp does not pass, but this proposal to close the curve does pass, Curve’s on-chain vote on Aragon will not happen until a new CoreProp regarding DAI allocation is passed.

Process: Assuming both CoreProps pass, the process for our community to close the GHST Bonding Curve will happen in a controlled, methodical way by following these steps:

Sunday, Feb 26 This CoreProp and a DAI distribution CoreProp must both pass in order to confirm AavegotchiDAO’s intention and terms. If passed, the Aragon on-chain vote to close the GHST Bonding Curve begins in the days following shortly after.

*Achieving quorum on our on-chain vote requires 8% of total GHST supply to participate. That means GHST holders need to coordinate migrating GHST back to Ethereum between now and the vote so that we can honor the AGIP and successfully close the Curve.

IF Aragon vote successfully closes the Curve: The Curve will immediately close, capping the supply of GHST. Any DAI collateral shall be transferred to all multisig wallets in accordance with the terms of the 25/25/25/25 AGIP.

Risks The risks of closing the Curve mostly are technical in nature. Pixelcraft Studios has already had our Solidity team spend time simulating the process for closing the Curve and how that would work. Everything worked as designed. The majority of risk is in the moments after the Curve closes.

Without deep liquidity and a spike in outside entities speculating, we may see dramatic volatility in the GHST market.

There is also a greater-than-zero risk for the new multisig wallets tasked with securing the DAI. With proper planning and for the reasons noted above, we believe that AavegotchiDAO is capable of this responsibility.

Benefits The benefits and reasoning for this are already well fleshed out above but to briefly review:

Remove all risk of Aavegotchi’s success relying on an outside party (MakerDAO and DAI)

Complete the GHST continuous token sale, securing funding for both AavegotchiDAO and Pixelcraft Studios, thus enabling bigger, better, faster, stronger development for both parties.

Improve GHST tokenomics, especially in terms of accessibility. As opposed to having most liquidity locked into a KYC-walled liquidity pool, AavegotchiDAO will be able to dynamically direct liquidity to the platforms that make the most sense at any given time.

Conclusion For the benefits noted above, I am proposing that now is the time to meet the moment and make this significant change to the Aavegotchi ecosystem’s meta. The status quo is simply unacceptable as the risk of doing nothing cannot be justified. Together we have weathered a brutal bear market in 2022 and now have an opportunity to prove we’ve learned lessons from watching seemingly invincible players in the space fall. Securing significant funding that is rightfully raised also makes a lot of sense given where we are as a protocol. The vision is too great for small budgets especially when the option to close the token sale and allocate those funds to the vision’s development is completely within AavegotchiDAO’s control.

We are in a completely unique situation where we can self-fund on a scale envious of our competitors, all while completely derisking from our current reliance on DAI tokens. Let's use this opportunity as a rallying cry to come together and level up as the completely independent, self sustaining AavegotchiDAO.