BDIP13 (Formal vote): Use DAO as stabilizer

Note: This is a modified version of an earlier proposal https://gov.basisdollar.fi/#/basisdollar.eth/proposal/QmfPqJpQYVhycXF3NugRaVe5aYbAYxSn4hnTf9F1YGjNfZ

Key difference is the inclusion of a liquidity threshold:

• If the combined TVL of the BSD/DAI and BSD/USDC liquidity farms is below $500k, and TWAP BSD <$0.95.
• If the combined TVL of the BSD/DAI and BSD/USDC liquidity farms is above $3,000,000 and TWAP BSD >$1.05.

Proposal: Use the DAO fund to act as a stabilizer.

1. Use DAO assets during contractionary cycles.
2. Sell DAO assets during expansionary cycles.

During contraction, use DAO assets to buy up BSD to speed up return to $1. During expansion, use DAO assets to sell BSD and BSDS to accumulate more resources for contraction.

How it works (Mechanism):

Check if TWAP BSD < $0.95 once per hour (or every 240 blocks). If TWAP BSD < $0.95 AND If the combined TVL of the BSD/DAI and BSD/USDC liquidity farms is below $500,000 THEN use up to 2% of DAI and USDC to buy up BSD from the LPs, subject to the condition that the max. purchase price is $0.95 post-slippage.

Check if TWAP BSD < $1.05 once per hour (or every 240 blocks). If TWAP BSD > $1.05 AND If the combined TVL of the BSD/DAI and BSD/USDC liquidity farms is above $3,000,000 THEN sell up to 2% of BSD in the DAO for USD and DAI, subject to the condition that the min. sale price is $1.05 post-slippage,

The $0.05 gap is to leave it to the market to close the remaining to $1.

Advantages:

1. During expansion, builds up a pool of assets in the form of USDC and DAI in the DAO. Maximizes the value of DAO resources as it converts BSD (which is intended to be long-term stable at $1) into USDC and DAI at prices of more than $1. The DAO therefore collateralizes the system.
2. During contraction, the USDC and DAI in the DAO is used to support BSD price.

Disadvantage:

1. DAO competes with market participants.