Wearables buy-back

Background

The problem that DG faces is a short-term lack of confidence and, consequently, a lack of demand for ICE. Within an economy, the confidence that agents have in their currency is important so that it can remain stable. As a result of the incident in which exploiters were able to claim ICE in large quantities and later sell on the market, a price run began, which eroded trust and affected the behavior of agents within the ecosystem. To avoid this continuing any further, we need to act ASAP. At the time ICE Spartan minting was done (last minting in ETH), $ICE was 0.108 USD, $DG was 0.308 USD (from Coingecko) and average price for wearables sold on OpenSea was 1.87 $ETH. We've seen significant price drops all throughout DG's economy. We've been discussing many $ICE sinks in the last weeks (ICE activation fee for NFT's was enabled yesterday). To encourage demand for ICE, it is necessary to provide it with greater utility. In the short term, the development of tournaments with prizes, the income from paid advertising in $ICE and the launch of ICE poker's mobile version represent an improvement in demand which, could manage to change the current price trend. All of them take weeks, or maybe months for the team to develop and send to production. Even with an enormous effort from them, assigned seating is not fully working. Considering these limitations, the DG treasury can take action withdrawing wearables from circulation through buybacks to limit further emission of $ICE. These NFTs can be used in many future scenarios such as wearable scarcity (resell at a greater price), prizes for tournaments, marketing and more, to be decided by the DAO when the time comes.

Proposal

The DG treasury shall use the money from ICE Spartan mint (1,250 wearables sold at 1.5 $ETH each = 1,875 $ETH = 5.6MM USD @ 3k per $ETH) to repurchase wearables from secondary market (OpenSea), at a maximum price of 0.90 $ETH each (40% discount relative to mint price, for a level 1 wearable, according to the average daily $ICE issuance each wearable has), prioritizing the cheapest available.

Maximum price to pay:

For level 1 wearables that amount would be 0.90 ETH x 1= 0.90 $ETH For level 2 wearables that amount would be 0.90 ETH x 1.1= 0.99 $ETH (assuming an average level 2 wearable could issue a 10% more $ICE than a level 1 wearable) For level 3 wearables that amount would be 0.90 ETH x 1.2= 1.08 $ETH (assuming an average level 3 wearable could issue a 20% more $ICE than a level 1 wearable) For level 4 wearables that amount would be 0.90 ETH x 1.3= 1.17 $ETH (assuming an average level 4 wearable could issue a 30% more $ICE than a level 1 wearable) For level 5 wearables that amount would be 0.90 ETH x 1.4= 1.26 $ETH (assuming an average level 5 wearable could issue a 10% more $ICE than a level 1 wearable)

The timing, and quantity of NFTs of each purchase is at the discretion of the DG developers team. These wearables could later be used as tournaments rewards, sold in our future native marketplace in $ICE, or they could also be burned and permanently taken out of circulation (TBD by the DAO using data on average purchase price, number of wearables held by the Treasury, etc). The DAO can also vote in the future what to do with the profit obtained from these repurchases in case they are resold on the secondary market for a profit (that is, for example, if 1 wearable was bought at 0.6 $ETH and then resold at 1 $ETH). It could be used to provide liquidity in the USDC/ICE pair, strengthen treasury, marketing campaigns, etc.

Rationale

Withdraw NFTs from circulation momentarily to improve overall game performance and allow us to finish developing assigned seating and get rid of cheaters, in addition to reducing the daily issuance of $ICE until there are working sinks (that we've mentioned on the “Background” of this proposal). It will work as a company buying-back stocks from the secondary market. With a buyback, a company can increase earnings per share (in this case for each NFT), all else equal. The same earnings pie (in this case daily $ICE issuance) cut into fewer slices is worth a greater share of the earnings per user. By reducing share count (or NFTs available), buybacks increase the stock's potential upside for shareholders who want to remain owners.