INDEX Sale #1

iip: 32 title: Index Sale #1 status: Proposed author: Matthew Graham (@Matthew_Graham), Simon Judd (@bigsky7) created: 2021-04-13

Simple Summary

This proposal seeks to increase Index Coop Treasury diversification by selling INDEX tokens for ETH or stablecoins. The INDEX Sale will be conducted in two phases: first a sale to strategic partners, then a sale to Index Coop community members.

Abstract

To diversify the Index Coop Treasury, INDEX will be sold for ETH or stablecoins. The INDEX Sale will be conducted in two phases:

In phase 1, the BD team led by @reganbozman and @bigsky7 will sell up to 10,000,000 USD worth of INDEX to strategic partners for ETH and/or stablecoins. The exact terms of this sale will depend on the BD team’s negotiations.

After the strategic sale, Index Coop Gold, Silver & Bronze owls from January, February, and March will be allowed to purchase up to 100,000 USD worth of INDEX each. The terms of this community sale will be the same as the INDEX strategic sale or better. This community sale will be led by @matthew_graham and the Treasury Committee.

The INDEX strategic and community sales will both have at minimum a lockup period of 6 months vesting linearly. The final terms of the sale will depend on the BD team’s negotiations. With an INDEX price of 30 USD we expect this INDEX sale to diversify 20% to 30% of the Index Coop’s treasury into ETH and/or stablecoins.

Motivation

Currently, the Index Coop Community Treasury is composed almost entirely of INDEX tokens. This is because the community treasury automatically vests INDEX tokens linearly on a block by block basis. Besides INDEX tokens, the community treasury also holds small amounts of DPI and ETH-FLI tokens accrued from those products’ streaming fees.

If the price of INDEX depreciates significantly the Index Coop’s ability to pay Index Coop contributors for ongoing BD, growth, and engineering efforts may be severely impacted. Significant diversification will help preserve the value of the treasury and ensure Index Coop operations can continue in the event of a bear market.

Furthermore, INDEX currently suffers from low liquidity. It is not uncommon for INDEX to experience +10% price swings in a single day. Some of the funds raised from this INDEX sale may be used to increase INDEX liquidity by providing liquidity to a Sushiswap or Balancer INDEX/ETH pool.

Specification

Strategic Partner Sale

1. The BD team is nominally allocated 300,000 INDEX tokens to sell for ETH and/or stablecoins (USDC or DAI).

2. The BD team does outreach to partners & conducts the INDEX sale.

3. Once the sale participants and terms are finalized the BD team produces a list of strategic partners containing:

   • A wallet address the sale participant will use to trade ETH/USDC/DAI for INDEX
   • The amount of INDEX they want to purchase
   • The amount of ETH/USDC/DAI they will trade for INDEX

4. The Index Coop engineering team will deploy an escrow contract (similar to BadgerDAO) for each sale participant.

   • The escrow contract will be funded with the desired INDEX sale quantity via the Index Coop Community Treasury directly.

5. To claim the INDEX the strategic partner must deposit the agreed upon quantity of ETH/USDC/DAI into the escrow contract.

6. After depositing funds, the Index Coop or sale participant may execute the swap.

   • This will transfer the deposited ETH/USDC/DAI directly to the Index Coop Community Treasury, and send the deposited INDEX to a vesting contract under control of the sale participant.

Index Coop Contributor’s Sale

The Index Coop Contributor’s Sale follows much of the same format:

1. After the strategic partner sale has been completed the Index Coop Treasury Committee will conduct the Index Coop Contributor’s sale.

2. The most favorable terms from the strategic partner sale (as determined by @matthew_graham and the Treasury Committee) will be offered to all Index Coop Golden, Silver, and Bronze Owl Contributors from the months of January, February, and March.

3. The Treasury Committee will produce a list of all eligible and interested Index Coop contributors containing:

   • A wallet address they will use to trade ETH/USDC/DAI for INDEX
   • The amount of INDEX they want to purchase
   • The amount of ETH/USDC/DAI they will trade for INDEX

4. The Index Coop engineering team will deploy an escrow contract for each sale participant.

   • The escrow contract will be funded with the desired INDEX sale quantity via the Index Coop Community Treasury directly.

5. To claim the INDEX the Coop contributor must deposit the agreed upon quantity of ETH/USDC/DAI into the escrow contract.

6. After depositing funds, the Index Coop or Coop contributor may execute the swap.

   • This will transfer the deposited ETH/USDC/DAI directly to the Index Coop Community Treasury, and send the deposited INDEX to a vesting contract under the control of the sale participant.

For eligible contributors interested in the Index Coop Contributor’s Sale, we ask that you do not sell your existing INDEX tokens leading up to and during the INDEX Sale. This sale is intended to allow Index Coop contributors to increase their ownership of the protocol on the same terms as those offered to strategic partners.

Voting

• FOR - Allocate 300,000 INDEX tokens to the BD team led by @reganbozman and @bigsky7 to sell to strategic partners. Subsequently conduct a community sale led by @matthew_graham and the Treasury Committee for Index Coop contributors according to the parameters above.

• AGAINST - Do not conduct an INDEX Sale according to the parameters above.

Copyright

Copyright and related rights waived via CC0.