LIP 008 - OTC Transaction Authorization

By Valiander (Foundation Director) Copyright and related rights waived via CC0.

Disclosure

As a Foundation Director, I have a duty under the Lunar DAO Charter to manage Lunar Foundation operations to the best of my ability to maximize the benefit to Lunar DAO.

Abstract

The Lunar Foundation proposes to be given additional authority to complete over the counter (OTC) deals on behalf of Lunar DAO.

Motivation

Midcap crypto traders have approached the Lunar Foundation with offers to purchase sizeable quantities of LNR over the counter (off-contract).

Rationale

The Lunar Foundation presently does not have the authority to execute these transactions, and requiring a three-day vote on every transaction would give the market too much opportunity to manipulate the price before, during, and after the transaction.

Analysis

When LNR first got off the ground, it had a 12% tax. 3% of that tax went directly to the Liquidity Pool.

OTC transactions should be benefitting Lunar DAO beyond simple funding. Therefore, we believe it makes sense to carve out 4% of any OTC deal to bolster the Liquidity Pool. That may be accomplished through any combination of direct LP injections and/or LNR buybacks, depending on the Foundation's assessment of what is best for the LNR token at that point in time.

Proposed Changes

1. Allow the Lunar Foundation to conduct OTC deals at their discretion, using the average peak price over the prior 8 days as the transaction price.

2. Require that every OTC transaction leverage a mix of direct deposits and buybacks to put 4% of the transaction into the Liquidity Pool.

3. The Lunar Foundation will post the details of each transaction to the Governance Platform within 72 hours of each transaction's completion.

Pros

1. OTC transactions offer midcap investors the ability to get involved in the Lunar Ecosystem by helping ensure funds are available to continue operations.

2. Selling LNR over the counter does not negatively impact the market price the way selling over a CEX or DEX does.

3. The Lunar Foundation gets the opportunity to gather first-hand information about the user workflows we will be enabling for Lunar Escrow™️.

Cons

1. Selling LNR from the Treasury reduces the amount of LNR available to the Treasury in the future.

2. Because Lunar Escrow™️ does not exist yet, we will have to take extra steps to ensure the safety of funds being transferred.

3. The LNR token will not get to benefit from price changes from the purchase transactions happening on the open market.

   1. We are likely to get some complaints about this from holders and fudders, but OTC transactions are a part of every crypto company.

Steps to Implement

None

Timeline

• Upon acceptance, this LIP would be implemented with immediate effect.

Associated Costs

None