Abstract

At the time of the LNR v2 smart contract migration, a portion of the liquidity available to Lunar DAO was still locked on a PinkSale smart contract. This lock expires on 2022.11.16 21:30 UTC.

Motivation

As of 6 Nov 2022, 1,327.53779547 Wrapped BNB valued at $469,044.69 USD remains in the LNR V1 liquidity pool.

These funds become available to Lunar DAO on 16 November 2022 @ 21:30 UTC (4:30pm EST), and the Lunar DAO Bylaws require a vote from DAO Members on how those funds should be allocated.

Rationale

Because the LNR V1 token is no longer operational, leaving any amount of WBNB in the V1 liquidity pool provides no benefit to Lunar DAO or the Lunar Foundation.

In accordance with the Lunar DAO Bylaws, the Lunar Foundation has a fiduciary responsibility to consider the practically endless options available, and present DAO Members with the best of those options for discussion and vote.

• $200,000 USD (roughly equivalent to 568 WBNB as of 6 Nov 2022) will be reserved by the Lunar Foundation to expand the operational budget for 2022.
  • Uses of funds for this allocation will be discussed in a separate LIP.
• The remaining estimated 759.53779547 WBNB (roughly equivalent to $267,728 USD as of 6 Nov 2022) would be added to the LNR V2 Liquidity pool in the manner outlined below.
• If Lunar DAO is able to obtain significant outside capital injection (referred to elsewhere as “the Facility”) before the end of the 2022 calendar year, then the future proposal to accept said Facility would include a provision to return the $200,000 to the liquidity pool using the process outlined below.

Analysis

This proposal would have the effect of moving roughly 57.3% of the unlocked funds into the LNR V2 liquidity pool, and retaining 42.7% for the Lunar Foundation 2022 budget.

• The size of the LNR V1 liquidity pool, the LNR V2 liquidity pool, and the market value of WBNB in USD are all subject to change between the date this proposal is offered for vote and the date the accepted transaction(s) is/are executed. All amounts are current as of 6 November 2022.
• Adding WBNB to the LNR V2 liquidity pool through a router transaction would impact the ratio of WBNB to LNR in the pool, which may have an impact on the secondary market and market rating indexes.
• Any secondary market impacts carry a significant risks of:
  • The token being manipulated on those markets
  • The visibility attracting holders whose personal goals do not align with the long-term goals of the DAO
• Due to the nature of the liquidity pool protocol, the Lunar DAO wallet that adds the WBNB to the new liquidity pool through a router transaction will receive LNR V2 tokens in return for that WBNB
  • If it chooses, Lunar DAO may decide what to do with these LNR V2 tokens through a future proposal
  • The WBNB amounts mentioned below do not account for gas fees or protocol fees involved with each transaction. The final amounts may vary due to these gas fees and protocol fees.

PLEASE NOTE: The “Pros” and “Cons” listed below are merely a guide to provide additional context. They are not exhaustive of all potential benefits and downsides, nor are they guarantees or warrants of any kind.

Pros

• The DAO can fulfill its existing financial obligations that were not included in the original budget, including the monthly fee on our market maker accounts
• Progress on operational and technical tasks for the DAO can be resumed without further delay
• The proposed schedule for the transfers would be extremely difficult for others to exploit
• If outside capital injection is obtained in the specified time period, then the entire LNR V1 liquidity pool will be incorporated into the LNR V2 liquidity pool.

Cons

• A “No” vote on this proposal would have the effect of canceling our market maker accounts that keep us listed on the various exchanges. The budget passed by the DAO’s creation does not account for that expense, and the November bill is coming due shortly.
• A “No” vote on this proposal makes the DAO 100% dependent on outside capital injection to execute any of their goals for the remainder of the year. If future investment proposals are not passed, or the investors at the table back out for any reason, the token tax alone will not be sufficient to operate the DAO in this economic environment.
• Less WBNB would be transferred to the new liquidity pool

Based on the various options available and weighing the strengths and weaknesses of each option, the Lunar Foundation proposes this as the best strategy to get the project moving at full velocity again, with the budget required to return operations to their previous capacity.

Proposed Process

To minimize the likelihood of secondary market exploitation while approximately 57.3% of the unlocked funds are transferred, the transaction schedule, number of transactions, and transaction amounts will only be known by a single individual responsible for executing the transactions on behalf of Lunar DAO. This individual would be required to agree to not exploit this knowledge for personal gain.

Timeline

The Liquidity Pool unlocks on 16 Nov 2022 @ 21:30 UTC (4:30pm EST). Shortly thereafter, the proposal will be implemented.

Budget

Besides per-transaction gas costs, there are no other costs associated with this proposal.

Summary

Using funds from the liquidity pool allows Lunar Foundation to cover additional operating expenses that were not included in the original budget, including the market maker accounts that keep us listed on exchanges, as well as to procure the technical team to resume building the platform. The implementation proposed allows for limited exploitation. It is the quickest way for Lunar DAO to resume full operations and get the roadmap back on track… which in turn is the best way to attract outside capital for the project.