Should we Buy PTP and Stake Liquidity on Vector?

Overview

The Magnet core team has been working on building Vector Finance, a ve-Token focused yield optimizer for Platypus Finance. The work on Vector comes in the midst of a wider “Platypus Party” with competing protocols working to launch and allocate the most $PTP they can for users. We believe Vector has positioned itself as one of the top protocols to win this war. An important part of Vector’s go-to-market this week is going to be to accumulate as much PTP as possible early on. This includes needing initial liquidity for our xPTP-PTP pool on Trader Joe.

The Magnet core team is proposing that Magnet uses a portion of its treasury funds to acquire PTP and stake PTP-xPTP on Vector.

Why would Magnet do this?

Supplying xPTP-PTP liquidity will benefit Vector as it will support the protocol early-on with strong liquidity. Magnet has a strong alignment of interest with Vector due to the tokens Magnet will be receiving as part of the VTX (Vector token) distribution. Thus, we should be doing everything we can to support our incubated protocol.

We also believe that this will be a lucrative investment for Magnet. VTX rewards from emissions will be high early on, which means we’ll receive significant staking rewards for staking liquidity. Additionally, we are bullish on PTP and believe the launch of Vector will generate a lot of new demand for the PTP token. We have already seen its price hold up very well during the recent sell off.

Once an adequate amount of xPTP-PTP liquidity has been accrued by the protocol, we would likely begin to withdraw our liquidity and return it to Magnet. We will have additional proposals in the coming weeks/months on how to manage the position.

Existing position

The team has already used $250k of funds to acquire 59,672 PTP tokens at an average price of $4.19 per PTP. PTP is currently trading at $5.85, so our position is now worth ~$350k (+40% gain).

We began acquiring some PTP because we saw it as an opportunistic buy on the dip. We are also extremely bullish on PTP, particularly as the launch of Vector commences. Another reason we began to execute some of the position earlier was to not be frontrun by the public on this proposal.

Proposal

The team proposes we allocate an additional $500k from the main treasury to be spent on PTP for the purpose of liquidity bootstrapping for the Vector Finance protocol. This will bring our total PTP exposure to $850k, or about 7.9% of the total treasury. We will be earning significant yield on this PTP, while also supporting Magnet’s first incubated project.

Timing:

The vote will last 12 hours. However, if there is a supermajority (>65% of votes being yes) by 6:00pm UTC (~10 hours from now, when Vector launches) - then we will acquire and convert PTP. If at the end of the vote, the answer is no (>50% of votes being no) after originally being approved by the supermajority, then we will sell down the PTP back into stables. There is significant liquidity for PTP, so we do not expect this to be an issue since the amount is just $500k.