Dough / eDough buyback program

## Summary This proposal introduces a DOUGH / eDOUGH Buyback program as a response to the termination of the DOUGHpamine, to absorb the possible unwinding of LP positions / dumping by holders not looking to participate in the DAO governance. Furthermore, the buyback should also serve any DOUGH holder willing to opt-out from the recently proposed upgrade to AUXO.

Authors

Bennet, Gabo_o

Passing threshold

5% or more of veDOUGH supply must participate (CURRENT_SUPPLY * 0.05 = RESULT) 60% or more of participating tokens must vote FOR

Motivation

One of the main reasons why the Doughpamine program was terminated was to avoid further selling pressure induced by LPs dumping rewards. As LPs now look at potentially unwinding their positions, they could potentially cause the very selling pressure the team has been trying to avoid through the proposal.

Moreover, as LPs exit and unwind, dumping would occur on an increasingly illiquid market which would exacerbate price decline. This would thus result in a lose-lose situation for LPs and the DAO as the former will incur both lower selling price and higher slippage, while the latter would have failed in its attempt to mitigate selling pressure.

In order to prevent the eventuality outlined above, it’s proposed to run a buyback program for LPs and for all floating Dough held by the market, to also represent an alternative for holders willing to opt-out from the proposed migration to Auxo. In this way, holders who wish to sell their Dough can do so through an OTC deal directly with the DAO treasury. This solution therefore aims at protecting Dough from the negative price impact that would be induced by heavy market selling. In addition, this would allow holders to sell while avoiding price slippage.

Scope

Dough buyback

There will be 9 buyback epochs, lasting 2 weeks each. Each epoch will have an increasing discount applied on the buyback price. The buyback price will be fixed at the 30-day TWAP calculated at the day preceding the start of each epoch, plus the discount relative to the specific epoch. Discounts per epoch and epoch calendar periods are summarised in the table below.

eDough buyback

This part of the buyback program is intended for eDough farmed by LPs which may not be able to vest before the protocol migration to Auxo or anyhow provide an exit solution for LPs that may prefer a short-cut alternative to the vesting of their eDough reward. Buybacks will follow the very same epoch distribution as for liquid Dough. However, the buyback price will be fixed per epoch and not dependant on market price, considering that eDoughs have no market/price set until vesting. The table below displays buyback price per epoch.

Benefits and risks

Benefits:

• allow Dough holders to sell their Dough with no price slippage
• avoid price impact of selling
• reduce Dough selling pressure

Risks:

• Reduce treasury farming principal (capped)

Next steps

The proposed budget to be allocated to this buyback initiative is intended to be deployed in the buybacks contracts on an epoch-by-epoch basis, with residual balance from the previous epoch rolled over, to constitute the new epoch’s budget together with any required amount top-ups.

Holders that wish to opt for the buyback program will be able to do so through the PieDAO website. The website’s UI will be available by the first epoch’s start date, currently scheduled for November 15th 2022.

Closing notes

This proposal aims at giving holders who wish to sell an option to do so without incurring in slippage and without impacting market price. This would aid the DAO in containing selling pressure and consequent price decrease. The buyback budget would be allocated on a epoch-by-epoch basis with any remaining balance rolled over to the following epoch, up to the max amounts summarized on the chart above.

This Vote

FOR: Proceed with the buyback AGAINST: Do not proceed with the buyback More Info Needed