YIP-62 Proposal: Treasury Providing Liquidity for Comethswap L2 $YAM/$MUST Pool on Polygon

Basic Summary

Comethswap is an L2 DEX on Polygon (fka Matic) belonging to the blockchain game Cometh. Yam has been running a promotional campaign with Cometh to create unique Yam-themed spaceship NFTs for use within their game based on designs submitted by the Yam Community. There will be a total of four NFT Yam spaceships.

Shortly after the conclusion of the promotional event, Cometh will launch a $YAM/$MUST pool on their ComethSwap DEX and incentivize it with $MUST rewards. At the same time, the Yam fleet NFTs will become available on OpenSea or via Cometh. The estimated launch is around May 3rd, 2021.

Abstract

Yam and Cometh will do a token exchange where Yam will provide Cometh with $25K in $YAM tokens in exchange for $25K in $MUST tokens. Cometh will then pair an additional $25K in $MUST tokens with the $YAM it received to seed the initial liquidity for the $YAM/$MUST pool on ComethSwap. Yam will then supplement that liquidity with the $25K in $MUST tokens plus an additional $25K in $YAM tokens to bring the total pool value to $100K at the start of the incentivized liquidity mining event.

Cometh will incentivize the $YAM/$MUST pool with additional $MUST token rewards. Additionally, the proceeds of the Yam fleet spaceship NFT sales will be used by Cometh to market buy additional $YAM to add to the liquidity held in the pool.

Since Yam does not hold $YAM tokens in its treasury, we will need to use $yUSD to purchase $YAM off the market.

Motivation

This campaign has several benefits:

• ComethSwap will become the $YAM token’s first listing on an L2 DEX allowing for trading with minimal gas fees. This will serve as an experiment for future L2 listings.
• This will be Yam’s first “buy back” event and will serve as an experiment regarding future $YAM token buy backs for exchange listings in the future.
• The initial market purchase of $YAM for $yUSD may have a small positive spot price impact on the $YAM token.
• The use of the Yam fleet NFT sales revenue to purchase $YAM may create additional buying pressure on $YAM.
• Using the proceeds from the NFT sale to supply liquidity to the ComethSwap pool allows Yam to deepen the liquidity on the DEX without the need to mint additional $YAM (inflation) or the need to expend too much in treasury funds.
• This liquidity mining event will benefit $YAM token holders who chose to provide liquidity through earning $MUST rewards.
• This promotion will bring added visibility and positive brand awareness for Yam and its products.

Specifications

This proposal follows the best practices suggested by Cometh and used with other participating protocols.

1. $50k yUSD in treasury will be sold into $ETH. If it benefits the trade, the 2. $yUSD will be unwrapped into $USDC, and then the USDC will be sold for $ETH.
2. The $50K ETH will be sold for $YAM through the Sushiswap liquidity pool.
3. $25K YAM will be provided to Cometh for initial pool liquidity in exchange for $25K MUST.
4. Yam will migrate the remaining $25K YAM and $25K MUST from the Ethereum L1 blockchain to the Polygon L2 blockchain.
5. Yam will deposit the remaining $25K YAM / $25K MUST into the 7. $YAM/$MUST liquidity pool on ComethSwap created earlier.

Total initial liquidity in the $YAM/$MUST pool will be $100K.

Voting Choices

1. Yes, spend $50k yUSD from the Treasury to supply liquidity to the YAM/MUST pool on ComethSwap.
2. No, don't spend $50k yUSD from the Treasury to supply liquidity to the YAM/MUST pool on ComethSwap.