Thank you Mrs. Sad Cat for the proposal.
As the Play-To-Earn industry grows, and the Merit Circle DAO investments begin to give bigger and bigger returns (as has always been the intention, à la 'P2E index), we must think of what our optimal route is for dealing with these investment proceeds.
Until now I think most people either don’t know what we do with these proceeds, or think we add the USDC gained to the DAO and perhaps use it to buy back MC tokens. While this isn’t necessarily a bad option, similar to Mrs. Sad Cat, I also doubt that this is the most useful course of action.
Taking a quick look at the %s you have given for the splits for the proceeds the standout point is the 60% being used for limit order support. DEX limit orders can be notoriously unreliable in execution especially in times of large volatility but this would be the only way on-chain so I don’t see a way around this.
I’ve also been thinking a lot about the fact that people will know there are orders set at certain price levels and I don’t actually think the issue of ‘people using them for exit liquidity’ is a real one. There is enough liquidity on Uniswap to already exit fairly large positions and I don’t see why it would make sense for people to wait until these limit orders are placed before exiting. With such a large supply of the circulating MC tokens locked up staking already, there really aren’t that many liquid ‘MC whales’ who are looking for exit liquidity and would need limit orders like these. This might change in the future and will depend on how big these limit orders are, where they are placed and the distribution of MC. Also if someone did want to ‘dump into’ these limit orders (not that they work like CEX limit orders do), all this would mean is the MC DAO gets to buy back tokens at a cheaper price, rather than at a higher price by market buying, as well as helping to push the price back up.
With regards to the FDV ‘problem’, it clearly is an issue for many investors, after many of us (including some ‘influencers’) have had to spend time repeatedly explaining why we didn’t think it was as big a problem as some seemed to think. Regardless of which side is right, one of the first thing new investors see is the FDV. If they see an enormous number they can often be put off, irrespective of why the number might be that high. The only way to reduce this FDV (whilst maintaining a high token price) is to reduce the total supply, and of course, the only way to do that is by burning tokens.
15% of proceeds being used to buy back MC and burning them seems a reasonable enough number to me. It means the vast majority of the investment proceeds continue to be added to the DAO (including the proposed limit order funds) but we still get a noticeable token burn from these proceeds.
The 75% of unused tokens from the Community Incentives DAO portion initially seemed quite high to me but I’m hoping this will at least ignite a desire within the team, seed investors and DAO community as a whole, to start actually using these tokens rather them letting them sit idle, or otherwise letting them get burned.
One final comment I would give is that Sad Cat have come up with a series of logical percentages to use for these proposals and while they seem OK initially, I think its important to remain flexible on them, especially when it comes to burning tokens as this is an irreversible action. The main one I’m looking at is the 75% unused tokens monthly burn from the Community Incentives. As this could potentially be a very large burn each month, it might be worth reassessing this number at least once a quarter just to reaffirm that we still think this is the right decision. We wouldn’t want to be in a situation where we think we have accidentally burned too many tokens and suddenly need them for a large incentive undertaking at some point in the future.
Otherwise I will happily be voting YES to this proposal.