Proposal: Increase Liquidity Budget

Hello Rally Community,

For those of you who don’t know me, my name is Miguel Vias. I am a cryptocurrency markets liquidity consultant appointed by the community on May 7th to help develop liquidity for $RLY. As part of this effort, on May 18 I submitted a proposal for 35 million $RLY to fund marketmaker and exchange partnerships. I am happy to report those funds have been successfully allocated to four market makers and a number of key exchange partnerships. $RLY is now listed on Coinbase, Coinlist, and Huobi, with more to come over the next few months.

As I had mentioned in the original proposal, all the market maker engagements have been in the form of loans with embedded options. This means that those funds, approximately 27 million $RLY, will be repaid to the Community either in the form of $RLY or USDC/USDT. The bulk of the remaining 8 million $RLY will be allocated to exchanges and will be used for educational programs. Those $RLY tokens will be used to inform their users about $RLY, as well as Rally, the flagship consumer app on the $RLY protocol, and to encourage them to participate in the project. By way of example, Coinbase recently launched a $RLY tutorial through its Earn program, funded through the previously approved educational program budget.

Over the last few weeks I have begun fielding requests from exchanges not only to list $RLY but also to engage in more substantive partnerships. There are numerous rewards programs which exchanges provide to their customers, and it is becoming increasingly likely the Community will have the opportunity to partner with these exchanges to activate those programs. To do so however, we will need to allocate additional budget to the liquidity initiative. There are two primary drivers of the increased budget request:

  1. Program Funding: Any exchange engagement around a rewards program will require $RLY funding which will have to come from the Community
  2. Market Maker Funding: With an increased number of listings our market makers will need more $RLY to provide liquidity on new exchanges

What is the ask?

To properly leverage these new opportunities, a high level request for the following 12 months is outlined below, consisting of up to a maximum total of an additional 30 million $RLY and 5 million USDC to be deployed as follows:

  • Loans: $RLY deployed in the form of loans to enable key market making partners to provide consistent liquidity
    • Amount of allocation: 60-70% of total budget
    • Loans may contain embedded options to sell $RLY
    • Loan terms to be no longer than 12 months
  • Rewards programs: $RLY and USDC deployed to exchange-specific rewards programs to help drive awareness and engagement with Rally efforts
    • Amount of allocation: 30-40% of total budget
    • $RLY and USDC will be returned to community if not used

As was the case in the previous budget request, the maximum number of $RLY to be deployed is substantial but will not be the total amount actually spent. Most of the budget is composed of loans which will be repaid either in $RLY or USDC depending on the terms required by the relevant partners. As is currently the case with the existing budget, we should expect the actual $RLY spend to be between 5 million and 10 million $RLY. However, to enable the engagement with exchanges and market makers, this amount needs to be approved by the community as available for deployment should the need arise.

How do we track and govern all of this?

In an effort to not reinvent the wheel, I propose we follow my previous suggestion:

  • Quarterly reports delivered to the community on September 30, December 31, March 31, and June 30
  • Quarterly community calls to review the report and collect community feedback on progress, spend, and strategy.

As part of the role for which I was originally appointed, I will act as the community’s agent for purposes of identifying, vetting, and officially contracting with partners, as well as overseeing and managing relationships with partners selected.

I hope this is all clear, but if anyone has any questions or concerns, please feel free to post them in the forum, and I will do my best to answer them promptly.

Thank you, and I look forward to the discussion,

Miguel

3 Likes

I think this is excellent.
Question: Are the market maker payments going back to the community DAO or the Rally network association? And, any sense of when the first payments might come through? I ask because the DAO’s treasury might currently be insufficient to meet this request (at 2MM USDC and 20MM RLY, I think). While the community of $RLY holders may vote to approve this, I think it would fall to the Network Association to fund this, at least in part…though I’m not sure?!
Since the DAO is in the process of being formed, led by @GaryCoover. I think the community would be ready to vote on this in principle to help inform the decision by the Network Association for the benefit of the larger $RLY ecosystem.
Anyway - all for it!

Cheers,
Grand

2 Likes

Great point. We’re still forming all the processes, but I think this should be in the Association’s purview as opposed to coming from the DAO which is meant for building on top of $RLY.

Since we don’t have a process yet, I’d suggest to @DaddyFatSax and the Association we still run this as a typical Snapshot vote to create transparency and community involvement if urgent as crypto is moving quickly right now

@MiguelVias when do you need a decision?

2 Likes

Thanks Kevin. In the next week or two would be ideal.

As they say, crypto never sleeps.

5 Likes

Your work has been incredible, and noted! Thanks for staying on top of this

1 Like

Solid proposal. I’m fine with quarterly reporting on progress. Not sure what predefined metrics could be utilized to measure impact of the RLY invested. Returns on loans is fairly easy, but I think this is also an infrastructure build out, which will enhance the total value of the Rally network. As a marketer you might have some metrics in mind that you could share?

1 Like

Hello Miguel,

I have a question linked to your proposal. The other day I was talking with Mike about the loans you provided, via your previous proposal, to liquidity providers. Those loans were added to the circulating supply of Rally.

  1. Is adding liquidity loans to circulating supply normal for projects in the crypto space?
  2. Do those loans influence the height of the price of RLY (not mean stability of price), one way or another?

Cheers,
Marijn

Hey Marijn,

Thanks for the thoughtful questions. In short, I’m not sure how other projects classify their circulating supply. In this case, however, I think it makes sense to add the the loans to RLY circulating supply since they have embedded options which means the RLY may not come back and instead could be paid back in USD or USD equivalents. With respect to RLY pricing, the loans should increase liquidity and thus dampen volatility. This likely means that short term spikes (height) should be lower, but the long term upside should not be affected.

Hope that helps but let me know if you need anything else.

Thank you!

Hi folks,

My name is Weiwei Geng and I’ve been appointed as a director on the RLY Network Association executive board.

With the passing of the decentralization proposal [[PROPOSAL] $RLY Network Decentralization] we’re now in a position where this budget ask of the community treasury is reviewed by the RLY Network Association executive board. We’ve got a lot of work to do to establish appropriate processes around submitting requests, offer the community ample opportunity to offer feedback, create an venue to signal support/dissent, and provide transparency into the executive board’s decision around each request. But until we have those robust and transparent processes in place we also want to make sure that time sensitive matters like this aren’t held up.

To that end, the executive board of the RLY Network Association had an ad hoc meeting to review and approve this request. We’ve seen excellent results from Miguel’s strategy to date leading to substantial liquidity and trading volume for the RLY token across multiple exchanges.

We’ll continue to advance processes, communication, and transparency at the RLY Network Association level to ensure a more formal and consistent process for these reviews going forward; expect to hear more from us in the coming weeks as we get this off the ground.

Thank you.

5 Likes