Cancelled

JBP-222: Update Discount & Redemption Rates

Author

Anon

Cycle

26

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Title: Update Discount & Redemption Rates
Author: Mr. Goldstein
Date: 2022-06-26

Thesis

Update Discount rate to 0.5% & Redemption (Bonding Curve) rate to 60%

Motivation

The recent changes in the broader macro environment, and more specifically the crypto markets, requires Juicebox to make needed adjustment to both the Discount Rate and Bonding Curve:

  • Reduce Discount Rate to a minimum of 0.5% to slow down the increasing gap between the AMM and the terminal pricing (terminal is 13x higher). By that incentivize new capital providers to contribute to the DAO vs. purchasing tokens on the low liquidity AMM (94M JBX tokens and 50 ETH).
  • Reduce the Bonding Curve Rate to 60% to improve the DAO’s capital preservation strategy and immediately increase its potential longevity

As we continue adjusting all variables of the token mechanics the DAO is only focused on ensuring the long term operations and success of Juicebox and its community community.

Risks

  • Reduce long term upside to token owners by slowing the upside price appreciation of the JBX token
  • Disincentivize new contributions to the DAO due to a more challenging access to liquidity to JBX token holders
  • Create a large immediate pressure on the Treasury caused immediate redeemers (400 ETH redeemed during last change)

Rationale:

  1. Redemption rates have stabilized after a record 600 ETH redemptions in May implying that most individuals wanting to redeem have done so. This gives the DAO an opportunity to further decrease the redemption rate and ensure capital stability.
  2. With the mint rate from the terminal decreasing to 36K JBX/ETH the difference between the AMM pricing to the terminal mint now hovers around ~13x. This variance is sufficient to provide new holders with price upside and should not be drastically increased.
  3. The low liquidity on the AMM creates an environment where new capital that wants to contribute to the JBX ecosystem has to do so via the terminal. Lowering the discount rate to the minimum of 0.5% slows the increase of the entry point for new participants.

Timeline

Implement immediately and reassess by FC#32

Copyright and related rights waived via CC0.