We’re proposing a governance vote to accelerate liquidity building on the PHUB/BTCB pair. As always, we’d love your thoughts and feedback ahead of the vote.
In August, a governance vote (PHUB 003) passed to redirect 45% of PHUB buy back funds to building liquidity. In the weeks following implementation we saw a steady increase in liquidity. However, unfortunately a large PHUB holder and liquidity provider was then scammed. This led to their LPs being removed and aggressively sold. Since this point, we’ve seen particularly low liquidity meaning reasonably small trades are having large price impacts. Although the 45% allocation is having a positive impact, due to challenging market conditions this isn’t driving the material uplift required.
PHUB has incredible tokenomics and benefits from protocol revenue in the form of buy backs that are distributed to PHUB stakers. We therefore expect significant price appreciation in the coming months as we progress our strategy. Ensuring sufficient liquidity to support price stability and growth is therefore key.
Our proposal allows us to quickly and sustainably build liquidity, while also allowing the full buy back allocation to be used for its initially ended purpose – ie 100% will be used for buy backs, as opposed to the current 55% for buy backs and 45% for liquidity building.
Our proposal is as follows:
• Aaron (CEO and Founder) will utilise his personal PHUB holdings to build liquidity. 2 PHUB, or $1000 a day of PHUB (whichever is higher) will be deployed via automated contract to the PHUB/BTCB pair.
• This will remain in place until 1000 tokens (10% of supply) have been deployed, or one year has passed, whichever comes sooner.
• This liquidity will be locked for one year. The LPs will then unlock linearly over a 6-month period.
• It is our intention to utilise treasury funds to buy out Aaron’s LPs prior to the lock period ending.
Won’t this lead to more sell pressure on PHUB?
It’s true that there will be a small number of sells on a daily basis to support this. However, we do not anticipate this having any adverse impact on price particularly given 1) our strategy is intended to drive significant uplifts in revenue and therefore PHUB buy backs 2) 100% PHUB buy back funds will be used for buy backs, as opposed to the 55% currently.
Our medium-term plan for PHUB liquidity
Building community provided liquidity on the pair is challenging. Given PHUB’s scarcity and significant upside, investors naturally want to hold on to their tokens. PHUB is expected to significantly outperform BTCB, and therefore many do not want to provide liquidity and see large portions PHUB sold for BTCB as the liquidity pool rebalances.
For this reason we will ultimately transition PHUB liquidity to being protocol owned - we will achieve this through a combination of 1) buying out Aaron’s LPs (assuming this vote passes) and 2) beginning to offer investors PHUB bonding. Bonding will allow investors to create PHUB/BTCB LPs and sell these to the protocol in exchange for discounted PHUB that vests over a short window. This will be implemented once PHUB reaches a price more reflective of its true value. This approach will be adopted across other pairs where it makes sense to do this.
Governance vote timescales
A window for community discussion will take place prior to the PHUB holder vote opening at 9.35pm UTC, 20/10/2022. As always the vote will be open for 24 hours.