AIP-008: Re-define ADEL>AKRO swap ratio

Title Of Proposal: Re-define ADEL>AKRO swap ratio

Author(s) Names: Vasily Sumanov

TLDR Summary

  • Define the new ADEL>AKRO swap rate. Change swap rate from 1:15 [initially announced rate] to 1:3.1 in order to match target dollar value of swapped ADEL to AKRO. The new swap rate roughly corresponds to ~$2.5mn in AKRO using March TWAP price (0.054654).
  • As a result of changing the swap rate, the amount of AKRO for ADEL holders will be re-allocated to incentivize growth of the ecosystem, for instance, through a Development Fund, Community Fund, and Liquidity Mining programmes.
  • Change the vAKRO vesting terms from 24 months years to 12 months to reduce potential downside of ADEL holders willing to swap

Proposal

As an AKRO token holder, I propose to re-define terms of ADEL>AKRO swap since current terms are not economically rational and detrimental to the future of the project.

Background

  • Background summary: the original AKRO<>ADEL swap proposal made as a voluntary treasury contribution by the team and was a function of how much the team can allocate from the Foundation net of existing commitments.
    • The original proposal was to allocate ca.$2.5M equivalent in AKRO 5.4% TTS (~215M AKRO) to swap for ~14M ADEL, resulting in a swap ratio of 1:15. At the time ADEL price was [~0.15] with a MCap of [~$1.4M] and AKRO price was [0.012] with MCap of [~$30M].
    • The guiding principle of the token contribution from the initial proposal were:
      • Allocate resources efficiently without compromising the future of the project & its long-term sustainability;
      • Treat our community members in a fair and equitable manner. Do not rely on inflation until absolutely necessary.

Motivation

The initially proposed swap rate is not relevant anymore due to the significantly changed market situation. Whilst this was a great show of trust and confidence by the team, it no longer makes economic sense due to current AKRO price appreciation and just the overall trend in DeFi - it is a inefficient use of capital that could otherwise be used to help the long-term success of the project. While we know that the final decision in regards to the rate should be made solely by the Akropolis team as AKRO goes from Akropolis treasury, we believe that this proposal serves as an indication for a better token usage & distribution & should be considered and thought about by the community and AKRO token holders.

  • Inefficient Use of Capital: The current price of AKRO has stabilised in $0.06 -$0.08 range, which is - more than 5x higher than when the swap details were announced. At the same time, ADEL price stayed around $0.2 since January. If the swap ratio remains 1:15 ADEL:AKRO, that would mean giving away around ~$15M in AKRO for only ~$2M in ADEL. This is an incredibly inefficient use of capital that can be usefully deployed elsewhere, and all of this with > 50%TTS in circulation and no inflation. Instead, these funds could be used to incentivize long term growth of the network, by rewarding developers and community builders.
  • Structural Disadvantage: Most newly launched projects allocate from 20% to 70% (and even more) of TTS to LM incentives & community development initiatives to acquire more users and engage the community. This gives new projects a competitive edge against those who launched much earlier. Liquidity mining (LM) is an important contributor to TVL viability and viable product development, helping compete with other DeFi projects & making product more attractive to the end users.

Now, only 50% of TTS remain for LM rewards and other expenses connected to running up the company such as marketing, partnerships, etc (with no current stabilised revenue source). Of course, this leaves Akropolis LM incentives at a disadvantage compared to other projects. Besides liquidity mining rewards, these funds can be used for further project development, Dev.Fund, audits, and other necessary expenses.

Potential issues

  • ADEL holders who already swapped & do not like new rate would need an ability to get their ADEL back;

  • The trader/speculator community will likely be upset with the new structure because it reduces their rewards.

Conclusion

  • Instead of following the current swap rate & giving away ~$15M out of treasury for $2M in ADEL, we should reserve AKRO for future Community & DevFund initiatives to give Akropolis competitive edge & attract more users and TVL alike.
  • ADEL>AKRO swap ratio should be changed to 1:3.1 instead of 1:15. New rate will be more economically feasible since it corresponds to the initial dollar equivalent of AKRO proposed for the swap and decreases the amount of AKRO given away 6 times to 1.12% TTS.
  • To decrease potential downside to ADEL holders willing to swap, vesting terms should be changed from 2 years to 1 year.

This proposal has been created to evaluate community opinion on this matter for signalling purposes. Voluntary grants of AKRO from the team’s treasury remain down to the team’s discretion.

1 Like

Strongly against this proposal. ADEL had a 80:1 AKRO ratio when it was first discussed to merge the tokens. Many invested into ADEL because it was promised future revenue from the Delphi vaults. 15:1 is already a major hit in the face of many people and most importantly, statements made should be kept.

There has also been no information regarding the hack compensation procedure for more than 4 months now. This should have the priority in any case.

You could also argue that the available project funds have grown substantially over the last months, which makes it a lot easier to cover for the swap in USD terms.

18 Likes

In favor of course - better to allocate money to development, attract more independent developers and improve LM for bringing more liquidity than giving it away to ADEL holders that didn’t even appreciate the rate at first

Strongly against this. It will only drag up old drama and FUD, this topic was already discussed at length and decided on?! Don’t drag this all up again now it will only hurt the project.

12 Likes

I fully agree and I believe not much has to be added. The proposal is based on a lot of assumptions regarding a snapshot and current market value ‘stability’. Everyone involved within crypto based projects knows that such snapshots don’t hold for a long period of time. This works two ways ofcourse, but the team at the time made the decision based on all the information that was available at the time, such as the moving direction of the whole cryptocurrency market.

Reducing the swap rate even further (ADEL at one point was worth itself 8 dollars per token) would be a huge blow to the community and early adopters that decided to support the project through its low and highs, such as the hack, would be punished even further.

Who is responsible for the current transactions costs on the ETH network that were already made for swapping ADEL? Would ADEL swappers even make the same decision with harshly reduced rates? I don’t think so, and organizing such a spectacle while losing a large part of the project’s long term supporters is a risk that shouldn’t be taken or even considered.

5 Likes

The proposal is using as an argument the current value of Adel compared to current value of akro. It doesn’t really make sense since Adel has not developed its economical value due to becoming mostly useless and abandoned.

8 Likes

It’s stupid to refer to ATH of ADEL during DeFi summer and noone made people “invest” to the token that made several X in one day.

I am strongly against this proposal and the logic being used in determining the swap rate could not be more flawed. Evaluating the swap rate at present time by looking at market cap ratio makes no sense. Of course the market cap for ADEL has not grown since it was announced that it was no longer the governance token for Akropolis Delphi vault products. The ratio calculated at the time was decided upon as a fair swap rate so that from that point forward ADEL holders would be able to appreciate along with AKRO as the tokens were being merged.

This proposal will not only unfairly compensate early users who believed in the future of the Akropolis products but also hurt the community as it will show that once again Akropolis is not following through with what was originally proposed to the community.

11 Likes

Strongly against this proposal. You can’t use the current market price of Akro as rationale for changing the swap rate. The market is highly volatile and Akro could easily be half its marketcap in a few months time and then someone could create a new proposal to alter the swap rate yet again.

You could also argue it is much easier for the team to honour the original proposal due to the appreciation of Akro.

The biggest problem this project has had since the hack is trust. Changing the terms of the Adel swap would again completely destroy trust with the community.

The decision and plan was made by the team after a long period of deliberation and input from the community. Everyone wants to move on from Adel. The plan was made and it should be followed through.

12 Likes

Agree. This will cause a shit storm that this project really doesn’t need. Everyone had moved on and had accepted the swap and compensation plan. There is absolutely no need to revisit this.

8 Likes

I am sorry but the negative push back this would create costs the project much more then sticking to the previous agreement. Also refering to dollar value does not really make sense. Plus how would that even be possible to execute? Have different swap rates for people that swaped already vs. people that swap later?
The only thing that makes sense in this proposal is to reduce the vesting period from 12 to 24 month.

11 Likes

I am short of words on this proposal. This is brought up almost at the close of the swap - when some people have already swapped agreeing to the set terms!

The team should focus on building things that unite the community not causing division, this shockingly sounds as if some one assumed AKRO price would remain stagnant.

ADEL swap issues should be burried - and since the team made a conscious decision to determine the swap rates, please for once honor your commitment. This is one of those things that are likely to ruin the teams reputation of not keeping their word and giving the project a bad name compared to the past fiascos.

After all holders of ADEL have been already shortchanged…

12 Likes

The swap process has been going on for over a month. There is nothing to discuss here.

11 Likes

I consider myself a long term investor of Akropolis.

I have already made the decision to swap the eligible ADEL that was staked to be converted to vAKRO.

I am also considering swapping the eligible ADEL that was vested to be swap to vAKRO as well.

I was planning on claiming the AKRO from my vAKRO to be staked to Akropolis.

What would incentivize me to go to this new proposal when I have already planned to stake my AKRO?

I have already incurred high fees with the initial swap and I don’t want to experience more just because new proposal has been made.

A lot of people didn’t agreed with the initial proposal but a decision was made and the community moved on. The team even said the swap rate had nothing to do with the price of the tokens but on how much they was willing to carve out of their treasury.

When you build a great project, people will invest in you and stay. I believe you built something great. Continue building and not uncover something that was put in the grave.

11 Likes

Strongly against this proposal. There are principles at stake. I want to preface this by saying I haven’t done the swap. I propose that someone make a counter proposal that makes the person who proposed the swap ratio change, have to pay for all the gas fees of those who already swapped. It would come out of their currently staked AKRO holdings. Probably around $100 to $200 in gas fees per that would need to be reimbursed. Now I am not being serious about the counter proposal part. Just trying to present a picture of some of the things this proposal doesn’t address. We should always be ready to pivot in life but when it comes to messing with people’s money, one should tread very carefully in the direction that their thoughts take. 1) parameters were already set with the understanding that market conditions are always changing. So using “changing market conditions” as a way to make important changes seems to open up a rabbit hole that has no end to its variables. 2) some of the thought behind the initial swap ratio was to alleviate some of the monetary pain to those who actually purchased ADEL. 3) Sometimes as a person or a company, you have to live with the decision you made because if you try to change it midway, you would be making a morally corrupt decision. The question is, what kind of person or company do you want to be?

11 Likes

Fully against this proposal. All has already been stated above. Team should stick to their - without governance - made decisions and communicate this. Don’t break up old wounds…

11 Likes

Totally against.

This is outrageous! Not only people lost their funds during the hack and the price of ADEL collapsed after team decided to abandon the token, investors also agreed to long-term compensation plan and swap terms. And now you’re trying to push proposal which will cause more pain to people who supported you.

Even we imagine this never happened I have a question regarding swap rate. Do you understand that AKRO price won’t be even close to the current level in a year? Or you somehow believed it is going to quadruple from here for no reason? Would be a surprise if it falls less than 90%. It will happen all over the place once people realize there is 50 users in 99.9% of the dapps.

Do not confuse the bull market with the success of your project.

10 Likes

At first reading I did not like the proposal very much, but after careful reading and reflection I came to the conclusion that the proposal is more than good. We all want Akropolis to develop and be one of the best DeFi projects.

The proposal is smart and I will explain why:

  • Тo make a project successful you need liquidity, without liquidity it’s extremely hard. To have good liquidity you need LM, the allocated tokens will be used for LM and for a Dev fund. Tokens will not go back to the team treasury, they will be spent publicly.

  • Decreased vesting, from 24M to 12M.

  • The difference in tokens will not go to the team treasury: it will go to the public address which will be managed by community though governance. This is big.

1 Like

taking users earned rewards from staking away from them to use for tvl at the last minute after a ratio was already discussed and agreed is a good idea to you? This is awful for the project and needs to be rejected.

6 Likes

Totally against.

Stop changing terms at the last moment, as you already did with the ADEL token.
It’s impossible to be long term holder if project reconsider tokenomics every 3 months and even after part of community already swapped or sold ADEL.

13 Likes