Title Of Proposal: Re-define ADEL>AKRO swap ratio
Author(s) Names: Vasily Sumanov
- 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
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 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.
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.
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.
- 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.