Proposal 20: Raise $7M fund for MCDEX DAO

1. Motivation

As the MCDEX V3 launch approaches, we propose to raise $6 million from institutional investors and $1 million from current MCB holders to collect bootstrap liquidity as well as to become well-rounded with reputable resources. Upon our profound communications with potential investors, they fully recognize the mission and vision of MCDEX, thoroughly understand the design logic, and are willing to provide support throughout the growth of the ecosystem as they firmly believe in the upcoming success. We would like to propose this fundraising plan for community discussion and vote later.

2. Fund Usage

All raised funds will be transferred to the MCDEX DAO vault and be managed by all MCB holders. Here we propose that funds raised from this round mainly become the V3 bootstrap liquidity. After the V3 launch, it will be added to the V3 AMM. As we are forming collaborations with trenching projects like BarnBridge and Saffron, these funds will enter the junior tranche to maximize capital efficiency.

3. Fund Size $7M

$7M in total, among which $6M will be allocated to institutional investors and $1M to current MCB holders.

4. Price: $10/MCB

This price is equivalent to the 30-day TWAP price with a 50% discount. The fully diluted valuation is $100M. We have set a strict vesting rule for investors. Meanwhile, there is a $1M allocation for current holders to protect their benefits.

5. MCB Source

The MCB of this round is from the community incentive issued in the future.

6. Vesting Schedule

Since the MCB’s new tokenomics is performance-based, tokens for this round are restricted by this model. Details are :

R = MIN(MAX((V - 0.2) * 0.75, 0),  0.64614))
R: MCB Vested to investors per Ethereum Block
V: Value Captured in the block

Since the major source of the DAO value capture is the 0.015% vault fee, the formula can be written as:

Daily Vested MCB  = MIN(MAX((Daily Volume * 0.015% - 1300) * 0.75, 0), 4200)

Daily Vesting Examples:

Daily Trading Volume Daily MCB may be issued MCB for investors
<= $8.7M 1300 0
$10M 1500 150
$40M 6000 3525
>= $46M 6900 4200

When the trading volume is lower than $8.7M/day, investors cannot get any MCB. When the trading volume grows more than $8.7M, investors will start to collect according to the above rule. When the trading volume is above $46M/day, the investors will enjoy the maximum speed of vesting. The shortest time for investors to collect all tokens is 6 months.

This model closely binds investors’ benefits to MCDEX performance hence encouraging all investors to make continuous efforts to help MCDEX to achieve its long-term value.

7. Investors

We have reached a preliminary intention with the following investors:

Lead investors: Delphi Ventures, Alameda Research
Other investors: Multicoin, Fenbushi Capital, Defiance, Incuba Alpha, D1 Ventures, Defi Alliance, NGC, IOSG, Zeuth, OKEx Blockdream Ventures, Horizon Capital, Bixin Ventures, Digital Renaissance Foundation, Mask Network, Shata Capital, Finlink, Plutus.vc, Magic Ventures, ZBS Capital, Meltem Demirors

8. Community Sale

To maximize the benefits of current MCB holders, we propose to give current MCB holders the right to follow up on the investment. Both the price and vesting schedule are the same with the institutional investors.

a) MCB holders can participate by staking MCB and USDC. For each 1MCB and 2.5USDC staked, they can subscribe for 0.25MCB.

b) If the subscription amount exceeds 100,000 MCB, the allocation of the investors will be proportionally decreased. For example, assuming that the total amount of subscription is 200,000 MCB, each investor’s allocation is 50% of the subscription amount;

c) After the subscription is finished, the staked MCB and excess USDC will be returned to community investors in 7 days;

d) Dev team shall deploy audited smart contracts for on-chain subscription;

Edit:

3 Likes

Hi Team,

Thoughtful proposal especially with the performance-based vesting terms. Two questions:
(A) is the team allowed to participate in the community round?
(B) $10 is still a substantial discount to the current price, many of us have been long term token holders and supporters and users of the protocol. We believe that the token should be worth more than $10. Is the team open to expanding the community round up to $2M so that the imbalance with VC investors could be smaller? Currently VCs are taking up most of the round. While they bring high signature marketing etc., it can be argued that many of us users will contribute to the trading volume and success of the protocol. Think the community round is relatively small in respect to the value we will bring to MCDEX.

Suggest to increase community round to $2M. Still small compared to $6M raised from VCs. Thanks for consulting the community as always.

1 Like

Thanks sounds great. If i am getting this right if i stake 1000mcb and 2500 USDC then i am able to get 250 mcb at $10? Is this what the institutions are doing as well?

Everything looks good but to minimize the imbalance with vc investors 1) i’d suggest increasing community round to $2M as the poster above suggested 2) increase the subscription amount from current to 0.5MCB for each 1MCB and 5USDC staked

1 Like

Thanks for your reply!

  1. Every MCB Holder, including the team member, can participate in the community sale.

  2. Increasing the size of the community sale is worth exploring. I shall create a pool here and maybe we could split the proposal into two proposals: a) for the $6m institutional investor. b) for the community sale.

What is the fund size of the community sale should be?
  • $1M
  • $1.5M
  • $2M

0 voters

Edit: Although I create this pool, it is very difficult to increase the size. Because when we disccussed with the investors, we said “the fund size if $7m” and the size affecst the final daily release cap and release speed. If we change this size, we have to re-negotiate with all the potential investors, which may cost weeks. Furthermore, maybe some investors may give up due to such change. I strongly suggest that the community to support the orginal $1m size. And we may have MCB staking when v3 launch, in which the MCB holders can stake MCB to eran new issued MCB. The MCB staking is live on testnet already.

Hi sir, you can “commit” 250 MCB if you stake 1000MCB and 2500 USDC. But the allocation of you depends on the amount of total commitment. If the total commitment is no more than 10,000 MCB, you can get 250MCB at $10. But if the total commitment is larger than 10,000 MCB, you will get less MCB. For example, if the total commitment is 20,000MCB, you can get 125MCB at $10, and the remaining 1250USDC will be returned to you.

Besides, please note the MCB sold at this round has a vesting schedule, which means if some condition do not occur, you may not get the MCB at all. Please read the “Vesting Schedule” carefully before participating in the community sale.

1 Like

There is about 2,100,000 MCB in circulation. Even we increase the size of community sale to $2m(200,000MCB), the rate is 200,000 / 2,100,000 < 10%. So, the 25% staking rate is proper enough. I suggest to keep the staking rate unchange even if we increase the size of community sale.

Hi Jie,

What about the price. Can we put that to a vote as well? It is currently @ USD 40 / token and the VCs get to enter at USD 10 / token? That seems like an awfully steep discount (75%) for them.

Thank you.

2 Likes

Yes, the discount is increasing and looks very high. We started to seek for investors in the beginning of March and the MCB’s price was about $12. It costs weeks for us to get the investors on board. Our community can deny this fundraising by voting. But it is impossible to change the price for investors.

1 Like

And if this funding is rejected, then how is v3 liquidity going to be provided?

The VCs you got on board are generally more community friendly. In the current market, I believe most of them would still be ok with the change (frankly it is a relatively small change to increase community allocation by 1M - we are not asking them to buy MCB at $20 or something). If a few pull out and v3 liquidity is an issue, I’m sure your community would be more than willing to step up and fill in the gaps. I myself am willing to commit $1M to buy MCB at any price between up to $15 if you so require the liquidity, under the same vesting terms. That is my confidence in the team.

The only issue is, the team tokens can easily outvote the community if this really comes down to a vote - though i must say MCDEX team have been community focused. You may rally the community to vote and see what the community thinks before the team votes either direction. Cheers.

1 Like

I must add - the community sale is also diluted by the team members participating in it. End of the day, the math is that the community holders get diluted by VCs who get to buy majority of the offering at $10 (they might add value but i’d argue this to be on par with the value a strong community/userbase brings). Furthermore, there are so many private investors that there will be a few that get to take a backseat in contributing to the MCDEX ecosystem i.e. do we need 4 serious, hardworking VCs or do we need 20 investors. MCDEX team have a excellent community focused record so far and we should preserve the spirit.

1 Like

Sir, I think the increasement of size is not big problem.
The problem is that we cannot increase the fund size without changing the vesting schedule. Recall the vesting formula:

R = MIN(MAX((V - 0.2) * 0.75, 0), 0.64614))

Also considering the total allocation is 700,000 MCB and for a specific investor with K MCB allocation, what he get is:

Vested for this investor = R / 700,000 * K

If we increase the 700,000 only, every investors’ vesting time has to been increased. To keep the same shortest vesting time, we have to increase 0.64614 to 0.73844. Either of the them will actually change the vesting schedule.

If there is an alternative way that we don’t change the vesting schedule for the investors, I will support.

To make more room for the community holders, I shall promise that I will give up the community sale personally, and maybe I can persuade some dev team members and early equity investors not to participate in the community sale neither. Please give me some time to communicate with them.

The core dev team and the angel investors, who totally hold about 500k MCB currently, promise that they will not participate in the community sale. Hoping to give more benefit to the other community members.

man you have excuse for everything. You don’t want to change change allocation size, vesting period nor that staking rate from 25% to 50%. I’ve not seen a single soul in community who has completely agreed with your proposal yet you have 57% vote on $1M( bot?). $1M allocation for community of 2000 holders vs $6M for some 20 investors doesn’t look fair to me. What’s the point of discussing this proposal lol if you can’t modify it nor reject it since you and team have majority voting power

Please check the token economics at https://v3.mcdex.io/references#/en-US/mcb-tokenomics I do not have majority of MCB.

just saw aimbot69’s post, don’t know if they are in the chat groups? I think it’s a legit comment if and only if they haven’t seen the discussions there. Quite a lot supporting voice. It is honestly a bit harsh to say “not a single soul”. I do agree with their point about the allocation for community should be bigger because that would of course be more beneficial for the community. Something I am absolutely happy to see. However, I personally think it is a well-thought proposal, will stake when it’s live

Interesting…quite a diverse voice here. Everyone has a reasonable logic there. But I gotta say that the team can’t satisfy everyone. As a community, we should move toward an ultimate goal – to realize this fundraise. If we insist this hard on pushing the community allocation to 2M, what would be the potential outcomes? I am a fan of Delphi digital, and I am personally quite happy to see them lead the inventment. I support this proposal because, by all means, I would like to see it happen. Don’t think taking the risk to push it to 2M is worth it.

Thanks MCDEX team for disclosing the terms of the deal to the community (might actually be a première in the space?).

Indexing the vesting period on the volume traded on the platform is great :heavy_check_mark:

Also, no doubts Delphi Digital and Alameda Research are recognized VCs.

Now if Delphi and Alameda were to be onboarded, did they share their thoughts regarding how they intend to help MCDEX grow its market share in the decentralized derivatives space?

Given their expertise (Delphi’s research desk & Alameda’s FTX derivatives exchange), we could expect Delphi to help with MCB Tokenomics, and Alameda to help with the product (MCDEX exchange)?

IMO the 50%~75% discount makes sense if we can expect these two great VCs to not just add MCDEX logo on their website and share a tweet, but allocate sufficient internal resources in order to be pro-active and work closely with the MCDEX team (ex: weekly or bi-weekly advisory calls). That would be a super positive signal.

2 Likes