A couple of weeks back we’ve been introduced to the institutional-grade market maker. After several rounds of negotiation we present this proposal for further discussion. Now you can ask all the questions you have here, we will launch an official proposal in ~48 hours.
Summary/Abstract:
This proposal is published for presenting the terms of $CVP market-making services to the PowerPool community and approving it:
Authorize FalconX as official $CVP market-maker.
Transfer 2% of CVP supply (2 millions CVP) to the Community treasury for market-making purposes as a loan to the FalconX. FalconX will have to get it back in 1 year (Feb 26 2022).
We would like to request the PowerPool community to pass a proposal to approve the transfer of up to 2% of the total token supply of $CVP by the PowerPool community to for Market Making services of $CVP on reputed centralized exchanges. To enable this, we would like to authorize and engage a third party agent to effectuate the market making.
We propose to PowerPool Community appointing a third party agent (FalconX) to act as the PowerPool Community Agent to market-make $CVP through its trading counterparties.
To facilitate the work of the Community Agent on the community’s behalf, we propose to authorize following actions to take operational actions required to effectuate the market making, including release of up to 2M $CVP to the Community Agent from the PowerPool Token Supply for liquidity provisioning.
The initial proposal specified that no tokens will be released until final terms are approved by the community. The Community Agent agrees to satisfy all the KPIs required by the tier-1 exchanges we list on.
A Yes vote for this proposal would accomplish the following:
Approval of the above terms to enable the Community Agent to proceed with creating and transferring 2% of the total $CVP token supply from the community token allocation, where the proceeds will be directed towards market making.
The loan will be returned in 1 year, in Feb 2022 in tokens or in DAI/USDT/USDC equivalent.
A No vote would result in rejection of these terms.
I think adding such guys as FalconX as a partner will open lots of doors for PowerPool. On top of that, CVP performance on CEXs will be drastically improved. Definitely a good idea.
Out of curiousity, what does FalconX get out of this work? I don’t see anything about setting aside a fee for them, so how do they make money off the market making process?
In my view hiring a MM makes no sense
Why hire a MM in the first place? Liquidity is the last of CVP’s problems…on uniswap, it has sub 500k volume and liqudiity north of 7m… doesn’t strike me as bad…it’s already listed on Binance where it has round 1.5m volume across the two pairs it is listed against…
Why FalconX? That also doesn’t make sense…why not someone else…why not have a competition process to choose the mm?
All in all, firmly against
Yes, CVP liquidity on Uniswap is great, but CEXes need more juice, it will make CVP to perform better during different market conditions. The vast majority of legit crypto projects uses third party market makers.
FalconX is one of the MM industry leaders with outstanding set of partners and investors such as 3 arrows capital and Coinbase ventures. Moreover, terms are super sweet. If you have other suggesting - feel free to share them here.
I know Falcon as rather an OTC broker and liquidity manager (but not with MM focus)
The brand is pretty strong, tier-2, but very solid US firm with high standards of work. I am pretty sure they are capable to MM CVP
Still there are some questions:
How 2 mn CVP were justified? this is 30% of circ supply - as per my knowledge this is pretty significant amount for MM to use
Any KPI they promised you can share? (likely not)
What is the compensation scheme for them? (i.e. how we are defended from the MM to making profit on us, holders and LPs) - this is something that I am personally convinced Falcon wont do, but would be very useful to check out the formal approach they offered
Still I am pretty sure the 1-2-3 questions above are not disclosable by Falcon
@powerpoolAdmin hope you guys discussed with Falcon whether they can help with bringing institutions to invest in CVP’s products.
Falcon has a great network among tier-1-2-3 US (and not only US) investors
IMO, MM is what every project needs and I am glad that PP team decided to ask our opinion about that.
I am just surprised that there are not so many posts here)
Questions:
What competitors had Falcon-x to become a MM for PowerPool?
Do they work already with any other crypto-projects? Found no info about their market-making for other projects (not sure if this info is public tbh but anyway)
Very good questions Sergey. These have to be answered before the vote can go through in my opinion. The devs possibly have this additional information, it just was not shared with the community. It should be shared ASAP. Thank you.
I don’t believe this is necessary at all for powerpool - why do you need to be noticed on a CEX? Who gives a F about that. Spending time on this means you are spending time on trying to pump the token. Stop worrying about this
But It looks like it’ll go through based on the vote right now - so if that happens there needs to be clearer details on:
Are there any additional costs associated with this? Eg monthly stipend to the market maker?
Should charge a loan on it
What are the KPIs that FalconX has to hit
Are there gates across the time period whereby if milestones are not hit, either party can walk away
They said it is necessary amount for sufficient liquidity. Based on current price of CVP it is something like $4.2m in CVP, looks like reasonable amount for MM ?
You are right, we cannot share KPIs
They have solid reputation and were recommend by several solid persons (Beta/gamma testers)
And you are right - they can do a lot more for the project than just MM on CEXes, including attraction of institutional investors, door opening, etc.
We doubt that such firm as FalconX will steal money from PowerPool. It is a company with solid reputation backed by Coinbase, American Express, and others.
It is not so easy as it looks like. Institutional-grade MM can add a lot of value - attract institutional investors to PowerPool indices, request custody options for CVP from huge custodians, and basically open a lot of doors for the project
I think people undervalue the importance of market makers. Even though AMM provides liquidity, not many people will accumulate via DEX as higher gas cost makes single transaction more preferable. Having more volume on CEX will allow bigger players to buy slowly through time (for example, Microstrategy and Tesla won’t just buy BTC/wBTC via Uniswap but through CEX and OTC desks that will also help with the fiat on-ramp portion).