Proposal: Market Making Proposal from Wintermute Trading

General Chat CVP Tokenomics & Treasury
1

Summary/Abstract:

This proposal is published for presenting the terms of $CVP market-making services to the PowerPool community and approving it:

  • Authorize Wintermute Trading as official $CVP market-maker
  • Transfer 1.5% of CVP supply (1.5 million $CVP) to the Community treasury for market-making purposes as a loan to the Wintermute Trading. Wintermute Trading will have to return either the full loan amount in $CVP or 6 million USDC (~50% premium to current price) in 1 year

Wintermute basic background

Wintermute was founded in July 2017 by three Optiver veterans. Evgeny Gaevoy, founder and CEO, was previously head of ETFs (screen and OTC) at Optiver Europe, one of the largest ETF market making desks.

Wintermute’s trading volume in 2H 2020 surpassed $70B and their average daily trading volumes in 2021 are over $2B

Wintermute is backed by Lightspeed Venture Partners, Pantera, Blockchain.com Ventures and others

Wintermute Trading is registered with FCA for our OTC business

Wintermute CVP specific background

Wintermute believes index products will be one of the key themes in 2021 and as a result is looking to back several teams in the space with an ultimate goal of:

  • Listing the index products on key cefi exchanges and facilitating liquid markets on these products and their derivatives (starting with perpetuals, following with options)
  • Combined total AuM of index products exceeding 25B by end of 2021

Wintermute believes the key issue with these products not being adopted outside of defi is lack of market making support as market makers and exchanges are not looking to support/list them because of low AuM, while the AuM stays low because there is not enough adoption/interest outside of defi. Wintermute wants to lead that adoption by committing a significant part of it’s resources and at the same time getting exposure to leading teams by becoming the official MM in protocol tokens and direct investment. Wintermute expects to be active in governance matters.

Specifically for CVP community Wintermute commits to:

  • Provide liquid markets across all tier 1 cefi exchanges (and a handful of 2nd tier as well)
  • Proactively support listing of $CVP on key western exchanges
  • Support a number of flagship pool tokens towards cefi and defi listings

Ask :

We would like to request the PowerPool community to pass a proposal to approve the transfer of up to 1.5% of the total token supply of $CVP for Market Making services of $CVP on key centralized exchanges.

We propose to PowerPool Community appointing a third party agent (Wintermute Trading) to act as the PowerPool Community Agent to market-make $CVP across cefi, defi and OTC

To facilitate the work of the Community Agent on the community’s behalf, we propose to authorize operational actions required to effectuate the market making, including release of up to 1.5M $CVP to the Community Agent from the PowerPool Token Supply for liquidity provisioning.

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 1.5% 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 at a price of $4 per token

A No vote would result in rejection of these terms

5 Likes
2

wow! Great to see Wintermute here! Terms are attractive

1 Like
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Great proposal, looking forward to working with you!

4

Support wholeheartedly

5

Thanks for putting this together.

Is the form of the loan repayment decided by us as the community or by the MM? The reason I say this is because as long as the price in USD appreciates by 50% (which is obviously expected) then this could become an extremely lucrative deal for the MM. They can elect to repay the $6m in USD in a year where the price could be $10-20 USD and could then dump these tokens on the market after the contract ends ($15m-30m worth of tokens). Why can this not be a loan of 1.5m CVP repaid in CVP? The MM is supposed to earn their income from the spread through buying and selling…i.e., market making…? This feels like they can earn on the spread and also the price appreciation of the token itself…

1 Like
6

Can the contract be uploaded here so we can take a read through??

7

Thanks for the question! We usually ask for smaller percentage of the total tokens and the basic engagement is typically limited to providing liquidity on centralized exchanges for the token.

In this case however, we are looking for a significantly expanded setup, not only covering the token (that doesn’t trade much at the moment, even on binance), but also helping with liquidity for the pool tokens as well, pushing for them to get listed on cefi and defi platforms, improving liquidity on rfq platforms like 1inch, matcha and paraswap and putting our own capital on these products. From that perspective, it does seem fair that we should share in the upside.

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You can find our default contract here

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I believe it’s a good idea to add a paragraph to this proposal, that if passed, FalconX MM proposal is deemed invalid, by doing this we don’t to run an additional proposal.

1 Like
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See here: Proposal 26: Invalidate outcome of "FALCONX MARKET-MAKING PROPOSAL v2" proposal

12

I think that dedicating a separate proposal to canceling FalconX proposal is redundant, since if we accept Wintermute, then it’s like “Daaaaa… We need to cancel FalconX now”…

BUT, that’s said, if no quick action is taken and Wintermute proposal didn’t go live on snapshot in the nearest future, like 1-3 days, than we need to issue FalconX canceling proposal

13

Thank you for prop.
It will be interesting to work with Wintermute.

I’d suggest adding necessary info to your proposal: to optimize the workflow and reduce number of unnecessary actions, lets cancel the FalconX proposal if Wintermute proposal pases.

14

As a CVP Gamma Participant and having previously worked at Wintermute Trading I think I can provide some useful colour on the team and the proposal above.

  • Index products are Evgeny’s and the teams’ bread and butter, CVP index products could trade notably tighter and more liquid if Wintermute are to expand into this.
  • Optionality baked into the loan agreement aligns the two teams nicely upon successful growth of the CVP index products and CVP on exchange liquidity -> with Wintermute providing top tier liquidity on all major venues.
  • The CVP community can use the agreement shared alongside the proposed terms (spreads and volumes on products) to estimate the value brought to it and the value the community can bring to Wintermute here and decide accordingly.

I will be voting yes.

3 Likes
15

Thanks, this is some valuable input!

1 Like
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1.5m CVP is a lot of tokens, and would have been able to sway most recent votes. For instance, the most hotly contested proposal so far (the MB one) received 3.37m votes (1.69m for). If wintermute decided to throw the weight of 1.5m CVP behind any proposal, they could determine the outcome.

Will the lent CVP be eligible to vote on proposals?

17

As discussed on discord - we are open to lock some of the voting rights as part of the agreement for the duration of the contract

18

Very good question!

@powerpoolAdmin please clarify

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which ones? can we get a list?

I proactively support that too…also i sometimes dream about it…I wonder what ‘proactively support’ means for Wintermute Trading?

What will this entail?

There seem to be no terms about the spread that Wintermute will have to maintain or the depth they will need to provide on each side? WHy?

20

WRT exchanges - this is something we would share with the management team, but not really to the whole world as there is a degree secrecy between MMs where everyone trades etc

WRT proactive support - we talk to key people responsible for listings at these exchanges on weekly basis and we frequently bring up the tokens we can support liquidity on day one, which makes listing decision easier for these exchanges

Contract menttions 0.75% spread. Depth is variable upon market conditions (and number of exchanges), but it is at least 10K USD