This proposals seeks to:
Allocate $100,000 USDC to the AVAX-PERP vAMM.
Allocate $100,000 USDC to the Insurance Fund.
Allocate $125,000 USDC to the Ops Multisig.
Allocate $100,000 USDC for Treasury Diversification in $AVAX.
Hubble Exchange is launching on mainnet shortly, but for trading to begin, $5,000,000 in liquidity is required. Until this liquidity threshold is achieved, Hubble Exchange will be in the Ignition Period during which the protocol can only gather liquidity.
Making (Providing Liquidity to AVAX-PERP)
Our objective is simple: end the Ignition Period and end it as soon as possible. Every contribution pushes the needle towards the initiation of trading and a successful launch.
If this proposal passes, $100,000 USDC will be transferred from the DAO’s treasury and deposited into the AVAX-PERP vAMM at 1x leverage.
The funds will earn a 0.05% fee and are likely to receive the funding fee for taking the unpopular position, while bearing impermanent loss. Since these funds belong to the DAO, they will not be eligible for liquidity mining rewards.
Providing Liquidity to the Insurance Fund
Protocol safety is always at the forefront for Hubblenauts and it is truly imperative to ensure a safe trading environment for all. Therefore, it would be imperative to bootstrap the Insurance Fund before trading can begin. The primary goal for the fund is to act as a backstop for bad system debt. This arises from failing to liquidate an account at the opportune moment when it has fallen below the Maintenance Margin Fraction.
Before trading begins, the insurance fund must be sufficiently funded to protect participants from bad system debt. The passing of this proposal will contribute towards sufficiently funding the insurance fund in the best interest of the protocol and its early participants.
This proposal seeks to allocate $100,000 USDC into the Insurance Fund which will be transferred from the DAO’s treasury.
This capital provided to the Insurance Fund will earn 33% of the trading fee and 50% of the liquidation fee, along with other deposits. The risk involves covering bad system debt - in case any arises.
Provide Liquidity / Working Capital to the Ops Multisig
As Hubble Exchange launches on mainnet and scales, the need for more working capital for operational expenses increases as we enter a new expansionary phase of the protocol. The herein proposal for capital injection owes primarily to the need to maintain competitive efficiency and in ensuring all significant overhead in the short to medium term is covered in a timely manner.
This is a proactive measure to fund the operations multisig with a cash infusion of $125,000, ensuring there is sufficient liquidity for operational expenses on an ongoing basis and with a view to ensuring operational liquidity for protocol development and maintenance.
Monthly compensation amounts outlined for Protocol Development, delineated under HP001 respectively, shall remain the same and liquidity provided pursuant to the aforementioned shall not increase monthly amounts received.
Allocation of USDC for Treasury Diversification in $AVAX
In consideration of the current downturn in the market and the rapid change in market sentiment across the board, a significant opportunity has opened up for an additional diversification of the treasury through purchase of $AVAX at currently relatively low price levels. At time of publication on 05/11/22, $AVAX trades at $29.51 and has experienced an intraday dip of -33.20%.
Present conditions afford a cost-effective solution for further diversification of the treasury and will serve as an additional alignment of incentive between the native blockchain of the protocol and the Hubble protocol itself.
In summary and with respect to the aforementioned, an investment of $100,000 USDC in $AVAX is prudent. As such, this proposal seeks to allocate the aforementioned amount to these ends.