Hey there Empty Set Dollar Community! If this is the first you’re hearing about Empty Set Dollar, I’d recommend going back to read our first issue. In it we cover the history of ESD. On to the review of this week: Community Call 3, Under Peg Selling Tax, V1.5.
Week in Review
Community Call 3
If you weren’t able to attend the third community call it is here for your viewing pleasure. In it, community members cover really important advancements in ESD.
Links to specific minutes: Status of the Peg (1:30), Under Peg Sales Tax (5:15), Treasury Update (29:15), V1.5 (31:20), Community Comment (37:30).
The entire community call here:
Under Peg Selling Tax
Under the status quo, the incentives are slightly misaligned which has lead to ESD’s price hovering between .2 and .3. This allows for a 3x investment when people purchase at .2 and sell at .6, which prevents reestablishing to the peg of 1$. This behavior isn’t an intended function of ESD when it’s under peg as the goal should be aligned with getting ESD back to the peg of 1$. This sales pressure creates a difficulty in getting back to peg. Additionally, there is the issue with “sandwich attacks,” where a buyer pushes the price up, waits for another buyer to execute, and then sells, sending the price back down. This is a manipulation of the system for quick profit, and would be significantly hampered by this new idea.
The new proposal would institute a tax when people sell ESD under peg, and the tax would grow in amount as ESD was further from peg. The tax would be sent to an external wallet; 50% of that wallet would be burned, 20% would be distributed to LP’s and 30% would be rewarded to users for purchasing below peg. This properly aligns incentives with getting ESD back to peg when it is far off of peg. These are preliminary numbers and can be adjusted during the community discussion.
For an in depth discussion, watch the video above.
V1.5
During the Community Call we got a peek at V1.5 which is a two token model of ESD. ESD would be the stable instrument, and then ESDS as the governance share token. The system would then maintain a partial reserve of DAO assets that would be used in stabilization efforts. This shifts from a supply based mechanism to a yield based mechanism. This would simplify the system and smooth out reflexivity of the token.
The ESS initiated this with the advice of multiple players in the ESD ecosystem including the V2 team as well as Mechanism Capital, along with Yan and Delphi. SN2 is already developing the interface for the DAO. The ESS has already developed some of V1.5 and that will be shared with the EIP when it’s ready.
The main reason for the change is that it stops the incentive to lock up circulating supply during growth, and thereby also prevents speculative elements from interfering with what is supposed to be a stable instrument. We want to stop the wild swings and this would be an intermediate solution that would integrate with V2. The timeline for the EIP is within the month. (Potentially as soon as this week.)
Again, for an in depth discussion, watch the video above. As always, please join the conversation on the discord or telegram. Our community is our strength.