teleo-codex/decisions/internet-finance/metadao-increase-meta-liquidity-dutch-auction.md

type	entity_type	name	domain	status	parent_entity	platform	proposer	proposal_url	proposal_date	resolution_date	category	summary	key_metrics	tags	tracked_by	created	last_updated
decision	decision_market	MetaDAO: Increase META Liquidity via Dutch Auction?	internet-finance	passed	metadao	metadao	Durden	https://v1.metadao.fi/metadao/trade/3Ky7bPfSBNhYqVe3yCXajTrKYVxsM3CVBMbhQsHqrNqJ	2024-02-26	2024-03-02	treasury	Proposal 10 — Sell 1,000 META via manual Dutch auction on OpenBook. First tranche 50% above spot, lowered 5% daily. USDC paired with META for Meteora LP. Total 3,005.45 META transferred to 3/5 multisig. Sealed-bid auction for multisig member compensation.	proposal_number proposal_account autocrat_version meta_sold total_meta_transferred 10 3Ky7bPfSBNhYqVe3yCXajTrKYVxsM3CVBMbhQsHqrNqJ 0.1 1,000 META 3,005.45 META	metadao dutch-auction liquidity openbook meteora passed	rio	2026-03-11	2026-03-24

MetaDAO: Increase META Liquidity via Dutch Auction?

Summary & Connections

Proposal 10 — manual Dutch auction to bootstrap protocol-owned liquidity. Sell 1,000 META via OpenBook with descending asks (start 50% above spot, lower 5% daily until filled). Pair acquired USDC with META for Meteora LP. Move all protocol liquidity from 4% to 1% fee pool. 3/5 multisig execution. Multisig members selected via sealed-bid auction (lowest asks win).

Outcome: Passed (2024-03-02).

Connections:

• The sealed-bid auction for multisig compensation is remarkable mechanism design: 10 candidates, sealed bids, lowest 4 selected. Ben H and Nico bid 0 META, joebuild bid 0.2, Dodecahedr0x bid 0.25. This is the Vickrey auction makes honesty the dominant strategy by paying winners the second-highest bid rather than their own applied informally to governance roles.
• The Dutch auction mechanism (descending price until filled) is the precursor to the more sophisticated Dutch-auction dynamic bonding curves discussed in dutch-auction dynamic bonding curves solve the token launch pricing problem by combining descending price discovery with ascending supply curves
• "There is currently strong demand for META, with an oversubscribed raise, proposals from notable parties attempting to purchase META at below market price, and a well-known figure DCAing into META" — context: this is during the Feb-Mar 2024 period when Ben Hawkins and Pantera were also trying to buy META
• Moving all liquidity to the 1% fee pool after the auction addresses the futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements — protocol-owned liquidity reduces the friction

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Full Proposal Text

Responsible Parties

Durden, Ben H, Nico, joebuild, and Dodecahedr0x.

Overview

Sell META via a Dutch auction executed manually through OpenBook, and pair the acquired USDC with META to provide liquidity on Meteora.

Background

Given the currently low volume and high volatility of META, there is little incentive to provide liquidity (low fees, high risk of impermanent loss). Yet there seems to be near-universal agreement in the Meta DAO Discord that greater liquidity would be highly beneficial to the project.

While the DAO has plenty of META, to provide liquidity it needs USDC to pair with its META. This USDC can be acquired by selling META.

There is currently strong demand for META, with an oversubscribed raise (proposal 3), proposals from notable parties attempting to purchase META at below market price, and a well-known figure DCAing into META. There is thus no need to sell META for USDC at below market prices; we only need to sell META at a price that would be better than if they were to buy through the market.

This proposal seeks to manually perform a Dutch auction using OpenBook. This serves a few purposes: price discovery through a market that is open to all, low smart contract risk (relative to using a custom Dutch auction program), simplicity (which will result in wider participation), and ease of execution (just place asks on OpenBook).

Implementation

Meta DAO will sell a total of 1,000 META.

The META will be sold in tranches of 100 META by placing asks above the spot price. The first tranche will be placed 50% above the spot price. Every 24 hours, if the ask is more than 6% above the spot price, it will be lowered by 5%.

Whenever an ask is filled, a new ask worth 100 META will be placed 10% above the spot price. In addition, USDC from the filled asks will be paired with META and added to the 4% fee pool.

The multisig currently holding the liquidity in the 4% fee pool will send their LP tokens to this proposal's multisig. After the 1,000 META has all been sold, all of Meta DAO's liquidity will be moved to the 1% fee pool. The LP tokens will be sent to the treasury to be held as permanent liquidity until Meta DAO decides otherwise.

All operations will be executed through a 3/5 Squads multisig.

Multisig address: LMRVapqnn1LEwKaD8PzYEs4i37whTgeVS41qKqyn1wi

Multisig members:

• Durden: 91NjPFfJxQw2FRJvyuQUQsdh9mBGPeGPuNavt7nMLTQj
• Ben H: Hu8qped4Cj7gQ3ChfZvZYrtgy2Ntr6YzfN7vwMZ2SWii
• Nico: 6kDGqrP4Wwqe5KBa9zTrgUFykVsv4YhZPDEX22kUsDMP
• joebuild: XXXvLz1B89UtcTsg2hT3cL9qUJi5PqEEBTHg57MfNkZ
• Dodecahedr0x: UuGEwN9aeh676ufphbavfssWVxH7BJCqacq1RYhco8e

Compensation

I am requesting a payment of 5 META to cover the cost of creating the market for this proposal and for the effort of crafting this proposal and carrying it out to completion.

For the compensation of the multisig members other than myself, I performed a sealed-bid auction via Discord DMs for the amount of META that each of the 10 candidates would require to become a member. Those who were willing to join for the least amount of META were selected.

The candidates with the lowest asks and their requested amounts were as follows:

• Ben H – 0 META
• Nico – 0 META
• joebuild – 0.2 META
• Dodecahedr0x – 0.25 META

All compensatory payments will be made by the multisig to each individual upon the completion of the proposal.

Total Required META

META to be sold: 1,000 META for liquidity: 2,000 META for compensation: 5.45 Total: 3,005.45

Result

This proposal will significantly increase Meta DAO's protocol-owned liquidity as well as move its existing liquidity to a more efficient fee tier, addressing recent complaints and concerns regarding META's liquidity.

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Raw Data

• Proposal account: 3Ky7bPfSBNhYqVe3yCXajTrKYVxsM3CVBMbhQsHqrNqJ
• Proposal number: 10
• DAO account: 7J5yieabpMoiN3LrdfJnRjQiXHgi7f47UuMnyMyR78yy
• Proposer: (Durden)
• Autocrat version: 0.1
• Completed: 2024-03-02

Relationship to KB

• metadao — parent entity, liquidity bootstrapping
• futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements — addresses liquidity friction
• dutch-auction dynamic bonding curves solve the token launch pricing problem by combining descending price discovery with ascending supply curves — early manual implementation of Dutch auction concept