Pros and Cons of increased liquidity / additional round of sale?

[marsrobertson]

Current valuation (21st June 2023)

Recent treasury (1st March 2023), source: Kleros Project Update - May 2023

A possibility:

More liquidity is good.

The opportunity cost is low.

The smart contract risk is low (Uni V2 has been around for ages)

More token distrubution is good: Telegram

Current distrubution chart: https://etherscan.io/token/tokenholderchart/0x93ed3fbe21207ec2e8f2d3c3de6e058cb73bc04d

Additional round of sale?

According to the financials, there is a few years on runway, no immediate needs to raise additional funds.

But maybe use that opportunity to increase the warchest, liquidity, distribution?

Pros? Cons? Thoughts?

[Juan]

Hey Mars, thanks for your interest on the topic.

Regarding funding, I agree that is not necessary at the moment.

Regarding liquidity, we are actually providing U$ 2.8 M (23/6/2023) on Uniswap v2 (Ethereum Mainnet) of ETH/PNK and around 300k on Swapr (Gnosis).

I would say that the amount of liquidity deployed is okay. To have a greater capital efficiency we could use Uni V3 and set liquidity across different ranges and always leaving some liquidity on V2 to have some full range liquidity.

For example, deploying 30% on a smaller price range, 35% on a much wider range, and the rest on V2, achieving a much greater capital efficiency (less slippage for traders with same capital) while having covered all price ranges.

This is something we had previously discussed, and didn’t reach consensus, but I think is a better option than LPing more Eth & PNk.

[marsrobertson]

@Juan

and didn’t reach consensus

This is non obvious, there will be always divergent opinions.

My opinioin is: higher liquidity is better, smart contract risk is low, no need to overcomplicate with a variety of concentrated liquidity features, we can just stay at V2, blockchain code does not get rusty as it is becoming older.

Quite the contrary - more resilient, more battle tested. See Lindy effect - Wikipedia and recent reentrancy issue in UniV4.

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I’ve also heard stories about guys who are not investing coins due to lack of exit liquidity.

More liquidity - more serious business can buy PNK.

[Juan]

Higher liquidity is better for the user, I agree.

Why can achieve more liquidity deploy on shorter ranges on Univ3 instead of deploying more Ether which represents a higher opportunity cost imo. (we can have more liquidity with even less $)

[marsrobertson]

The problem that I see with V3 (or V4) and concentrated liquidity: what if it goes out of range and Kleros Coop will run out of PNK?

Another issue - att some point the range will be “out of bounds” and no more PNK to buy.

I get the point about capital efficiency but the ETH stack is sufficiently big and there are no imminent capital expenses.

[Juan]

That is why I mentioned allocating a part to in a V2 pool and the rest on different ranges (some tighter and some wider) on V3 to have deeper liquidity but being covered at all ranges.

Regarding running out of PNK; The Cooperative has more PNK than the one that is LPing, so it won’t run out of PNK.

[Laurence]

Governance is able to mint PNK if it is really required.

[marsrobertson]

I think there is 1b limit set by “social consensus” in the whitepaper.

I’m enthusiastic about getting entire circuluation out there and increasing the liquidity.

Kleros Cooperative can still hold strategic reserves (not staking, not voting).

[cshack]

I believe y’all need a forensic accountant with decentralized background and law background. Basically, I would hire a 3rd group of consultants to look over everything to make sure that everyone gets paid correctly that is involved with staking. Make sure that each issue is not falling through the cracks, they will help get the word out about everything that y’all are doing to expand growth. Also, I think that this could open up accounting law and have this third party come in with their own ecosystem in place where there coin can stake with PNK and it would help with keeping up with information better as well.

Last thing, individual data brokers on the blockchain will be huge market soon that this would help tap into as well. Basically everything that legal zoom does but decentralized as well.

I would love to come in and help lead because I run a non profit and y’all need to be doing after grants while giving out grants for this as well so we would need a grant team because the US is giving our 40 billion in grants to help develop 3rd world countries, to promote western civilization, but my nonprofit is well connected to help grow this humanitarian project the way y’all want to as well.