This partnership is a bad idea and goes against the fundamental values of DeFi and cryptocurrency.
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The entire addition of a Repayment Option leaves a sour taste in my mouth–particularly at $10. My first instinct would be to remove the purchase option in its entirety. Anchoring the DAO to negotiate against a $10 strike price in a clause that should not even exist is extremely predatory. Unfortunately, Wintermute knows that it has the upperhand negotiating with a DAO and is attempting to extract ridiculous terms.
Although I’m not against a market-making deal, this proposal is not seeking to do the DAO a kind favor by accepting a free $7M loan. A deal structured in good faith would either eliminate the purchase option entirely or set the strike price substantially higher to reflect INST’s potential appreciation over the loan term.
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@WintermuteGovernance If the proposal is not approved, will Fluid DEX not be integrated into your trading systems?
If the answer is yes, I don’t understand why this is included in the proposal.
If the answer is no, then we have more clarity about what is being negotiated.
Regarding the Strike, something that can protect both parties would be a variable function; something like:
Stk = MAX(TWAP * 0.85, 10 USD)
Highest result between “TWAP (e.g. in the last 30-45 days before expiry), with a 15% discount” or “10 USD”.
This means that
If the TWAP with 15% discount exceeds 10 USD, the result will be this adjusted value. Otherwise the result is 10 USD.
In this way, Wintermute would not be adding risk to its business and would not be exposing the Dao to a potentially low price.
This gives us scenarios where the FLUID TWAP at maturity is:
Between 0 USD and 10 USD: the Dao had no costs (losses) greater than a potential opportunity cost of use. Wintermute will not exercise the option.
Between 10 USD < and 11.76 USD: the option is executed at 10 USD. The spread between what the Dao charges and the TWAP will be up to 15%.
Any price above 11.76 USD: a discount of 15% will be applied.
The proposal is already passed.
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The proposal has been voted on and passed 11-0
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