First, thank you to the Colony community for your forbearance, understanding, and constructive discussion over the last several days since the difficult decision to halt the CLNY sale was taken on Friday 17th Dec.
We heard from many users who were surprised and frustrated by the decision to halt the sale for several reasons.
- The decision to halt needed to be taken quickly, hence there was only 9 hours notice between the proposal being made and the sale stopping. This meant that people for whom this whole process took place while they were asleep or at work had no opportunity to contribute to the process or to react to the decision.
- The communication of the proposal was poor. The announcement was made only on Discord, when it could and should have been made across all of Colony’s communication channels including Twitter, Email, Telegram, and the website. Hence, many people in our community who were not active in Discord at the time were also not aware of, or able to react to the decision.
- A number of community members had devised sophisticated strategies based on the expected duration of the sale, and had invested considerable time and effort into executing those strategies, only to find the rules change at short notice, thereby stymying their plans. As a consequence, many were left holding xDai which they only held for the reason of purchasing CLNY.
These are all important learnings for us as a DAO. In future we must do a better job at managing expectations and communicating. For instance, we could and should have been clear that our expectation was that the sale would be for 20m CLNY, but that we’re dealing with many unknowns in this first use of Coin Machine on xDai, and therefore reserved the right to course correct should any significant issues materialise.
Furthermore, in the future, if it is necessary to coordinate a rapid response to an issue we face, we will do a much better job of communicating it. This was a key failure, and will not be repeated.
Moving forward, after processing both the issues which led to the halting of Coin Machine, and the issues doing so caused, I propose the following three steps, which I believe should attenuate most of them. As always, I welcome constructive feedback.
1) A short continuation of the Coin Machine sale
To accommodate those for whom mainnet gas costs are a significant issue, and who have already incurred some costs in acquiring xDai, I propose a short continuation of the Coin Machine sale.
The key assumptions and constraints informing the recommended parameters are:
- Most people who prefer to buy on xDai are smaller purchasers in the <$2k bracket.
- It is necessary to ensure that the extension to the Coin Machine sale will last long enough for people in most time zones to participate.
- We wish to retain enough CLNY for a sale on mainnet
- It is desirable to change as few parameters as possible to limit cognitive overhead.
These assumptions and constraints have led us to arrive at the following Coin Machine parameters.
Amount: 1m CLNY
Start time: 12:00 UTC on Wednesday 22nd December
Max per batch: 83,333 (1m / 12)
Target per batch: 41,667 (max / 2)
Starting price: $0.52623 (same as when Coin Machine was halted)
Batch interval: 1 hour
Averaging window: 16 batches
Individual Limit: 5%
We will follow Colony’s principle of only voting if there is significant dissent.
Please note that if we need to vote there is likely to be significant delay to give enough time for people to vote, which may, due to the Christmas holidays, mean that the sale cannot be concluded until January.
2) CLNY Sale Part Deux in Jan
We have spoken to the team at Copper, and believe this will be an excellent option for us to conduct a token issuance on mainnet. Copper is a UI to Balancer’s Liquidity Bootstrapping Pool (LBP) mechanism. It allows liquidity for a new token to be bootstrapped by people buying the token from the pool with a stablecoin.
We anticipate that the LBP will take place some time in January, and run for 3 days, selling approximately 10m CLNY comprised of the unsold portion of the Coin Machine sale with a top up from the “Strategy Fund”.
3) One Million CLNY Airdrop
In the proposal to halt the Coin Machine sale we said:
There will be supplementary votes on whether we should wait to unlock wCLNY, and whether to wait to start pre-sale token vesting, until after the LBP has concluded.
CLNY being liquid before the completion of the LBP poses a significant risk to the success of the LBP. We strongly recommend everyone who has bought CLNY because they believe in the project and want it to succeed to vote not to enable wCLNY to be unwrapped.
CLNY being traded before the LBP completes is likely to make the LBP practically impossible, because arbitrage between the DEX and the LBP will cannibalise the sale. This will lead the LBP to perform worse than it otherwise might, and consequently result in significantly less liquidity available once the LBP has concluded. That will have long term negative consequences for both the Metacolony and every individual CLNY holder as it will be much more difficult to buy or sell CLNY.
Therefore, we believe it will be in the best interests of all CLNY holders to delay liquidity until the LBP has completed, and there is ample liquidity available for all.
By way of reparation for the unexpected 4-6 weeks of CLNY illiquidity, we will airdrop 1 million wCLNY if wCLNY holders vote not to unwrap wCLNY until after the LBP has completed.
- 500K will be divided between wCLNY holders proportional to their wCLNY holdings.
- 500K will be divided equally between all accounts holding wCLNY.
Timing of the vote TBD.