Generating DAO Token Value

With the decision to peg ICE tokens to ETH, the ensuing LIQ tokens will be affected by their own speculation added with ETH’s. Although quite simplified, the value of LIQ tokens at any given time after launch day can be expressed as the following:

LIQ^price = ETH^price + LIQ^speculation + LIQ^TreasuryValue

The first two parts of this equation will already be in effect during the governance token offering. Exchanges that choose to list ICE during these three months will take part in market wide speculation on the tokens themselves while taking Ethereum’s price into consideration.

ETH’s price fluctuation will certainly push and pull LIQ value but the speculation on LIQ itself coupled with any future production of a LIQ treasury will add much needed cushioning, leading to less violent sell offs if ETH retraces or dumps. The platform will not start with a Treasury on launch day, both as a means of displaying decentralization and avoiding any kind of hidden funds / secret keys scenario often seen on platforms.

So How Do We Generate A Treasury?

• % of pool fees from just LIQ/ETH or all pools are sent to treasury
• Running arbitrage bots using capital from LIQ holders
• Supply/Borrow against LIQ to farm other platforms

How Do We Value LIQs Treasury?

• Unused funds +
• Arbitrage bot funds +
• Farming capital +
• Over-time fee accumulation

With ETH being in prime position along with BTC for a bull run takeoff, LIQ is also fit for appreciation of it’s price floor. The market wide trading of LIQ should lead to gains but it’s important to add value outside of the ETH peg. We use this peg primarily as a store of value, so to truly gain value in it’s own right outside of ETH moves, LIQ will need to incentivize holders while simultaneously allowing them to vote.

One of the ways LIQUID will achieve this is through incentivizing platform usage for the common Liquidity Provider. Through our ability to vote for Pool fee changes, LIQUID will consistently meet competitive fee pricing, maximizing TVL and having a direct impact on the LIQ token price itself. If The LIQUID platform can maintain a large enough TVL without exodus, the % of fees captured for any swap pair will be significantly high enough to compensate for any amount of actual fee % reduction through voting. A long enough stand would most likely lead to TVL exodus from other platforms to LIQUID simply based on the total fees captured.

If LIQUID successfully takes over as the de facto swaps platform supplanting Sushi and UNI, the platform itself will be worth more through it’s governance token due to total market %. Another means of price appreciation would be getting LIQ listed on platforms such as Compound or Cream where LIQ can be utilized as borrowing collateral. As soon as that is achieved, LIQ can be frozen in contracts and utilized in farming. Coupling this with voting could add some significant value. If we give LIQ holders the ability to vote while simultaneously taking part in farming or bot arbitrage funding, not only can more LIQ be locked up for longer, but the sell pressure is decreased and the farming or bot proceeds acquired can be directly used to purchase and disperse more LIQ back to vaulters.

Having cyclical price appreciation is crucial in maintaining upwards momentum of LIQ’s price. Farming with borrowed liquidity can be done safely along with switching between strategies on a weekly basis. Utilization of different farming strategies together would allow LIQ to stay diversified enough to quickly deploy and retract farming capital with minimal exposure. The other natural benefit of our ETH peg is that supply/borrowing platforms like compound and cream will at all times know that LIQ has a price floor therefore could supply LIQ with the same borrowing limitations of ETH.

Maintaining a good balance between LIQ in reserve and LIQ being staked to borrow Stable coins will be critical in making sure the farming strategies have minimal risks. Freezing and unfreezing deposits would allow withdrawals during a specified time and lock LIQ in position for the rest of the week. Utilizing borrowed stable coins like DAI to farm platforms such as Harvest or Pickle will also help keep original capital safe regardless of what these aggregate platform DAO tokens end up doing price wise. If LIQ maintains positive price action, this should also slowly increase the deposited LIQs borrowing limit, taking pressure off our targeted collateralization %.

Bringing vaults to the LIQUID platform should be relatively easy given long term LIQ holders won’t be doing much with the tokens outside voting and providing other forms of ETH liquidity. Whether a single vault with a revolving strategy or multiple vaults get implemented, maximizing profits would be akin to what other farming aggregate sites do for easy farming. Possible techniques for long term growth include:

• Utilize farming aggregate site competition to maximize profits
• Consider long term locking of aggregate site DAO tokens for price appreciation
• LIQ holders vote on how to cast other platform DAO token votes (vote within a vote)

The focus of any vaulting strategies will be two pronged. First, to generate value for any and all LIQ holders who take place in voting. Secondly, to synthetically produce scarcity and lower LIQ selling pressure. Incentivizing voting correctly benefits everyone and will ultimately lead to LIQUID’s success.