Proposal for Adding Liquidity to KNINE/WETH Pair on Uniswap
(1) Introduction and Objective
K9 Finance DAO proposes adding $250,000 of liquidity to the KNINE/WETH pair on Uniswap using treasury funds. Currently, the DAO holds $300,000 of unused USDT that is not allocated to any liquid staking or money market investments. By leveraging a portion of this USDT to support the KNINE/WETH liquidity pool, the DAO aims to both strengthen liquidity and take advantage of transaction fee earnings.
This proposal suggests converting $125,000 of KNINE tokens and $125,000 of USDT (to be converted into WETH) to add liquidity to the DAO’s liquidity pool on Uniswap. This strategy maintains a robust USDT reserve in the treasury, ensuring that the DAO can still support potential budget extensions while capitalizing on favorable market conditions for Ethereum. By enhancing liquidity, the DAO can reduce volatility and better manage buy and sell pressure during what could be a turbulent period in the broader macroeconomic landscape.
(2) Benefits to K9 Finance Community
- Increased Liquidity: Adding $250,000 to the KNINE/WETH liquidity pool will strengthen K9 DAO’s liquidity position, allowing for smoother transactions and less volatility for KNINE holders and DAO members
- Transaction Fee Earnings: By allocating treasury funds to Uniswap, the DAO can generate passive income from transaction fees within the liquidity pool, contributing to a self-sustaining treasury.
- Market Strategy: Utilizing USDT to purchase WETH at a time when Ethereum’s price has lagged behind Bitcoin provides an opportunity to acquire Ethereum at a favorable rate, potentially increasing the value of the DAO’s assets.
- Risk Mitigation: Enhanced liquidity in the KNINE/WETH pool reduces the impact of market fluctuations, allowing K9 DAO to better absorb buy and sell pressure over the coming months.
(3) Proposal Details
(a) WHAT
The proposal suggests that K9 Finance DAO allocate $250,000 of treasury funds to the KNINE/WETH liquidity pool on Uniswap:
- $125,000 of KNINE tokens will be added to the pool.
- $125,000 of USDT will be converted to WETH and then paired with the KNINE tokens in the liquidity pool.
This action will leave the DAO with a sufficient amount of USDT to support any monthly budget extensions, while also putting funds to productive use in the liquidity pool.
(b) WHO
The stakeholders impacted by this proposal include:
- KNINE Token Holders: All KNINE holders will benefit from improved liquidity and reduced price volatility.
- K9 Finance DAO Treasury: The treasury will earn transaction fees from the liquidity pool, adding a potential source of income.
- Management Council: Responsible for overseeing the allocation and management of liquidity to ensure it aligns with the DAO’s objectives.
(c) WHERE
This liquidity will be added to the KNINE/WETH pool on Uniswap, enhancing liquidity for K9 DAO’s main trading pair.
(d) WHEN
Upon approval of this proposal, the liquidity allocation process will begin, with funds deployed to Uniswap as soon as the necessary conversions (USDT to WETH) are completed.
(e) HOW
The liquidity allocation process will be as follows:
- Conversion of USDT to WETH: $125,000 of USDT from the treasury will be converted into WETH.
- KNINE/WETH Pairing: The $125,000 of WETH will be paired with an equivalent $125,000 worth of KNINE tokens.
- Liquidity Pool Deployment: The KNINE/WETH pair will be added to the liquidity pool on Uniswap, allowing the DAO to benefit from transaction fees.
(4) Impact Assessment
The expected impact of this proposal on the K9 Finance DAO ecosystem includes:
- Short-Term: Immediate increase in liquidity for the KNINE/WETH pair, reducing volatility and providing a more stable trading environment.
- Long-Term: Passive income generation from transaction fees, adding to the treasury’s self-sustainability and potentially increasing the value of DAO-held assets.
- Risks and Uncertainties: The primary risk is the potential for WETH price fluctuations. However, by retaining some USDT in the treasury, the DAO maintains flexibility to respond to market changes if needed.
Metrics for Success:
- Increased KNINE/WETH Liquidity: The DAO sees a notable improvement in the liquidity of the KNINE/WETH pair, resulting in reduced slippage for traders.
- Earnings from Transaction Fees: The DAO generates passive income from transaction fees in the liquidity pool, contributing to a sustainable treasury.