Valuing an Investment
TLDR;
- Market making: BadgerDAO has the opportunity to strengthen token distribution, liquidity depth, and volume by providing a $BADGER loan to a global market making partner, with ongoing yield on the loan.
Background
- $BADGER has been listed organically on some exchanges since its inception. However, to enable working with a market making service provider, Badger required a legal entity with supporting characterization and documentation. The Badger Association can now enable the due diligence and KYC required to enable this type of partnership.
Recommendation
- Badger and DWF Labs have developed an approach to loan 300,000 $BADGER tokens to DWF Labs, with a focus on Asia expansion, and Yield shall be paid at 6% per annum by DWF Labs to Badger on the outstanding Loan
Marketing making agreement with yield
Description of Services
Token: Badger DAO token with the ticker symbol BADGER, more information which can be found at Badger DAO price today, BADGER to USD live price, marketcap and chart | CoinMarketCap.
Services Provided:
- The company will ensure continuous trading activity for the BADGER token and maintain high availability for placing buy and sell orders.
- They aim to keep trading spreads tight for BADGER and related trading pairs.
- Efforts will be made to enhance the BADGER token’s liquidity on various cryptocurrency exchanges.
- The service covers spot, futures, and options markets.
- It applies to exchanges that comply with legal standards and are supported by the service provider.
Loan and Objectives:
- A loan of 300,000 BADGER tokens is involved in the service.
- The focus is on the BADGER/USDT trading pair with specific targets for market share and trading efficiency.
Reporting and Duration:
- The company will report monthly on market making activities.
- The market making agreement is in place for a six-month period unless extended by agreement.
Loan confirmation:
- Term and yield:
a. 6 months commencing from disbursement date.
b. Yield shall be 6% per annum on all outstanding Loan, payable during each month during the Term of the Loan.
- Call option:
- When the market making agreement loan concludes, DWF can choose to exercise call options over the Loan which shall be at several higher price points than the market price of $BADGER at the time of the Loan.
Part 1:
Metrics of Success
How long will the investment thesis take to play out?
- This investment would provide a return if exercised under the loan repayment schedule, at the 6 month milestone
Will the treasury recoup funds or does the investment represent an outlay?
- The treasury is expecting a positive return on this loan as per above criteria
What are the risks associated with each investment?
- Protocol risk (0 - 10)
Likelihood of a smart contract or system of smart contracts is exploited or funds are lost
2 - established exchanges would be engaged
- Liquidity risk (0 - 10)
Liquidity risk refers to how easily an asset can be bought or sold in the market.
2 - the potential partner is a global expert in providing liquidity
- Market risk (0 - 10)
Market risk is the risk that arises from movements in stock prices, interest rates, exchange rates, and commodity prices. Metrics to consider : VaR, skew, sharpe.
3 - global crypto markets are volatile, however this proposal helps to mitigate such risk
- Credit risk (0 - 10)
The risk of loss from the failure of a counterparty to make a promised payment
4 - DWF has a positive track record of delivering on its obligations and Badger is protected under the terms of the legal agreement
- Execution risk (0-10)
How long will it take to execute, how many signers on a Multisig or queue of things that must be signed first.
2 - This decision enables execution by the Treasury Council, supported by Badger technical support as required. Execution is expected within one week pending approval of this proposal and pending the agreement being fully executed between both parties
