ShapeShift

Summary

Proposal to swap $1M of FOX tokens for $1M of RUNE with the THORChain Treasury, then deposit $2M of FOX & RUNE to kickstart the FOX:RUNE Pool on THORChain.

Abstract

THORChain and ShapeShift DAO have long been good friends. ShapeShift provides a free web and mobile interface to THORChain, and THORChain powers ShapeShift’s cross-chain swapping. Our values are closely aligned, and we’ve been exploring ways to further strengthen our blossoming relationship.

A member of the THORChain community reached out to propose a $1M FOX/RUNE swap in which…

1. ShapeShift DAO sends $1M in FOX directly to the THORChain deployer
2. THORChain sends $1M of RUNE to ShapeShift DAO
3. Both Treasuries deposit $2M of FOX & RUNE to the FOX:RUNE Pool on THORChain and increase the depth of the pool’s liquidity by $4,000,000

Motivation/Benefits

In addition to strengthening the relationship between the ShapeShift DAO and THORChain communities and aligning incentives, the following benefits will be gained:

1. Diversifying ShapeShift DAO’s Treasury to include RUNE, an asset with strong tokenomics and upside potential
2. Establishing FOX liquidity on THORChain, enabling decentralized cross-chain swaps for FOX for the first time, and opening the door for FOX holders to LP on THORChain
3. ShapeShift DAO’s liquidity position will earn revenues from trade fees and RUNE emissions

Specification

Because the DAO’s Gnosis Safe cannot hold native RUNE (only ETH and ERC20 tokens), and LPing on THORChain requires native RUNE, a THORChain multisig address must be created to receive the RUNE and deposit into the liquidity pool on behalf of the DAO. Hopefully in the near future a solution for this is built (ie. Gnosis Safe + SafeSnap on Cosmos) and the multisig can be replaced by the DAO.

1. To facilitate the receipt and LP of RUNE, a new THORChain multisig address will be created on behalf of the DAO by @mperklin and myself (@willyfox)
2. $1M FOX will be transferred from ShapeShift DAO’s Gnosis Safe to the THORChain Deployer contract, and $1M of RUNE will be transferred to the DAO’s THORChain multisig address
3. Both ShapeShift DAO and THORChain will deposit $1M of FOX and $1M of RUNE into the FOX:RUNE pool which was just churned in on November 2, 2021 and already has ~$3.5M of liquidity as of November 8th
4. The DAO’s FOX:RUNE Liquidity will remain in THORChain generating revenues for the DAO indefinitely, and any changes will require a subsequent proposal

Drawbacks

For now at least, the DAO must rely on a multisig in order to swap and LP RUNE. Additional possible risks include the price of RUNE decreasing or the network being exploited and/or halted.

Vote Yay: Execute $1M FOX:RUNE token swap and deposit $2M of FOX & RUNE liquidity to THORChain Nay: Do not execute FOX:RUNE token swap