##Summary
The Akita DAO treasury and its operations are funded through an on-going stream of AKITA tokens. It must safely and slowly divest these AKITA tokens to facilitate those operations. Using a Liquidity Bootstrapping Pool (LBP) via Fjord Foundry is a proven option to accomplish this task. As an initial test for the Akita DAO, 300B (300,000,000,000) AKITA tokens will be matched with ETH to start a LBP. Over the course of 60 days, this pool of liquidity will be algorithmically weighted to provide trading and arbitrage opportunities until the final weights of assets is 1% AKITA and 99% ETH.
##Abstract
It is well-known that Gitcoin launched two LBPs in the past, releasing roughly 37.8% of the total AKITA supply into the market in a safe way that arguably provided price support to the token while the prolonged bear cycle continued to drag the entire market down. This method avoided selling all the tokens en-masse which would have drained all liquidity from the market and sent AKITA to zero. Through the long time horizon with such a large holding, they created substantial trading volume, buying and selling the token algorithmically onchain. With smart contract management, this was a successful fundraiser for their DAO, generating over 4000 ETH.
The Akita DAO must look at its AKITA holdings albeit at a very different scale. As the LBP has been a successful tool for other organizations, the DAO can launch its own LBP as a test. The results will show the final amount of ETH created by the LBP, as well as the volume generated, and the trading fees captured by the protocol. While the end result is unknown, we can simulate the LBP in this document, with generally positive results.
##Motivation
The Akita DAO has planned operating expenses for administrative and web tools, promotional activities, etc. As the DAO continues to carry out its mission, development expenses are projected to be significant.
The AKITA token’s market price is extremely volatile. With the Sablier stream of AKITA tokens continuing into March 2027, the DAO should always be looking at how it utilizes its AKITA supply while growing its reserves. The DAO should take action to prevent large single-action sales of the AKITA supply, just as it has in working with Gitcoin to support AKITA as they divest their holdings.
The market continues to go sideways, but clearly shows enthusiasm for the Bitcoin Halving and other key milestones. Additional trading volume for AKITA-ETH during this time will help capture fees as a small, but still very appreciated revenue source to the treasury.
##Specification
The Akita DAO multisig will engage with Fjord Foundry to establish an LBP utilizing a maximum of 300B AKITA to represent 95-99% of the total LBP assets. The additional 1-5% will be provided in ETH tokens. The current value of AKITA and ETH put this ratio in the realm of 300B AKITA : 1 ETH. At the end of a 60-day period, the final assets will be 99% ETH and 1% AKITA.
The ETH generated through this LBP should be earmarked for specific needs. This proposal specifies:
- 40% of the final ETH amount, or a minimum of $15,000 in ETH and maximum of $25,000 in ETH, will be retained for supplying liquidity to the HACHI token on an L2 or side chain to Ethereum so that the token can function on a highly gas-efficient network. If the total dollar amount of ETH generated through this LBP is significantly greater or insufficient to meet this requirement, the Akita DAO Stewards will agree upon an adjusted amount and plan of action.
- 20% of the final ETH amount, or a minimum of $10,000 in ETH and maximum of $25,000 in ETH, will be retained for supply additional liquidity to the HACHI-ETH UNI-V2 LP.
- Of the remaining total ETH generated by this LBP, 50% will be swapped to stable coins, such as DAI, USDC, or USDT.
##Benefits
The Akita DAO treasury will be able to actively utilize its funding stream in a supportive way for the token market. Instead of making giant sales and trying to time the market, the DAO will be contributing to the market volume while also capturing some fee revenue. The DAO will be able to use the generated ETH for strengthening its future. If the market activity greatly increases in 60 days of the LBP, there is potentially a great upside for DAO reserves.
##Operational Needs and Costs
Akita DAO stewards will need to set up and execute the LBP through Fjord Foundry’s interface within the SAFE multisig. An administrative fee of 200 USDC will be provided to @RyMac for the research and advising on this process. Gas fees will be required for execution and for token transfers. The expected fees should be minimal, and will depend more on the network activity and its relation to gwei.
The maximum amount of AKITA tokens required should be 300B (300,000,000,000) and appropriate total ETH amount should be under 2 ETH, but likely closer to 1 ETH.
##Drawbacks
By leveraging the benefits of the LBP, the DAO also loses immediate access to these funds. The DAO will need to continue to accrue its streaming tokens via the Sablier Finance smart contract. The number of tokens capping at 300B is considered a safe amount by calculating expected future costs for the next 6 months, with remaining and future expected AKITA leaving a buffer to ensure those costs are met.
Impermanent Loss is also a factor to consider, but the LBP Simulator Document helps to model out expectations. Through this simulation, the expected Impermanent Loss should be minimal, likely less than $100.
##Vote
Yes, No, Abstain - If the total YES vote is greater than the total NO vote, then this proposal would pass and be executed by the Akita DAO’s Stewards.