Vending Machine Subcomittee
This proposal suggests creating a subcommittee of Trustees to manage a “Vending Machine” contract on Optimism. While all funds in the “Vending Machine” are owned by the Protocol, the Subcommittee would be responsible for setting the prices on the Vending Machine. This proposal also suggests funding the Vending Machine with 4,000,000 ECO.
The vending machine allows people to buy ECO directly from the contract using USDC. This is facilitated by a smart contract that acts very similar to a traditional market maker. The contract offers two options – they can buy ECO from the contract at the “Buy Price” or sell ECO to the contract at the “Sell Price”. These prices are set by a “Set Prices” function which can only be called by the “Price Setter” of the contract. The buy and sell functions can also be turned off.
I will colloquially refer to the contract as “the Vending Machine”. Some other background information about the contract:
- The contract is deployed to Optimism already, and is funded from a generous grant from the Eco Association.
- It was deployed with a “Buy Price” of $0.0225 USDC / ECO, which is about 50% higher than the price on Ethereum Mainnet.
- It already has about $15.9k USDC balance from the last few days from ECO purchases.
- The Vending Machine has two roles, a “Price Setter” and a “ContractOwner”. The “Price Setter” can set prices, and the “ContractOwner” decides the “Price Setter” and can move the funds out of the contract.
- The sell function is turned off, so users can’t sell ECO back to the contract right now. This allows the contract (and therefore the Protocol) to accumulate USDC reserves.
- As of launch, there is no “Price Setter” and the “ContractOwner” is set to the Root Policy address.
This post proposes that the “Price Setter” role on the contract be bound to a subcommittee of Trustees (4-6). This subcommittee would set the Vending Machine price on a regular basis. I think this is a pretty interesting monetary lever to add to the protocol, for the following reasons:
It allows the Protocol to accumulate USDC reserves (basically FX reserves), which can be used in the future for monetary policy.
With a sufficient ECO and USDC balance in the contract, it allows the subcommittee to stabilize the ECO price around a range. The “Buy Price” and “Sell Price” create buy/sell walls on the Eco price. In this way, it acts like a peg-stability-module.
It is expensive to bridge ECO from Optimism to Ethereum (and vice versa). Therefore, it will be more economical for most small purchases to just use the vending machine, even at a 50% price premium (or large price discount). In the absence of other market makers and assuming the sell function is turned on, this subcommittee can impose exit taxes on small balances, which incentivize spending of ECO over selling.
I anticipate at first, the subcommittee will keep the Buy price at a pretty significant premium to mainnet Ethereum, and keep the sell function off so that the protocol can accumulate more USDC. This should mean that prices are set occasionally; I do not anticipate this subcommittee to readjust prices multiple times a day. The subcommittee will vote in a special discord channel, and submit transactions to set prices with a multisig wallet.
In order to bootstrap liquidity in the contract, I also propose that the contract funds the vending machine with 4,000,000 ECO.
I would love feedback and discussion on this proposal!
This official proposal will bind the “Price Setter” role on the contract to a subcommittee of Trustees. This subcommittee will set the Vending Machine price on a regular basis.
- The multisig address the “Price Setter” will be bound to:
- oeth : 0x4b5c40EfdB69093130A0E49552F0fbBa33649952
- The seven Trustee Subcommittee members (see this post for more details):
- ML, dmititup, Pete Dattels, MikeWeb, Bob Amano of Pure Macro, Subspace, Chris Berg
- The Trustees on this committee are joining the subcommittee as part of their ongoing responsibilities as Trustees.