Note: This post is not a formal proposal, and is only meant to kickstart the discussion on the subject in the forum.
In light of the recent success of the $MASK fund, a recent topic has been coming up quite often on governance calls and in the discord. It is the idea that D1 funds might have much more product market fit than D2 funds and should get the majority of DAO-provided or incentivized liquidity.
D1 funds are more simple to understand, to arbitrage, and see much more volume than d2 funds, especially if compared on a ‘‘volume-per-liquidity’’ basis.
For example $MASK
D2 funds are also complicated to arbitrage, as they have multiple components with sometimes very high prices.
In practice, it is very hard to arbitrage the PUNK d2 : to do it properly with all the underlying components would require 2500eth*, and doing so would by itself, would at the moment be unprofitable since the PUNK cannot absord 2500ETH, it only has 500ETH of liquidity.
If this has interest, I think it would be a good idea to have a snapshot to poll NFTX holders on the matter and see if they would support adopting a new strategy/vision where D1 funds get the majority of liquidity and focus.
If this has consensus, there are multiple path fowards and different proposals possible:
- We can propose to remove part of the PUNK-ETH liquidity and reallocate it to PUNK-basic.
- We can propose an updated liquidity plan to the recently approved plan to launch new funds to something that follows this new strategy (Draft Proposal: Liquidity allocation for all additional DAO-managed funds - #4 by 0xchop)
- We can propose to remove some liquidity from the NFTX-ETH and re-allocate it towards specific D1 funds