[Closed] AIP 006: Joining ADEL and AKRO as a win-win for everyone

Title Of Proposal Joining ADEL and AKRO as a win-win for everyone

Author(s) Names The Liquidator

TLDR Summary

  • It has been decided that there will be a token swap offer for switching ADEL to AKRO (https://medium.com/akropolis/akropolis-ama-recap-df556c6a94e7)
  • Option as described above: team funds will be used to pay for the swap (conversion rate still unknown)
  • Option 2, suggested in detail below: the total circulating market value of ADEL is quite small (pre-price drop about 2 million USD plus vested tokens, let’s be generous here and say that will end up at 3 million USD), this would be about 350 Million AKRO or about 8.75% of the current total AKRO supply of 4 billion tokens.

Potential problems with the currently proposed token swap

It has been decided that there will be a token swap offer for switching ADEL to AKRO (details here: https://medium.com/akropolis/akropolis-ama-recap-df556c6a94e7).

So now both tokens need to be joint in a fair way and both are interested in a bright future of Akropolis:

Some have mainly supported the project via the AKRO token, others liked the idea of supporting the yield aggregation side of Akropolis and wanted to take part in community governance (ADEL).

We currently have people in both camps (of course there are also many in between) and now we need to join them, also in a financially fair way.

Financing a non-mandatory swap via team funds has 3 problems:

  1. the team has to pay for it and the available funds on their end may not be enough to compensate 100% of the ADEL holders ($ value wise)

  2. you still end up having 2 coins on coingecko/coinmarketcap which will cause confusion with new investors.

  3. while a potential dilution of current AKRO holders sounds intimidating, if you add back the circulating dollar value of ADEL to AKRO, you will get away with a situation where the team does not need to pay as many funds and the ADEL holders are still pleased, while the AKRO holders potential dilution is close to zero.

Potential solution to make everyone happy

The only reason why the team has come up with the solution of offering a token swap and paying it with their own funds is the worry that if you would create new AKRO tokens for the swap, you would virtually “dilute” current AKRO holders:

  1. If you perform the calculation you will see that this is not quite correct, since it is only true if you do not add the current circulatung value of ADEL to the AKRO token.

  2. You could take the total market value of ADEL (pre-price drop about 2 million USD plus vested tokens, let’s be generous here and say that will end up at 3 million USD, which would be 350 Million AKRO). This would not even be 9% of the Fully Diluted Valuation of AKRO (which is at 34 Million USD right now).

  3. You could say you dislike a “dilution”, even if it is in the area of below than 9%, I get that, but in return you could make the token swap from ADEL to AKRO mandatory.

  4. I think that nearly everyone will swap ADEL for AKRO if ADEL only has a value in Delphi V1, so the total swap amount will be the same as if the swap was mandatory.

  5. You would then “add” the current circulating value of ADEL back to the AKRO holders, so your “dilution” will end up being much less or even zero.

  6. In return, ADEL would completely be delisted, which would also add the benefit of having no confusion that there are still 2 tokens out there, especially for new investors.

  7. The team would not have to pay as much from their team funds, so that money would potentially available for future development investments, which will benefit everyone that is involved.

Conclusion

The majority of AKRO holders and the team should have ADEL tokens as well. So nearly everyone would benefit if we find a fair solution of joining ADEL and AKRO together

The proposed suggestion also avoids the whole scenario of “ADEL was a gov token for Delphi V1 only and now you need the AKRO token for Delphi V2 (names not yet fixed)”

We would simply join the tokens, accept an overall increase of AKRO tokens < 9% but the total value of both tokens gets joined as well. Dollar-wise, everyone should stay about the same and only a single token remains.

Funny enough, in the KuCoin hack which took part September 2020, 283 million AKRO tokens were taken from the hacker and are now frozen in this account: https://etherscan.io/address/0xeb31973e0febf3e3d7058234a5ebbae1ab4b8c23

So these tokens were completely taken out of the overall AKRO supply and were never replaced. From that perspective, if 350 million new AKRO tokens are generated to integrate ADEL and AKRO together, you could make the following calculation for 2020:

  1. 283 million AKRO effectively burnt
  2. 350 new AKRO tokens generated, resulting in only 67 million new AKRO tokens overall, which is a dilution of only 1.6% (and then you would still get the benefit of the circulating value of ADEL)

An alternative would be to only re-generate the 283 million AKRO from the KuCoin hack and use them for the token implementation of ADEL and AKRO, while the team would provide the additional 67 million AKRO tokens from their funds, but this would lead to an odd total number of tokens in the calculation of coingecko/coinmarketcap.

This suggestion should be a win-win for everyone, be it mainly AKRO or ADEL holder, both and the Akropolis team as well.

Thank you for considering :slightly_smiling_face:

  • For
  • Against

0 voters

5 Likes

@TheLiquidator

Thank you for taking the time to present this proposal. I like the principles that you brought up. You have presented a good opportunity to address the KuCoin hack situation as well!

We need to understand how many members are aligned with swapping all of their ADEL tokens to AKRO tokens.

One of the bigger incentives to be completely invested in the AKRO token is the value accrual that will occur. This should help recover any losses that occurred by simply staking in the ecosystem long term and discourage people to quickly sell off their AKRO tokens.

If we revert back to just the AKRO token, that implies that the AKRO token will govern both “Delphi 1.0” and “Delphi 2.0”, correct.

We need to determine the exact inflation that would occur and what the team is willing to accept.

2 Likes

I am not in favor of a swap or merge. the community was assured in the news of the merger that both tokens would remain, and now team is trying to put an end to adel. I’m not in favor of a swap, but if it is decided to move forward with one, it should not be mandatory. and if people do decide to swap for akro, then those adel that were swapped should be burned. the revenue share of Delphi should not be removed, and the project be allowed to live out the original plan the team originally made, and not deviate from that. this proposal does not go far enough to make up for the lost future revenue that adel holders were promised. I recommend nobody agree to anything till at the very least, a set ratio is disclosed. undetermined ratio is too open ended,and nothing should be voted on till at least that ratio is disclosed.

Sometimes promises cannot be kept but it’s not realistic to ask for the promised revenue at the moment. Delphi 2 will outshine Delphi 1. I don’t see any reason why a fork would help with that situation. You would need a dev team to further support Delphi 1 and make it more attractive compared to Delphi 2, which is very important to consider. Why should people invest in Delphi 1 if Delphi 2 exists that is provided by yearn with all of their support? that is the main reason for this proposal.

It is always a compromise but this compromise tries to treat investors of ADEL and AKRO in a fair and equal way, which will benefit everyone in the end.

1 Like

how about the team agree to implement auto restaking feature along with the swap.it was separately voted on and passed unanimously on its own merits. the team mentioned implementing it in the vesting proposal. I’m sure if the team would agree to commit to something else like this as a rider, it would go a long way to satisfying people on this issue. would save them a lot in unnecessary gas fees. I’m sure people would get on board with that. and like I said, it already passed its own separate vote on its own merits. so don’t see what opposition the team could raise.
on its own, this proposal doesn’t go far enough in my openion.

DIP 007 looks more promising then this version, though I am withholding support for and recommend everyone withhold support for any proposal that does not bring the team to negotiate with the community on the matter.the swap is not enough,and the team should not be let off the hook so easily with a simple swap. at least DIP 007 provides language in it that gives us ability to revisit vesting, and I think that is an important matter to revisit.a simple swap will not remove the damage that adel holders were dealt by this. this win-win is not a win. it leaves the team too much wiggle room.I feel the team needs to earn back our trust. I hope everyone will consider this alternative proposal being put forward instead of the current one. DIP 007: Adel to akro merge

We never said we do not want to implement restaking - it just requires a lot of preliminary work (such as implementing backend for vesting rewards & searching for solution when restaking stays custodial). Ultimately it starts with backend implementation - which we will start to work on soon enough.

Hi, I’m not sure if this is the best place for me to ask this question but I have recently purchased some ADEL. In fact, the transaction took place on February 2nd and I started staking them on Delphi straight away. My plan was to eventually swap my ADEL for AKRO tokens in March as the medium post suggested. However I have just realized that the Final snapshot was on February 1st. Does that mean I won’t be able to participate in the swap? If I want to convert my ADEL to AKRO now, do I have to unstake them and exchange them on a platform like Uniswap?
Also will ADEL not be used in the future at all?

2 Likes