Proposal for Supplying CEX Launch Initial Liquidity

Community Treasury
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Summary:

This proposal outlines a plan to provide initial liquidity in USDT to Coinstore CEX, aligning with their terms for Initial Exchange Offerings (IEOs). The funding for this liquidity will come from assets currently held in ETH on the Ethereum Mainnet, WMATIC on Polygon, and a portion of the Balancer USDC 20/80 pool. A total of $50,000 in USDT will be supplied, with a structured return based on the terms set by Coinstore. The funds will be completely returned after a six-month period.

Motivation:

Participating in the IEO on Coinstore presents a strategic opportunity to enhance the visibility and trading volume of the THX token. By supplying initial liquidity, we ensure a smooth trading experience for both new and existing token holders, thereby supporting the token’s market stability and growth.

THX Network B.V., the company developing THX Network’s infrastructure, has paid the Coinstore listing fees and provided the THX tokens from its private sale reserves. This community proposal requests that the THX community solely provide the initial $50,000 in liquidity for market-making purposes. This initiative will be funded by reallocating existing resources, ensuring a balanced approach to asset management and investment in growth opportunities.

Risks:

The primary risk involves the commitment of significant cryptocurrency assets to provide liquidity, which will be locked during the Price Observation Period as stipulated by Coinstore. The terms also restrict withdrawal of USDT from the market making account during this period, posing liquidity constraints. Additionally, failure to comply with Coinstore’s operational requirements may lead to the freezing of our market-making account and other punitive measures.

Specification:

The proposal involves reallocating the following amounts from our cryptocurrency holdings to fund the initial $50,000 USDT liquidity provision:

  • ETH from Ethereum Mainnet: Approximately $21,000.
  • WMATIC from Polygon: Approximately $20,000.
  • USDC from Balancer 20/80 pool: Approximately $9,000.

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These funds will be converted to USDT and deposited into the designated market maker account prior to the official IEO announcement, in compliance with Coinstore’s terms.

Return terms and Conditions:

  • Liquidity Withdrawal Restrictions:

    • Within 30 days from listing: Maintain 30% liquidity.
    • 2 to 3 months from listing: Maintain 25% liquidity.
    • 4 to 6 months from listing: Maintain 20% liquidity.

  • Account Restrictions: No withdrawals of USDT during the Price Observation Period. Failure to meet requirements may result in suspension of the IEO and market-making account privileges.

Next Steps:

First, this proposal will be open for discussion for a minimum of three days. Afterwards, it can be signaled to move to a vote. It is then subject to validation by the Governance Council and, once approved, will proceed to be posted on snapshot.org for voting. This process is described in the Proposal Workflow.

The responsibility for approving this proposal falls on the THX community and will be voted upon by token holders. Upon approval, the execution is up to the multisig holders. If approved, the necessary funds will be converted to USDT and transferred in preparation for the IEO on Coinstore, where they will be managed by the designated market maker in compliance with all outlined terms and conditions.

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The proposal appears to be well-written, although I have reservations about supporting the Proposal for Supplying CEX Launch Initial Liquidity with Coinstore, especially if it entails reallocating liquidity to facilitate listing the $THX token as an IEO. This could introduce uncertain arbitrages and increase price volatility, particularly when I feel like current token marketing efforts are lacking to attract buyers.

Coinstore is not an exchange I particularly like now, particularly due to a negative experience. Last year at an event in Melbourne, we had promising discussion about potential partnerships for my upcoming web-series project. However, subsequent conversations on Telegram with their business development team revealed intentions similar to those outlined in the proposed plan. Upon expressing concerns, they assured me based on the conversations they had with me at the crypto con they would find alternative way, but then after a while their reliability in chatting ran out, especially considering a now deleted Telegram chat history.

For reference about what users think of Coinstore, here are some reviews on Trustpilot (coinstore.com Reviews | Read Customer Service Reviews of coinstore.com) and Reviews.io (coinstore.com Reviews - Read Reviews on Coinstore.com Before You Buy | coinstore.com). Based on the consistent negative user feedback I have read online i personally as a user couldn’t/wouldn’t want to keep any money or THX holdings to even make trades in this exchange, not sure if others feel the same so i would expect the order books/liquidity to be thin and weak which might breach their operational requirements or fail to meet fundraising goals without possible negative impact on the rest of the existing community.

On unrelated notes I am still engaged in discussions with the team at Bitget, who have maintained transparency by not deleting any Telegram chat history, something in which Coinstore failed to do.

3

Thank you for your feedback @Phillip.

The negative reviews about Coinstore are largely tied to a failed project called ‘Quopi’. Individual projects fail all the time, and early-stage projects and launchpads are especially risky, so that’s not a solid basis to judge an exchange. I cannot speak for your personal experiences with the company. However, I do understand that business development in our industry is both competitive and noisy with negotiations that frequently fall through.

To summarize the reasons why THX Network B.V. chose to work with Coinstore:

  • There are no known alternatives for launchpads that work with KYC’ed users for tokens already live, and that also support EU jurisdictions, especially the Netherlands.
  • Their IEO performance record is strong, with their sales consistently being oversubscribed. You can check out the individual launches at their Coinstore Launchpad – Help Center.
  • Coinstore protects and compensates their users against failed launches to enhance launchpad quality.
  • Two trusted local market makers in the Netherlands were consulted about working with Coinstore; both regard it as a viable option and offer longer-term services to mitigate risks like maintaining a healthy order book.

Given the above, THX Network B.V. has already decided to work with Coinstore and will be covering all the direct costs associated with this launch. Now, it’s a matter of determining if this proposal is of sufficient quality to move to a vote, and for the community to decide if they want to support these efforts by providing the required liquidity, which is currently one of the main goals of the community treasury.

4

To quickly add to this, one more reason for going for a Coinstore listing is that they have 7M KYC’ed users in emerging markets and double digits monthly growth. This aligns perfectly with our customer’s user base, even several of their tokens are listed there. It also aligns with the user base of our native blockchain network; Polygon.

Data from Coinstore April '24 Factsheet.

5

I am active participant in all project outputs through the launchpad platform on the Coinstore. I really like this exchange - first of all, for its price protection for ordinary market participants, which helps to be safe in such a volatile market. So I support your decision. Are there any dates or approximate deadlines for the release of your project?

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Thanks for dropping by and for your comment @lin4o! The launch on Coinstore is scheduled for next month.

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Understand your points Mieszko but not sure I entirely agree, it’s not just Quopi, but more recently PXR and there have been other projects that get tucked away, that I believe are worth discrediting. Despite the exchange willfully saying they can protect and compensate their users against any failed launches I can’t agree with this as a an entirely valid point, they do not carry a proof of reserve that I can find on site which is a major red :triangular_flag_on_post:to any sophisticated investor or VCs wanting to put money on the exchange and trade.

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Yes, there are other failed launches there too. Still, the point remains the same. Coinstore makes some efforts to minimize risks for their users, while most launchpads do not.

Proof of reserves is indeed a decent quality signal for exchanges. At THX Network B.V., we didn’t take this into account in the exchange selection, we definitely should do that for future listings. However, as stated, there were no other launchpad options available in our jurisdiction, so we did not have the luxury of choosing one that provides proof of reserves.
Fortunately, we’re not targeting sophisticated investors here. For that, the company has a SAFT and private sales. We’re targeting small retail holders for regional marketing purposes.

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9

@governance-council the proposal has gathered feedback. Requesting this proposal to move towards vote on https://snapshot.org/#/thxprotocol.eth/.

Let’s formalize the approval vote below.

  • YES, valid proposal criteria met
  • NO, valid proposal criteria not met
0 voters
1 Like
10

@governance-council thank you everyone for reviewing and voting!

With 6 ‘yes’ votes out of a possible 7 votes the proposal got an easy majority whether it met the quality criteria. It will move towards a vote as early as tomorrow! :ballot_box: :clap:

Don’t forget to stake and lock your tokens to participate in voting :slight_smile:

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Vote is active at THX Community Proposal: Supplying CEX Launch Initial Liquidity (snapshot.org)

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Vote passed! :white_check_mark:

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The multisig signers have completed the transfers to Coinstore :muscle:

Transaction IDs:

  • 0x437a2c1a6ae9c9cf861877379a35f5673d83a249f966684975312f1f01ed9f73 10 USDT test ETH
  • 0x1f86b954e4d63f98a116f7c0da1e16b7de93daa0c0a006c0996e3c148bc5b0ab 10 USDT test Polygon
  • 0x6a3d779ac757f69aee44d103d299ae48b294cebbb3e24a29be61370fd80ef4db 24990 USDT ETH
  • 0xc18b53f4a3b4df2f20ee1e1e87894b8cd86b6734c6345605ae4086ba9d4ee6c3 24990 USDT Polygon

Due to the recent rise in $MATIC and $ETH prices since the proposal estimate on March 10th, the following surplus in community treasury funds remains in the community Safes:

  • 523 USDT in eth:0x4a30c80A2c41312ce4ee79f730C8D84cAD9f7B31
  • 5423 USDC in matic:0x59429282A4e566373a1F2D5F20CF08184b46ee07
  • 11 USDT in matic:0x59429282A4e566373a1F2D5F20CF08184b46ee07
1 Like