GSR Market Making Proposal

GSR Market Making Proposal <> Nation3(NATION)

This proposal outlines the indicative terms of an agreement for market-making services (the “Agreement”) to be provided by GSR Markets Limited (“GSR”) for the NATION token, and provides relevant background on GSR. The aim of this proposal is to seek approval for a loan of 2,104 NATION tokens, which would be used by GSR to provide liquidity across a set of specifically-supported venues.

GSR: Who are we?

Founded in 2013, GSR is a crypto market-maker that utilizes its proprietary trading system, often trading $3 - $5bn a day of volume across the entire crypto ecosystem. Composed of nearly 300 individuals, with a core engineering and trading focus, GSR uses nearly a decade of market data and expertise to continuously refine and expand its trading engines and programmatic execution capabilities, with a focus on providing best-in-class service to our clients across different stages of their development. With connectivity across 60+ crypto exchanges, GSR is also integrated with various major decentralized exchanges (DEX’s) and lending protocols.

GSR partners with projects across the entire crypto ecosystem, and has considerable expertise across the decentralized finance (DeFi) space. GSR has provided, at times, over US$1bn of liquidity a day to DeFi markets. GSR has invested in excess of $50m in DeFi protocols in the Web3 ecosystem, with the intention of further expanding its investments in the second half 2022.

Nation3 and GSR: How can we add Value to Nation3’s community?

After engaging with some of the prominent partners of the Nation3 movement, and observing the evolution of its governance, which echoes the ideals of a true Web3 crypto-powered community, we believe GSR is uniquely positioned to provide liquidity for the NATION token across various centralized exchanges (many of whom require a dedicated market-maker).

Nation3’s ability to leverage the Web3 ecosystem in transforming the concept of nation-states to crypto-powered communities is a testament to its unique ethos. As the Nation3 community evolves beyond its current size, it is essential for it to gain exposure across a broader set of market participants. Being listed across centralized exchanges (CEX’s) should allow the NATION token to penetrate a larger and more diverse audience and facilitate its further adoption across retail and institutional investors who seek trading opportunities. As a market-maker, GSR aims to facilitate frictionless price discovery and, while doing so, GSR will serve as a buyer and seller of last-resort, help reduce transaction costs and provide liquidity in periods of heightened market volatility.

Market-Making Proposal

This market-making proposal will require:

  • Approval for GSR to serve as an official market-making partner for Nation3.
  • An authorization to lend 2,104 NATION tokens from the community treasury to GSR to be used for providing liquidity across different venues.

The Agreement will allow GSR to repay the following NATION token amounts from the loan on the dates set out below:

  • 1,052 NATION tokens, 6 months from the inception date of the market-making deal, at 1,578,000 USDT*, paid to the Nation3 treasury.
  • 1,052 NATION tokens 12 months from the inception date of the market-making deal, at 2,104,000 USDT, paid to the Nation3 treasury.

At the end of the 12 month period, if GSR has not elected to repay the loan in USDT (as outlined above), GSR will return the balance of the 2,104 NATION token loan amount to the Nation3 treasury.

*USDT refers to the stablecoin ‘Tether’

GSR Commits To

As part of this market-making proposal, GSR will:

  • Use commercially reasonable efforts to provide liquidity for any NATION token listing on supported centralized exchange venues.
  • Deploy the loan to provide liquidity to NATION token markets, and will NOT use the loan for any other commercial purposes such as lending or staking (diluting current yields).
13 Likes

Thanks for this proposal, GSR team!

Liquidity is indeed quite important for the Nation3 DAO, just wanted to lay out some actionable ways that this proposal might help:

  • Obviously more liquidity would help the DAO hedge some of its tokens into BTC/ETH and stables. This is paramount to ensure financial stability for the project and for contributors.
  • Significant liquidity is a requirement for having $NATION as collateral in different DeFi protocols.
  • It would also help Nation3 gain exposure to people that might want to read more about the project and become citizens.

In terms of the loan amounts (which is structured like the Nation3 DAO offering call options to GSR) it seems in tune with the market. In case that the loan gets repaid in USDT by GSR, it would mean that the DAO would be selling $NATION at $1500 and $2000 respectively. That’s roughly 2x-2.5x more than today’s price. It sets incentives right for GSR to work hard towards a common goal.

Something that I’d like to point out though, is that the denomination of the loan repayment would be better in USDC. As someone who’s been in the space for long, I’ve seen the rollercoaster that USDT has been. It’s never collapsed (thankfully to the space), but they are quite opaque compared to USDC. USDC has quite a great track record of being fully collateralized 1:1 to USD, so I’d like to request to amend the proposal to replace all USDT mentions for USDC.

10 Likes

great proposal. :grinning: :grinning: :grinning:

2 Likes

great desicion Let’s hodl

2 Likes

Great proposal!Only one question, what is the collateral from GSR for this lending of 2104 $NATION? I think this is an important point, which is not mentioned in the Proposal.

1 Like

Support the proposal and look forward to GSR expanding the influence of the NATION3 community.

3 Likes

Everything is moving in a better direction :two_hearts:

3 Likes

The community has moved forward, but I have two questions:

  1. If GSR fails to pay usDT of the corresponding amount, it should be in breach of contract and the details should be written more clearly.

  2. Since GSR is a loan, there should be collateral, which should be clearly written into the proposal;

1 Like

https://www.gsr.io/ is that the official webset of GSR?

It’s a good proposal to have a crypto market maker for Nation3, good news and will absolutely help Nation to grow, but I would like to point out:

  1. If GSR could not be elected to pay the loan by the end of 12 months later, not only 2,104 NATION should be repaid, we should ask for reasonable interest.
  2. If finally, GSR can’t pay USDT (USDC) or NATION, what is the plan B, hope to have a clear answer for the solution.

Thank you for the proposal. The repayment terms seem reasonable compared to $NATION price at this time. The current value of the loan ($2M) probably isn’t a material consideration for a firm of your size at any other time, but considering the recent Luna contagion events, does GSR’s past exposure to LFG materially affect its repayment ability of the $NATION loan in any way in the future?

1 Like

Yes, that’s their site

@luis 1. Thank you for your support and consideration. We believe this proposal reflects both our and the community’s stance in cultivating a relationship-based ecosystem. GSR’s reputation is a highly-valued asset, and by engaging in this public proposal, we appreciate what is at stake.

With regards to USDT (‘Tether’), most of the pairs we will need to support will be $NATION/USDT so having the loan repayment in the same currency simplifies our operations and helps us generate liquidity. Those pairs gather the most volume and we want to be very active there from the start of the process.

@abhijoysarkar, The combination of macro headwinds combined with crypto-specific contagions (such as Luna and broader over-leveraging) has certainly proved a challenging environment, but our active adherence to risk management combined with a well capitalized balance sheet have allowed us to continue serving our clients across diverse business lines. GSR has been around since 2013, founded by former traditional finance executives that have brought with them the lessons learned during the great financial crisis about credit risk, portfolio risk management and most significantly: the importance of reputation. put simply the idea of always doing right by your clients. We have been an actor in the crypto ecosystem for close to ten years and plan on being here for many more, the key to our success is doing the right thing by our clients and counterparts.

2 Likes

Hi @WilsonNG, GSR will not pay interest on the token loan used to provide liquidity across various venues. We will not stake or earn interest from the loan either, it will be managed and distributed across trading venues to create tradable environments on those platforms, centralized or decentralized.
We also do not charge initiation or trading fees, we will bear the costs associated with trading the token so that the only transaction between Nation3 and GSR is the token loan and its return or potential repayment.

2 Likes