Proposal “Core-Feedbands-Hedge-Reimbursement“ (Closed)Back

Title:Core Team Feedbands Fiat Guarantee Reimbursement
Owner:glennaustin
One-time payment: 721 DASH (65602 USD)
Completed payments: 1 totaling in 721 DASH (0 month remaining)
Payment start/end: 2018-04-18 / 2018-05-18 (added on 2018-04-17)
Votes: 689 Yes / 52 No / 12 Abstain

Proposal description

This proposal is cross-posted from https://www.dash.org/forum/threads/proposal-core-team-feedbands-fiat-guarantee-reimbursement.36618/

Proposal background

This proposal replenishes the Dash Core Marketing budget, which provides escrow services and a fiat guarantee to a Feedbands proposal ((https://www.dashcentral.org/p/scale-internet-ads-dashinformer) which purchases internet ads promoting the Dash network. As described in their proposal, Feedbands requested a fiat guarantee since most of the liabilities associated with purchasing online advertisement are in fiat.

Due to the recent sharp drop in the price of Dash, Dash Core Group experienced losses of $269,085.92 related to its exposure to Feedband’s fiat guarantee. The budget proposal was submitted to the network on February 14th at a price of Dash equal to $643.27. By the time the first network payment was distributed on March 4th, the price of Dash had dropped to $607.45 and by the time the first payment was invoiced and processed on March 8th, the rate was $454.31.  The loss from providing the hedge for the first payment was $96,937.21. The second network distribution was April 3rd at a rate of $332.20 and was processed on April 11th at a rate of $307.70.  The loss from providing the hedge for the second payment was $172,148.71.

Potential future liability
Next month, assuming the Dash network decides to continue funding Feedbands in this budget cycle, and upon completion of milestone 2 (another $200,000 in verified ad spend), Feedbands will request the final payment tranche of $330,000.  Dash Core Group may need to post another proposal requesting reimbursement if the price of Dash doesn’t recover to the $643.27 level.

If you have any questions, please direct them to @Fernando in the original Forum post.

Requested funding is as follows for the May 3rd budget cycle:
- 716.07 Dash for funding shortfall due to fiat guarantee ($269,085.92 @ $375.78 per Dash)
- 5.00 Dash proposal reimbursement
Total: 721.07 Dash

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Discussion: Should we fund this proposal?

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1 point,10 months ago
Core shouldn't have been gambling like this.

Voting yes, but please do a proper hedge next time in a similar situation.
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1 point,10 months ago
voting YES. (I think Core should run a surplus of funds)
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4 points,10 months ago
Seems like the Feedbands proposal is becoming expensive to afford in a month with very little budget left for other tasks.
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2 points,10 months ago
Why I have nothing against this proposal as such, but I think there are more important projects to spend funds on. Voting NO.
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0 points,10 months ago
Why not hire a Technical Advisor on the market state and then sell off some dash for fiat when conditions become oversold, etc. Its actually not as hard as it looks for a hedge. I could help here.
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-1 point,11 months ago
Yes. Feedband's work is solid.
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-2 points,11 months ago
Every big online brand in the world spends and spends and spends and that's why they are a BIG BRAND. More you spend, bigger you get. Yes to this and yes to more money next time.
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2 points,11 months ago
Good conversation on the forum. Voting yes. The fiat amount guarantee was originally put in to limit how much money the advertising proposal would get in the event Dash continued to rocket --up-->

Nobody, including Feedbands, anticipated such a big drop in Dash value.

Once again, in a complex and challenging situation, Dash acts like the adult in the room. Well done Dash community and Core.

solarguy
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3 points,11 months ago
"Nobody, including Feedbands, anticipated such a big drop in Dash value.
Once again, in a complex and challenging situation, Dash acts like the adult in the room. Well done Dash community and Core."

I do agree. But, as @Arthyron says, we need to learn and plans to avoid this kind of situation happen again.
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1 point,11 months ago
I agree with @Arthyron. This event, and the discussion surrounding it, will end up giving us more and better tools to deal with volatility.
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1 point,11 months ago
I voted yes, by the way.
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1 point,11 months ago
We do feel a sense of remorse regarding the fiat guarantee. At the time we executed the agreement, Dash was in the 600s and everyone was sort of expecting it to jump right back up to 1000. We felt it would help make sure that if/when that happened, we wouldn't be getting more than we asked for and the surplus generated would go to Core. At least that's how we envisioned it.

I recognize the strain put on Treasury this month from both this and our other proposal, and we completely understand if the Network chooses to vote down our standing Advertising proposal to make additional room in the treasury for other solid projects this month.

All that said, we are achieving incredible penetration on reddit, just check out r/cryptocurrency, r/bitcoin, or r/ethereum. We've received an agreement to ramp up Coindesk to a full 20% of their impressions, as well as with Coin Telegraph. If the ads continue, it will not be money wasted. As we've transitioned almost completely off of Google we believe we have found a more effective strategy here that seems to actually be working as we have been gaining some market share back.
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0 points,11 months ago
I'm not sure how much of that market upturn can be attributed to our advertising projects, but they certainly have helped, and I appreciate your candor and sense of responsibility in all of this.

As the first--to my knowledge at least--potential benefactor of a fiat-pegged budget guarantee, do you have any thoughts about the process, whether or not it should be used in the future, how it might be improved, changes that could be made to safeguard liabilities to the treasury, etc? There was some discussion on the forum but you mostly just clarified your position about this particular instance and your involvement.
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1 point,11 months ago
There is only one solution I have come up with that removes the upside for the proposal owner while also removing the downside risk from Core / Escrow providers:

Structuring the agreement such that if the value of Dash goes down, the proposal owner receives only the value of the Dash, but if the value goes up, they receive the fiat amount requested.

I am not sure what folks will think about this as it exposes the proposal owner to all of the downside and none of the upside. Personally we would have been happy to agree to this, as we could easily have made it work with less and did not want a larger budget for the project.

It is also important to keep in mind that our proposal was for something totally flexible as ad spending. Other proposals might have fixed costs that make the fiat guarantee necessary. Purchasing a building or a business, for example.

This may sound crazy but if Dash issued a second tier token designed to, tether to the USD (or the national currency of choice) and it is exchangeable for its dollar value in Dash at any time, then the DAO could payout in a unit that does not fluctuate, and it would be backed by a pool of funds set for that purpose.

Would we opt for a fiat guarantee again? I don't think it's worth the risk of this happening again. I also think this was a rare occurrence, much less likely to happen than the reverse scenario. But the treasury should not be a casino.
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3 points,11 months ago
As discussed on the forum, this will set a precedent, so Core will need to lay out rules and criteria and plans for future fiat guaranteed proposals so that we don't run in to this problem in the future.
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0 points,11 months ago
I do agree.
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