Place a limit buy order on ROOK token

Draft: Place a limit buy order on ROOK token

Proposal

Place one or more limit buy orders in order to create a decent floor and support the price.

Background

Right now the total marketcap of KeeperDAO sits at around 88m$ while in treasury we have a bit over 92m$. Basically, the market values our tech and protocol negatively which is… not desired.

My proposal is to use a couple of million $ up to 10% of the treasury to place either 1 large limit order OR 2 maybe 3 smaller ones on different price levels.

I think a psychological level would be 100$ that we should hold. Therefore, one of these limit orders should be placed around that number which is currently around 25% bellow market price.

To take into consideration:

  1. We can adjust these limit orders price levels once every 2-3 months if necessary based on market volatility.
  2. We can increase or decrease the amount of funds used for the limit orders every 2-3 months if necessary.
  3. Currently the liquidity of rook is not great and therefore if there is enough sell pressure we could have serious spikes down which will make ROOK difficult to integrate in future use cases.
  4. Having the limit order in place will keep the holders much more relaxed, encourage more people to buy and hold the token while keeping a positive vibe in the community.
  5. We create another use case for the treasury.
  6. We could consider to burn the tokens that are eventually bought back thus reducing the supply.

Specification

To be discussed.

10 Likes

Good initiative.

i think its baffling to see that this token gets overlooked by so many people with this kind of earnings and a treasury that is higher than the total marketcap of the actual token.

In regular markets they do “share buybacks”, i think its a good idea to use a part of the treasury to this use as well.

3 Likes

This seems to be well agreed upon, and the next question would be determining the size and locations of these orders. I’m hopeful once we reach rough consensus there, this KIP could be formalized and then reviewed by Sophons sooner than later.

I also would like us to look at placing limit orders in terms of both USD and Eth price.

Just as a starting point, my personal suggestions would be:
$2.5m at $100
$2.5m at $125
1000 Eth at 0.04

I’d also like for us to essentially make these orders “trailing”, like so:
For every $50 we recover, I think we should move the $2.5m orders up $25 - this goes up to $250.
For every .01 we recover, we should move the Eth order up .005 - this goes up to .06.

In practice, this means:

ROOK/Stables
If/when ROOK reaches $200, we move the orders to $125 and $150.
If/when ROOK reaches $250, we move the orders to $150 and $175.
If/when ROOK reaches $300, we move the orders to $175 and $200.
If/when ROOK reaches $350, we move the orders to $200 and $225.
If/when ROOK reaches $400, we move the orders to $225 and $250.

ROOK/Eth
If/when ROOK reaches .05, we move the Eth order up to .045.
If/when ROOK reaches .06, we move the Eth order up to .05.
If/when ROOK reaches .07, we move the Eth order up to .055.
If/when ROOK reaches .08, we move the Eth order up to .06.

3 Likes

You propose what to do when the price moves up. What do we do if the price moves down and breaks through these ‘walls’? Do we allocate another $2.5m and/or 1000 eth from the treasury?

I think regular buybacks are better because it alleviates the sell pressure at all price levels.

I think chances are very low for the price to break ALL these levels since:

  1. Treasury is higher than marketcap … not sure what sellers are left at this stage
  2. The token distribution trough users is quite good and there are not super large whales that could push the price lower
  3. in combination with the regular buy back I think there super small chances for them to break

But if that happens we can discuss another KIP and analyze the situation. Honestly if those levels break means literally no one wants our token which i highly doubt will happen.

I especially agree with having a maximum 250$ limit level for now since I don’t want these limit orders follow blindly the increase of rook price in case of a massive pump to 1000$ for example.

We are below 0.04 eth at the moment…

In any case, I’m not opposed to the limit orders but governance is not terribly fast. My point is that I think we should work through the buyback first and then see if we still need these limit orders.

This limit orders are needed because they will work best together with the boost of liquidity Lapras suggested in the other KIP. Also as I said, I really doubt anyone would sell into these since they act as a heavy duty floor… I would personally long ROOK every time we get closer to a limit order and like me I think a lot of other traders - might be quite a safe bet and trade since the downside potential is small. This will create additional buy pressure around those levels and thus naturally protecting the treasury limit orders.

Also I think that we can not place too small limit orders since those are much more vulnerable.

At the end of the day, worst case would be for them to be filled resulting in a buy back, we could either burn that rook later OR sell it back slowly once the price is high or use it as collateral etc. Overall I would take this risk. We do need to create a floor that would boost the credibility of the token and increase the trust among the hodlers.

What I would like to see is that we won’t give away large quantities of ROOK to partners/exchanges and such because they could actually sell into these limit orders. Therefore, I am asking the team to handle very carefully any type of exchange listing that requires us to pay large amounts of ROOK tokens. (I think FTX listing was a bad idea because of this, those guys do this with every single project, dump or hodlers right after the listing) either make it vested and slowly release over time on just give away some stables from treasury and not ROOK.

This type of exchange whales I think are the single threat to these limit orders.

2 Likes

My only problem with limit orders is. The limit walls are predefined. This makes any malicious actor to mis-use them to their personal use aka use them as exit liquidity.

There are some big ROOK whales, some are VCs, whom you can’t control when they would sell or buy. During mass selloff’s from such impatient whales, instead of punishing them, we support their cause of selling into our walls with better prices.

Thereby, our treasury funds acts as a proxy for someone’s liquidity. Not the ideal way to use our treasury funds.

I strongly want us to be very strict in terms of emissions now that we are a matured project. Being leniant on emissions and countering the sell pressure from these un-wanted rewards using buy walls is not the correct way to approach the problem imo.

Let’s strictly cut down emissions. Have x% of treasury profits that are TWAPped everyday/over the week to buy ROOK and burn. This isn’t deterministic in anyway and makes sure there is a consistent buy pressure in the market from the protocol revenues. I feel this way, we achieve more positive effect. You cut down the cause(emissions) and heal the price in an organic way

3 Likes