The below process outlines how the Tangle DAO LLC Committee is to liquidate SMR or any other token assets it may hold. This process shall be followed until it, or a revised process, can officially be integrated and confirmed by the community within the [Exhibit C- V1.md (The Shimmer Community Grant Committee)](https://hackmd.io/MBh_1dR4SoeCMKvMYOw3Jg) Shimmer treasury committee framework.

***Objective:** This process foundation is to ensure the Treasury can liquidate assets for operations while maintaining zero or minimal impact ont he market price.*

# PROCESS

The committee developed the below process so that the Treasury can fund operations while balancing the cost of liquidation against the effect a trade would have on the token price. There are three liquidation methods the committee shall use; OTC (over-the-counter), DEX (decentralized exchange), & CEX (centralized exchange). The decision tree below outlines what liquidation methods should be prioritized based on the liquidated amount.


**Summary**

Each liquidation method will have a detailed process to follow. The next prioritized liquidation method shall be used if the designated liquidation method does not meet the specified criteria. If no methods exist within the requirements set below, then the committee will conduct no liquidation. Aside from each process, the bullet points below will be foundational to all three liquidation methods.

All liquidations shall be halted if:
* There is a 10% price drop within 24 hours since the liquidation starts.
* The price extends below the 20 SMA (20-day simple moving average).

**OTC Liquidation**
1. OTC clients will be introduced to the Tangle Treasury through the Program and Co-Lead. If any outside member or reviewer is contacted by an interested OTC buyer, they should be directed to the Program and or Co-Lead.
1. All OTC sales will have a minimum threshold limit of 10,000 USDT and an upper threshold of 100,000 USDT.
1. All OTC sales will be given a -5% to +5% discount, given liquidity at that time. If DEXs and CEXs have a lot of liquidity, the Treasury may charge a 5% premium to conduct an OTC trade. However, if liquidity is very lean, the Treasury would give a 5% discount when executing a trade. If multiple OTC buyers exist during liquidation, the buyer who requests the most negligible discount or will pay the highest premium shall be prioritized as a buyer.
1. The market price will be based on the 20 SMA (20-day simple moving average) for (Shimmer ($SMR) or Iota (Miota)) USD (Historical Data). The average price of the Open and Close from the previous day’s price will be the OTC exchange price. This market price basis may be changed once price Oracles are present on Shimmer EVM.
1. Until a Smart Contract escrow service is available, the process of exchange will be defined as below:
* The Treasury and OTC buyer agree on an exchange rate that is set as a foundation based on the previous day’s average price or with a price oracle on the Shimmer or IOTA EVM network. They will also agree on the number of tokens and discounts agreed upon in writing. The Treasury will have a legal document written for both parties to sign to ensure the Tangle DAO LLCs KYC/AML policy is followed.
* Agreement is then provided to the committee and requires a majority vote by the treasury committee members to execute OTC trade.
* Until an intelligent escrow contract or traditional escrow service is available, the OTC buyer will first send USDT to the Treasuries in BUSDT or Tangle DAO LLC approved stable token.
* Upon confirmation of funds, the committee will complete a multi-sig SMR or asset token and send a transaction to the buyer’s address.
* The program lead and co-lead will seek confirmation of receipt from the OTC buyer to ensure they have received their funds and have that confirmation in writing.
1. A 24-hour waiting period will occur after confirmation by the receiver is received before the OTC trade is publicized and entered into the Treasury transparency expense report.
· All OTC buyers must KYC with AuditOne to ensure the Treasury adheres to their KYC/AML policy.

**DEX (Decentralized Exchange) Liquidation**
1. The program lead will use accepted DEX exchanges on the Shimmer or IOTA Network below. The committee has agreed upon these DEXs. DEXs can be added or removed by the committee with a majority vote as new DEXs will probably list on the Shimmer and IOTA mainnet networks in the future.
* IOTABee
* ShimmerSea
* TangleSwap
2. The program lead will assess the token exchange price on each DEXs. Each DEX must allow for multi-sig signing. The lowest DEX will be used, and other DEXs whose liquidation rate is within 2% of the lowest DEXs rate will also be used for liquidation. If DEXs have a greater than 2% exchange rate, they shall not be used for that liquidation at that time. The liquidation will be spread evenly across the DEXs within the acceptable exchange rate parameters. Consideration shall be given to ensure there are no excessive fee costs incurred.
3. Each liquidation will be completed with a maximum 1% slippage rate and no more.
4. The program lead will create multi-sig transactions with a 3 of 5 signature requirement for each liquidation.
5. The team will then complete the signatures and execute the trade.
6. Liquidation activities will be kept private until the completion of the liquidation. There will be a 24-hour hold period before updating the Tangle transparency expense report.

**CEX (Centralized Exchange) Liquidation**
1. The below exchanges will be used for liquidation to USDT. Other exchanges can be added or removed with a committee majority vote.
* BitForex
* BitFinex
* BitPanda
2. Until a 3rd party provider can conduct liquidation for the Tangle Treasury, the below process will be used.
3. No more than 10,000 USDT in SMR will be exchanged at a time.
4. Analysis to ensure no excessive trading fees incurring a significant cost.
5. The program lead will use the exchange that allows the Tangle Treasury to conduct a trade offering the lowest rate and suitable liquidity.
6. The program lead summarizes which exchange and at which rate the proposed liquidation will be conducted. The program lead then initiates a transfer of SMR to the Tangle Treasuries exchange account.
7. The committee will review the liquidation exchange summary, sign, and execute the transaction.
8. Once the transaction is completed, the Program Lead will submit a limit order above market price and shall not sell into bids.
9. Once the exchange sale completes, the Program Lead will immediately send the USDT to the Tangle DAO multi-sig wallet.
10. Liquidation activities will be kept private until the completion of the liquidation. There will be a 24-hour hold period before updating the Tangle transparency expense report.