## Author

- Evmos DAO
- Juno Growth DAO

## Summary

This proposal requests a spend of 3,000,000 EVMOS from the Community Pool to establish DAO Liquidity of EVMOS/JUNO within both ecosystems.

## Abstract

This proposal is the mirror of the proposal on JUNO (PROP XY) to request 841,005 JUNO. If only one proposal passes then the community spend shall be returned to the corresponding community pool. If both proposals pass, 1,500,000 EVMOS would be directly swapped for 420,502.5 JUNO from the Juno Community Pool. This is an approximate value of $500,000. Afterwards, both multisig parties will add funds to the EVMOS/JUNO pair on each ecosystem. This does not create sell pressure in any way.

Both parties agrees that this liquidity shall not be sold or removed from the liquidity pool for a minimum of 4 year. Liquidity is owned by each DAO; Juno DAO manages the pool on the Juno side and Evmos DAO on the Evmos side. A governance text proposal is required to remove or modify the LP position in any way.

**Main benefit for community owned liquidity:**

- Laying a sustainable foundation for liquidity
- Long term alignment between Evmos and Juno. Opens the door for future collaborations
- Diversifies treasury in non native token; allowing both chains to benefit from each other's strengths and grow together.
- Generating revenue; LP fees flows back to the community / DAO

**Main risks for community owned liquidity**:

- Impermanent Loss
- Smart Contract Risks (can be mitigated on the Evmos side by putting liquidity into UniV3/V2)

## Conversion Rate

The conversion rate takes circulating supply, total cap, inflation and token unlocks into consideration. The party with more aggressive inflation (in this case Evmos) shall compensate the other for dilution. The compensation cannot be pooled since it unbalances the liquidity pool. Instead it will move to the community pool of Juno where it cannot be sold for 4 years. This way we achieve a fair and one-time swap execution between two community pools. Afterwards both parties are exposed to the same upside, downside and IL risks.

| | Evmos | Juno |
| --- | --- | --- |
| Circulating Supply | 442M | 97M |
| increase_to_total_supply | 226% | 192% |
| Total Supply | 1,000M | 186M |
| | | |
| Base Evmos | 100% | 192 / 226 * 100 = 84.95% |
| Base Juno | 226/192 * 100 = 117.7% | 100% |
| Price Ratio | 0.33 | 3.33 |
| | | |
| Community Pool Request | 3,000,000 Evmos | 3,000,000 * 84.95% * 0.33 = 841,005 Juno |
| Pooling per ecosystem | (3,000,000 * 84.95)/2 = 1,274,250 Evmos | 841,005 / 2 = 420,502.5 Juno |
| Dilution Compensation | 3,000,000 * (1-0.8495) = 451,500 Evmos (to Juno Community Pool) | 0 |

## Multisig

4/6 threshold on Evmos

- 2 DAO
- 2 VAL
- 2 JUNO / EVMOS COMMUNITY MEMBERS