RGP-17: Ribbon Bond Issuance

Proposals
1

Summary

We recently announced our partnership [1] with Porter Finance [2]. We want to be one of the first to issue bonds on-chain through Porter.

At time of writing, the Ribbon Multisig is sitting on ~$70M [3] worth of RBN tokens. We propose to raise cash for working capital by collateralizing $RBN and issuing bonds against it through Porter.

Proposal

We are working with Porter Finance to issue and sell to lenders $3M of convertible bonds [4] backed by $15M worth of $RBN collateral. The exact amount issued will depend on the interest rates at auction time, but we are targeting up to $3M. There are a number of uses for this working capital: protocol owned liquidity, bootstrapping the stablecoin supply in our covered call Fuse pool [5], or undercollateralized lending through Maple Finance [6].

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The call strike will be 3x the market price at issuance.

We expect a 3-4% net borrow APR for the cash raised since the 7% borrow APR and Porter’s 1% service fee will be offset with 5% in Porter tokens through their liquidity mining program. Since the token has not launched, we will receive IOU’s redeemable for the Porter token at a later date in the future.

Conclusion

The goal of a DAO is to maximize long-term token holder value. Issuing bonds backed by RBN allows us to increase our working capital, without giving up equity, to aggressively improve our protocol through off-chain and on-chain activities such as protocol-owned liquidity, increasing stablecoin supply in the covered call fuse pool, or earning yield for a rainy day.

Launch

We are scheduled to collateralize $15M in RBN and raise up to $3M in stablecoins late May / early June.

Voting

This proposal will be posted on the forum for 1 week prior to voting. Voting will then be open on Snapshot for 5 days. This vote will be a single choice vote. You may vote on the proposal by selecting “Yes, let’s do it” or “No, this is not the way”.

UPDATE

We are postponing the snapshot until we finalize bond issuance details with Porter Finance.

References:

  1. Ribbon X Porter Partnership

  2. Porter Finance

  3. Ribbon Multisig

  4. Convertible Bonds Definition

  5. Covered Call Fuse Pool

  6. Maple Finance

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2

I strongly support Ribbon using Porter to raise working capital via debt. Nascent is an investor in both Ribbon and Porter. Our Chief Architect, Brock Elmore, recently participated in an audit of Porter’s contracts conducted by Spearbit, also a Nascent portfolio company. I state this both to disclose our bias and to show how deeply familiar we are with Porter’s offering.

Given the current market conditions, it is especially attractive for Ribbon to raise working capital via debt using Porter, rather than by selling RBN. Other DAOs are also likely to find this a compelling proposition and Ribbon dog-fooding this offering will help build awareness and confidence for the Ribbon Treasury product.

1 Like