Maintaining Market Price

Understanding backing and potential DAO strategies.

Vapor DAO is ultimately inspired by Olympus DAO's premier model. We say "VAPOR is backed by the treasury" because each Vapor token has an intrinsic value of 1 USDC. In addition to this intrinsic value, the treasury contains additional reserves (comprising of Sui, Defi strategies, and Vapor ecosystem assets), which will eventually be paid out to stakers of VAPOR in the form of rebase rewards.

However, the actual market price of VAPOR or at any given time is ultimately dictated by market pressures. The multisig and team has a variety of levers to ensure that VAPOR will consistently trade above its backing value.

Scenarios for strategies:

(IV = Intrinsic Value, RFV = Risk Free Value)

• IV < Market Price < RFV

• IV > Market Price

DAO Strategies

IV < Market Price < RFV

Ultimately, the team must maintain the trust and confidence of the community and the market. The best way to do that is by behaving predictably, within the parameters agreed upon by the community.

Continuation of Defi strategy deployments

Utilize hard treasury assets into liquidity pools or participate in yield farming incentive programs to generate further yield on the treasury, i.e. research and invest in more profitable Defi strategies.

For instance, instead of a single-asset sUSDC (Scallop USDC) deposit, the treasury would add LP on a DEX like FlowX or Cetus.

Adjust Bond Parameters

In order to mitigate the impact of continued bond dilution below RFV, bond minimum prices would be adjusted such that the maximum bond discount is 0%. Since adjusting minimum prices is just another mechanism for managing bond capacity, this power falls within the multisig's authority to manage bond capacity.

This signal should reassure buyers of VAPOR below RFV per token that their claim on the treasury reserves will not be excessively diluted by continued bonding below RFV.

Reducing Staking Reward Rate

In order to give an irrational market pricing VAPOR below RFV the time to correct itself, the policy team may reduce the staking reward rate to mitigate emissions.

Emergency reward rate reductions will be voted on by the community of token holders through governance.

Assuming an emergency reward rate reduction proposal passes, the reduction would be implemented rapidly to maximize the impact of the emergency change, rather than in the usual gradual manner over the course of a week.

IV > Market Price

Inverse Bonds

In the event that VAPOR were to trade persistently below IV, as a last resort the team would launch inverse bonds, which accept VAPOR in return for USDC at a discounted rate, and then the bonded VAPOR is burned, shrinking the supply of VAPOR. This process increases the backing per VAPOR and extends the runway.