Make ARTH more desirable

To figure out the best approach to getting ARTH back to and above $1, we really need to understand how we got to the current state of ARTH, where it’s under $1, a backlog 736,000 ARTHB waiting to be redeemed, and a surplus of bonds with few buyers stepping up.

Not only do we need a solution that will help the project get to an expansion phase, but one robust enough that it is capable of handling and shortening future contraction periods. I mentioned a few ideas in my other proposal, AIP6.

Problem:

ARTH is under $1 and few people are buying bonds so there isn’t a way to bring the price back to and above $1 outside of waiting it out.

However, ARTH is worth $1, the current peg. Buying below $1 is like buying 1 USD at a discount. People will buy ARTH below $1 and sell as it get close to $1 which negates the effect of bond buyers.

How do we make ARTH more attractive so that people are willing hold it and even buy it above $1? We really have to ask, what can ARTH do for you? Right now I don’t think there’s a strong reason to buy ARTH above the target price, which is why we’re in a extended contraction period, one where bond buyers aren’t willing to step up.

When ARTH is over $1, people are incentivized to sell and buy back when the price is below $1. This causes a constant cycle of downward pressure on the price. When we’re in an expansion phase, ARTH holders aren’t rewarded unless they provide liquidity with their ARTH, but providing liquidity isn’t a risk free endeavor, due to the risk of impermanent loss. Selling your ARTH for DAI makes much more sense since you can still retain access and use of the funds.

Solution:

The solution to this is very simple. It’s already being used by ARTH holders who bought at a discount and are waiting for the price to get to $1 to sell, which will push the price down.

There’s currently a pool to stake ARTH for MAHA with 900k ARTH being staked. I have noticed that the amount staked has more than doubled since the price of ARTH dropped below $0.90. Most of the ARTH will be unstaked and dumped when ARTH gets near $1. What can we do to entice them to continue staking longer? We need to increase the rewards for the pool or create additional temporary pools when people aren’t buying bonds.

The current pool awards 4000MAHA over 30 days, which is roughly 133.3 MAHA awarded each day, pro-rated to the stakers. The pool currently holds 900,000 ARTH and each additional staker dilutes the rewards. There are currently 3,500,000 ARTH tokens outstanding. If we triple or quadruple the pools/rewards, it will soak up all the available ARTH. It’s a temporary measure, but it’s an easy fix and great marketing as well. I doubt the stat page is updated but we’ll just use the listed number of 150% annual rewards for staking ARTH. If we 3x or 4x, we can advertise 450% or 600% annual returns paid in MAHA, a very undervalued token. Who wouldn’t be excited about that? I know I am. If additional pools are opened. I personally will buy ARTH well above $1 to get 450-600% staking rewards in MAHA.

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To build on this as well, since 1% of Bond redemption goes to the stability fee and burning of maha, couldn’t a similar situation go into effect where a percentage of the maha mined goes toward buying up Arth in contraction phases. Perhaps this is already how it works. Still just learning.

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So the only issue here is how much MAHA there is available to budget for these pools (MahaDAO Transparency Report January 2021 | by Steven Enamakel | MahaDAO | Jan, 2021 | Medium details how much we can spend).

This budget can be changed and we can look at rearranging some of the rewards to give more to this pool. However, the issue is that this will not scale as the supply of MAHA is limited whereas the supply of ARTH is unlimited.

Every month about 55k MAHA is available; which means that even if we roughly 14x’d the rewards (from 4k MAHA) we still can only meet the demand for 30mn ARTH coins (since right now we are at 3mn coins).

Still short term however this could work.

This is a great idea of presenting the rewards!

Yes, I agree that it’s a temporary band-aide since its very costly when the circulating supply of ARTH increases to the hundreds of million. Long term solutions needs to be put in place such as use cases for ARTH - for example, trading pairs.

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Agree with this 100%. I know a few folks who are sitting on their hands and waiting to sell their $ARTH when it gets back to $1. Why? They are seeking better yields. These would be meaningful withdrawals based on the size of the pool. Unless the pool grows (through an increase in buyers - who need a reason to buy) or incentives increase for owning $ARTH and staking $ARTH, this cycle will may not be broken, $ARTH will not reach a $1 and worst case scenario is current $ARTH holders liquidate and cut losses, out of a combination of frustration, but more importantly seeking better yields and the high opportunity costs of holding a token that has a hypothetical ceiling at or near $1 (which is an appreciation of only 30% - there are far better performing coins). I know a handful of those people as well. This group here supports $ARTH and $MAHA and are optimistic about the price getting back to $1 but the discord channel is dead (very low engagement) and there are better yield opportunities with better coin appreciation opportunities in the market, which smart money will move to unless incentives are increased. Additionally the supply does not seem to be contracting OR the website is not being updated? Supply should be well below 3m at this point but it is not being updated. Showing potential coin buyers that information is current and the team is engaged (by updating the website, contributing/engaging actively on discord) would also be a positive sign to potential buyers that this is a project worth getting involved with but when the supply #s (ARTH - World's first Valuecoin)
don’t change on the website when the epochs expire or ever afterwards (literally days have passed without the supply of $ARTH number going down) - opportunities to build trust are lost with people who are watching before they buy. I’ve literally seen it happen with my own eyes. If the price were at the $1 peg it would likely be less of an issue but when the price is struggling to peg and the basic data on the website isn’t update to match the contraction / buy back it doesn’t build confidence in potential buyers who decide to go elsewhere for their yield and stablecoins because there is no shortage of opportunities in the market right now. Doing the little things right makes a big difference.

It has been a hard sell in my investor groups, many have given up on this project and written it off already.

A few examples to consider:
https://harvest.finance/ - 147m mkt cap similar yield with > 800m deposited
https://app.badger.finance/ market cap 200m, 2b in deposits, Digg yield is 133%
https://app.beefy.finance/ mkt cap of 117m has rewards in the thousands of % and higher

ARTH + MAHA = a ~$12m market cap - SO EARLY, LOW MARKET CAP = HIGH PERCEIVED RISK WHICH NEEDS TO BE COMPENSATED WITH YIELD

These projects are all more established based on market cap and deposits aka more trusted and their yields are on par at worst or much better than what $ARTH/$MAHA is offering.

Based on how early the projects are, rewards need to be increased to keep up with the market