How to OTC Trade for a DAO? A Story from Tribe and Lido

People are doing this with Tribe after the stablecoin DAO announced their disbandment: bidding for their tokens.

It may seem promising for the DAO to receive this many offers—except for one thing. Even though these assets are all liquid and tradable on the open market, participants do not have a reasonable consensus on how to price these tokens.

Buyers started their bids with a price lower than the market price. When explaining their offer, one team said this:

We realize this offer is below current market value; however that market value is heavily impacted by slippage, and thus we believe that a lump sum at a set price from the DAO may serve the Tribe’s interests.

After more people swarmed into the bidding war, people started adding $50k on top of each other.

More importantly, the criteria to qualify a bid as a votable proposal is opaque. For example, a DAO member put Wintermute’s $500k bid for $INDEX token to snapshot but ignored the $600k bid made later.

If Tribe’s practice reflected a market failure, Lido’s series of proposals on diversifying treasury highlights the need for a new consensus on pricing tokens.

After the June market crash, a few members proposed to sell 10k ETH to DAI to diversify the treasury, which sold 2% of their gov tokens (worth $30m) later. In traditional finance, this type of order is usually executed by an OTC desk, a professional trading team settling large orders in exchange for a service fee. However, the entry requirement for becoming their client is pretty high. You must pass their KYC by submitting information about the legal entity or business representative–things that most DAOs do not possess.

I do not want to go through every detail of this story, as you can learn here. To sum it up:

  • The first proposal of selling 10k ETH to DAI was rejected because people felt that it did not include parameters of a standard OTC trade, like price, time, execution venue, execution strategy, etc.,
  • The second proposal was put up later. It proposed to sell 2% of Lido gov token (in liquid form) at a 7-day rolling average plus a 50% premium, and the VC Dragonfly would buy half of these tokens. It was rejected, too, as people wondered how the price was reached and why there was no lock-up.

By reading these posts on the gov forum, we can see how traditional OTC practice is incompatible with DAO organizations. Most OTC trades require some level of secrecy (negotiating in private telegram chats), which is against the transparent ethos of DAO.

If you read this far, I believe you’ve already felt something is missing– a new consensus on pricing assets. It was not needed in traditional finance, as traders did not have to explain why they reached the price. But in the era of DAO, where tens of thousands of people are all stakeholders in these trades, it is necessary. Without a shared understanding and process for OTC, communities will naturally struggle to reach a consensus.

The new pricing mechanisms must be:

  • Widely accepted for being fair and transparent
  • It barely requires human intervention and is hard to be manipulated
  • Usable for any order size

Interestingly, the best candidate for all of this is also nothing new. For example, in Lido story, they ended up with a strategy used in traditional finance: TWAP.

The passed proposal proposed to sell with a price that would be higher of:

  • TWAP price + 50% premium (~$1.45).
  • A 7-day backward-looking TWAP + 5% premium.

Lido’s decision to use TWAP gave me so much confidence in building our product, Integral SIZE, a TWAP-based decentralized exchange. Although most people have not used TWAP in their lifetime, they view it as a fair price, as it is accessible and hard to manipulate.

It is a common ground for humans to agree upon, and it’s scalable. Whether it’s a $1 or $100mil trade, TWAP execution will always be applicable.

Just like Uniswap provides the go-to price for small swaps, Integral SIZE delivers the go-to price for large swaps of DAOs and pro traders. It is the TWAP price provider in DeFi.

In 2 weeks, we’ll launch the product on Arbitrum, our first attempt on the Layer-2 network. We believe the product can help solve the liquidity issue plaguing L2s and make them as good as Ethereum in terms of trading.

And if you are a DeFi builder and want to put TWAP execution into your maths equations, check our SDK and API so you can integrate your product with us.


Integral Insights


June 13th, 2024

Integral Insights May ‘24


June 6th, 2024

How to Participate in the Arbitrum Rewards Campaign

125,000 $ARB will be dedicated to a 3-month liquidity mining program focusing on store-of-value (SoV) token pairs such as WETH-USDC, WETH-USDT, WETH-wstETH, and WETH-ARB.


June 6th, 2024

Unlock High Yields with Integral's $225K ARB Grant from Arbitrum Foundation – Join Our Liquidity Mining Program Today

Integral has been awarded a significant grant of 225,000 $ARB from the Arbitrum Foundation under the Long-Term Incentive Pilot Program (LTIPP). This funding will drive the growth and adoption of Integral on Arbitrum, benefiting the entire ecosystem. With 125,000 $ARB dedicated to a 3-month liquidity mining program focused on key token pairs like WETH-USDC and WETH-ARB, liquidity providers can enjoy high yields and reduced trading costs. Additionally, 100,000 $ARB will be allocated to incentivize integrations with aggregators, solvers, and vaults, fostering a more interconnected DeFi environment. Join us and be part of this exciting journey to enhance liquidity and trading on Arbitrum!


May 9th, 2024

Integral Insights April ‘24

The combined average daily volume across Ethereum and Arbitrum is now at 8.8 million USD, a remarkable 22% increase compared to last month.


April 25th, 2024

Introducing New Pool Analytics: Elevate Your Liquidity Provision Experience

A standout feature in our latest update is the "LP vs Hold" tab, which provides a comparative analysis of various holding strategies against Integral's LP positions.


April 1st, 2024

Integral Insights March ‘24

We achieved several important milestones, including a new all-time-high daily volume for Arbitrum and the addition of four new pools on the Ethereum mainnet.


March 4th, 2024

Integral Insights February ‘24

Another milestone was reached on February 21st when Integral processed over $2 billion in cumulative volume.


February 1st, 2024

Integral Insights: January ‘24

Our initial launch with the ETH-RPL pool was a success, quickly elevating us to the second most utilized liquidity pool for this pair’s trading.


January 17th, 2024

Is Liquidity Fragmentation Really That Bad?

When the token evolves into a store of value, it attracts outside traders, focusing on trading costs and slippage. This is when concentrated liquidity truly shines.


January 2nd, 2024

2023 Review

At Integral, our focus remains on developing a sustainable product for on-chain trading, serving both traders and liquidity providers.


December 12th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees on Ethereum Mainnet

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.


December 6th, 2023

Integral Insights: November ‘23

During November, Integral processed an average of approximately 6 million in volume with around 1.5 million in TVL. The system’s overall capital utilization sits at around 350%. It is the 10th most used DEX on Ethereum.


November 28th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.


November 15th, 2023

How Do University Blockchain Societies Gain So Many Votes?

Explore how university blockchain societies like FranklinDAO and Michigan Blockchain have grown into influential players in DAO governance, utilizing delegated votes and strategic partnerships to shape the future of DeFi protocols like Uniswap, Compound, and Aave.


November 6th, 2023

Integral Insight: October ‘23

We give an update for our work in October and highlight a profitable LP position from a long-term user.


October 26th, 2023

Understanding the Stakes in Lido’s Growing Share of Staked ETH

The community is arguing whether a protocol may have too much control over the Ethereum network. Lido controls a large percentage of staked ETH, which could have consequences for the network’s future security and neutrality.


October 14th, 2023

Changes to Staking and Farming

Looking back at our progress so far and to the future with new updates to staking and farming.


October 11th, 2023

Integral Insight: September ‘23

We give an update for our work in September with utilization going up on higher volume for our new pools.


October 11th, 2023

The Hottest Narratives of the Summer

What were the hottest narratives of the summer? Our DeFi research team delves into the growth of trading bots, RFV traders and more in this overview.


October 2nd, 2023

Uniswap Governance: A Deep Dive

Governance is considered a critical component for the decentralization and community-driven development of DeFi protocols. We take a look at one of the largest goverance ecostystems in DeFi, Uniswap. In this blog post, we'll discuss the landscape of Uniswap's governance, pulling data from empirical research to dissect the system's delegates and proposals, revealing some interesting findings.