Reserve price for the first vault shows as 0 on fractional art

valory-xyz / agent-academy-1

Valory's Agent Academy 1 - participant repo

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Reserve price for the first vault shows as 0 on fractional art #138

Open 0xArdi opened 2 years ago

0xArdi commented 2 years ago

https://fractional.art/vaults/0x3f49438561dd2f11b4f47f4117770de6c565aaf7

0xArdi commented 2 years ago

The reservePrice is correct. There isn't a price set. VLT1 holders need to set it on their own. Currently no VLT1 holder has voted on a reservePrice, which is why it is 0. This does NOT mean that somebody might purchase the vault for free. At least 50% of VLT1 (number of VLT1, not number of holder addresses) must vote on a price before the vault is eligible for an auction. If we want to set an inital reserve price, we will need a TX to be made when the safe is created.

adrianoVal commented 2 years ago

Ok it just means that if El col collected a valuable NFT, someone could theoretically buy the vault for 5 ETH. If all the vault raises is 5 ETH then it won't have enough to pay for the next vault. 0.5% of 5ETH = 0.25 ETH < vault tx costs is max 0.5ETH. To ensure elcol raises enough for the next vault, (at least 10ETH) it should use its vlt1 token to set the price at 20ETH

0xArdi commented 2 years ago

There are two cases:

ElCol sells 100% of the tokens, and raises 10ETH. Which means that it got the funds it needed to deploy a new vault from the operating fee.
ElCol sells more than 50%, less than 100% of the tokens, and the vault is auctioned. The ElCol would get the funds from the tokens, shares of the auction price at this point, that it still holds.

Note that the smallest share a holder can have is 1/1000.

adrianoVal commented 2 years ago

1) Agree 2) Elcol needs to sell 100% of the tokens to have the funds to pay for the next vault. The rest of the ETH raised is used to buy NFTs. If someone owns most of the supply of the token at 50%, they can bring the reserve price to near 0. If no one bids in the auction, there are basically no proceeds for El col for holding the token. Which means that El raised < 10ETH, which in turn means it has < 0.5ETH to pay for the next vault

0xArdi commented 2 years ago

They can only drive the price down by 1%, from whatever the initial price was. IE, if we set 20ETH, we are stuck with it. Checkout min reserve factor. A majority holder could set the price very low, but to do so they would need to purchase the majority of the tokens.

adrianoVal commented 2 years ago

In that case we could set it at 10 ETH In cases for example where 51% of tokens have been sold, someone could be majority shareholder at 50%, and so be able to set the price very low. If sold at that price, it means El col would not have raised enough to deploy a new vault, because it only raised around 5.1 ETH, 95% of which was used to mint NFTs.