I hear Hugh’s point about doing this manually so devs can focus on v2. I am happy with that approach but another idea would be to have external devs build a stand alone buyback contract. Use the community fund multisig to put ETH in and get wNXM out in tranches and pay the devs with a grant up front or an ongoing commission.
I loved the point raised on the community call (made by Dopeee I think) of “I want the mutual to do this trade, not just signal it and have the price adjust” - the strategy above wouldn’t be as good as manually using the OTC desks at achieving that goal, but it would serve a slow and steady approach. Perhaps it would be a strategy for the community fund instead of the capital pool. As Hugh mentioned on the call, they have different objectives.
Yes, I think the upside of capturing a deep discount on wNXM is worth the risk of having do some manual trades. I would prefer to see a decentralised approach like a stand alone buyback contract but I would rather see the mutual buy back below book than not.
I would rather see it burned - the sooner the bonding curve is the go to place to buy and sell NXM the better it will be for all mutual members. Having deeper liquidity in wNXM is good for people wanting to buy in cheaply, having an MCR higher than the floor is good for all the current mutual holders.
I do like the idea of the community fund providing liquidity - it would generate some revenue for the fund - perhaps converting the LDO rewards into ETH and staking it in specific uniswap ranges would be an easy win?
I liked the idea of an immediate action being to start the MCR floor rising slowly again - this would keep the value from cover buys and investment returns in the mutual. This would reduce the (small) buy pressure in wnxm from the arb bots and give the investment team more time to buy back at a big discount. Ultimately the way to stop the arb is lift the MCR%. Buy and burn the wNXM until it is above book value is a good first step and gives us time to think about the longer term strategy.