On October 6th, the dYdX Foundation hosted a discussion with Anchorage Digital on Twitter Spaces regarding their proposal to lend out $DYDX tokens from the community treasury to institutional TradFi firms and market makers to:

1. Derive yield and diversification for the community treasury, and
2. Drive more liquidity to the dYdX platform.

You can listen in to the Twitter Spaces recording here.

Cliffton (dYdX Foundation):

Hey everyone, thanks for joining. Let's get started. Good morning, good afternoon, and good evening everyone. No matter where you guys are joining from, thank you so much for taking the time to join this twitter spaces that we're hosting with Anchorage Digital. My name's Cliffton from the dYdX Foundation. Together with us today, we have Chase as well as Peter from Anchorage Digital, so they'd be happy to walk through their proposal on our forums about lending our $DYDX tokens from the community treasury to market makers to simulate liquidity on the platform, and partially also to start some form of treasury diversification for the dYdX community treasury.

Chase and Peter, I know you guys are speaking out of the same account, so could you guys just give a quick introduction about yourselves and quickly walk through what the proposal's about?

Chase (Anchorage Digital):

Yeah. Thanks for the introduction. This is Chase Crimmen and as mentioned, we're both going to be speaking from the same account because of some microphone issues, but I am on the lending team at Anchorage as mentioned. My primary role is in origination, pricing, negotiation, that sort of thing. I spent seven years before I came to Anchorage as a market maker myself in both credit and digital assets. I'll kick it over to Peter here.

Peter (Anchorage Digital):

Hey guys, this is Peter Mallik. I'm also on the institutional lending team with Chase. My responsibilities are particularly around types of custom transactions. That could be with a TradFi financial institution or it could be with a protocol like dYdX.

Prior to this, I worked in the FinTech lending space, so worked at a company called WebBank, and then prior to that was at two startups, two data analytics startups, and before that, was on Wall Street.

Cliffton (dYdX Foundation):

Nice, appreciate the intro. Could you guys just give a TLDR of what your proposal is about, just for everyone who hasn't really taken time to review it on Commonwealth?

Chase (Anchorage Digital):

Yeah, sure. And maybe we could even start with some basic info about what Anchorage is and then we can dive into the specifics about the proposal.

Cliffton (dYdX Foundation):

Right. That makes sense.

Chase (Anchorage Digital):

Anchorage's bread and butter business is as a custodian. So we started about five years ago and at the time of launch, we did pure custody and as time has evolved we got an OCC Federal Bank Charter, which is unique in the United States where we are the only federally chartered crypto bank. And as time went on, we built ancillary services such as staking, agency trading and lending. Also, we do some governance work as well, allowing people to delegate votes from custody.

So that's the high level little bit about Anchorage. Happy to dive into any details and questions that anyone has, but we can move on to the proposal here, which is what we're all here to talk about. So the genesis of this project was we had approached both dYdX Trading and the dYdX Foundation as we had seen a lot of interest from market makers in borrowing $DYDX tokens.

And market makers wanted this for two reasons. One for the pool yield, but equally as important, they are interested in fee reductions so that they can quote tighter and trade more. And at the end of the day, it's all about taking one side of as much flow as you can and this helps them do that at a more efficient price.

So when we approached dYdX, they said that the community is looking for a way to help diversify its holdings and that there may be some synergy between these two ideas here. So we've gone through an iterative process and if some of you haven't looked at the proposal on the forums in a while, I encourage you to look at it again as we've made several changes over the last few weeks, particularly working in concert with Callen over at Wintermute. I see he's on this call.

So we think it's a win-win-win for everyone, where the community gets to foster growth and encourage trading on the platform by bringing more sophisticated market makers into the space, which brings spreads tighter, which means more people will come to you to take one side of their flow.

Additionally, we're going to convert all of the interest paid on these loans into $USDC for the community and pay it out to them in $USDC so you get a genuine diversification benefit, and the market makers are dying to get their hands on some $DYDX tokens in order to be able to have a stake that has a fee reduction. So we think that there's something in here for everyone and that is our goal at the end of the day, and we're open to feedback on if there's any improvements we can make in that arena. Peter, did I miss anything here?

Peter (Anchorage Digital):

Yeah. Just a couple of points. So we had an original proposal where we would facilitate a borrow from market makers of $DYDX tokens held at the community treasury. We've made some modifications to that. So originally, the borrow rate would've been equivalent to the safety pool rate. We realized that's kind of a negative incentive and would leave the treasury flat. So we decided to increase the interest rate that we would offer.

So it would be the safety pool rate plus some margin. We would pass on the entirety of the safety pool rate and part of that margin back to the treasury. So the treasury would be earning something above the safety pool rate. I think that's an important distinction. We would keep the remainder of that margin above the safety pool rate. There's a couple of mechanisms we're throwing around to make sure that market makers don't have governance rights over the tokens that they borrow, so as to not dilute the governance rights of existing token holders. I think that's an important point.

And then lastly, we were thinking originally to do this in a staged approach, where we would lend out a small portion of tokens to start with, and then if that proof of concept phase was successful, we'd move on to a larger program in both the start, the pilot phase and then also the ongoing phase later on, if that comes to fruition. We would like to diversify, and have multiple borrowers, and multiple market makers who would be the borrowers, such that we would increase access.

The idea is to increase access and democratize the ability of many market makers to participate and enhance activity on the platforms. And so we want to have multiple market maker borrowers to further that goal.

Cliffton (dYdX Foundation):

Got it. Thanks for the context and on the forums, I guess we've been getting quite a lot of interest and responses from a few of our community members. So if anyone wants to ask the Anchorage team questions, please feel free to request to speak and I'll bring you up on stage.

Chase (Anchorage Digital):

While we're waiting to see if anyone has any questions, I want to drill into Peter's last point about democratizing the ability of many market makers to participate. The dYdX community does not want to design this program, so it's only Anchorage’s favorite clients. We want to set this up, such that, if you qualify using our underwriting standards, if you qualify for this program, you will be able to take advantage of it. Say there is an Iranian LP that can't be onboarded to a US bank, we will onboard that company and give them access to this program. And we at Anchorage have aligned interests there. We're looking to have relationships with as many market makers as we can, and we also want the protocol to have as many market makers trading on the protocol as possible.

Cliffton (dYdX Foundation):

Got it. Appreciate the insights there. As mentioned, if anyone has any questions, please feel free to request to speak and I'll bring you up on stage.

Peter (Anchorage Digital):

So the other point, I don't know if anyone has requested to speak yet, but just really quickly, the other point we wanted to make is, while there is some credit risk involved in a borrow, we're trying our hardest to minimize that. And so to the extent we're going to require that borrowers stake their borrowed tokens to the safety pool and we want to be able to track that on-chain, if for whatever reason that doesn't happen, then the borrower would be in default and we would have the ability to pursue them.

And so we're doing our best to try to minimize the risks that are associated with this, and I thought that was probably a point worth highlighting.

Chase (Anchorage Digital):

That is a great point. That involves some engineering build out on our side, which we have no problem doing. We would look to actively track that one, the address we have lent these tokens to is staking them and not potentially opening up like a net short position or putting selling pressure on the token, and additionally that they're not voting with them. And we would aim to craft the legal agreements such that there would be penalties for violating either of those terms.

David (dYdX Foundation):

Hey guys, thanks a lot for walking through the proposal. I guess I just had one question. If I'm a token holder on the one hand or a market maker on the other hand, why should I care about this proposal? What are the benefits for both classes of interested parties here?

Chase (Anchorage Digital):

Yeah, that's a great question. I think we'll start with a token holder and the community at large. The number one benefit, I think, and I'm open to an argument that this is not the number one, but the number one is that you guys are going to bring more market makers onto your exchange because these guys are going to have more competitive pricing with the fee discounts that come from this. That means deeper liquidity on the protocol, which means more retail flow comes in to take down that volume there. And that means at the end of the day, more trading fee revenue as you guys collect on both sides of a trade depending on the fee discounts.

And then there's the second benefit, which is the diversification of the treasury. We will be returning this interest in the form of $USDC. With the current pool yield plus our enhancement, you're looking at something roughly around 15% annualized on anything you lend out turned back into $USDC, and then reducing the community's exposure to their own token, which in the lending world we consider to be a one way risk.

And then on the market maker side, there's fee discounts. Obviously they don't get to capture any of the rewards or the staking rate in the pool because that is owed as a floating element on the loan. So for them, it's all about the fee discounts and we've run some numbers on what volume of trading a market maker has to do to justify the borrow at a given rate. So if we charge roughly 3% above the staking pool rate, that means that a market maker who is trading roughly $5 million a day with a 70-30 maker-taker split respectively, they will need to borrow or that will justify borrowing 1 million $DYDX tokens.

In order to justify borrowing, you need to get up into the $11 million, $12 million per date volume, and then at the top bucket where you're doing a 5 million $DYDX token staked and bring yourself into that top fee reduction tier, you need to be trading about $27 million a day in volume on dYdX.

Peter (Anchorage Digital):

And just so you know, in terms of that volume versus the total volume on the platform, we're looking at incremental pickup of something like, I don't know, 2% to 4%, and that's just for the small amount of tokens lent that Chase mentioned, the 2 million to 5 million.

Josh (dYdX Foundation):

Makes sense. Thanks for walking through that guys. Josh from the dYdX Foundation here, really appreciate you guys coming on and walking through the proposal with the community. I think one thing from my end that I just wanted to make sure we're all clear on, in terms of enforcement through the agreements, is monitoring to be done by the community controlled entity or is that through Anchorage specifically in terms of what's happening with delegated tokens? Are our tokens being voted or delegated? And in terms of what LPs and market makers are doing with the token specifically, like no shorting of $DYDX?

Chase (Anchorage Digital):

Yeah. That's a great question. So we hadn't really considered that. We would have done this in-house no matter what, but if the community is interested in seeing that reporting end monitoring, I'm sure that's something that we could work out. We'd probably have to execute side letters with the borrowers, granting us permission to share that information as we're typically under non-disclosures with them. But we wanted to get carve outs here to be able to tell the community who the actual firms are that are borrowing.

So if we're going to go down that path, we can also have them grant permission to Anchorage to share that reporting with the community.

Josh (dYdX Foundation):

Sounds great. Yeah, makes a lot of sense. Thanks. I think Cliff, we have a few people that are up on stage right now.

Cliffton (dYdX Foundation):

So we have TokenFi and we have Anumora who has been brought onto the stage. So can we just get TokenFi to go ahead with their question first and then Anumora, maybe you can go next?

TokenFi:

Yeah. Hey, it's TokenFi, Jason with Blockchain at Columbia. Always great to see more partnerships pop up and I hope I'm not misunderstanding anything here, but looking at Callen's point in the discussion of the proposal, he did some calculations and it looks like we would make a loss of $400,000 at the minimum loan of $5 million. How is this going to be addressed, and is this just the price for diversification or will we be losing on these loans?

Chase (Anchorage Digital):

Yeah, great question. So I mentioned at the beginning of the call that we had gone through an iterative process here and when we first proposed this, we had contemplated charging the borrower the exact rate of the pool. We've now switched that where the community gets more than the staking rate in the pool, not a lot more but a little bit more. And the borrower is effectively going to pay Anchorage's fees.

So the loss to the community is now a small gain and there's no cost to your diversification unless dYdX shoots to the moon and you guys have $USDC at that point.

TokenFi:

Got it. Thanks.

Cliffton (dYdX Foundation):

Cool, thanks. Anumora, do you want to go next?

It seems like Anumora might have some technical difficulties, so I have a couple of questions on my end as well if that's fine. So at a high level, can you just explain what the main benefits are to dYdX for this proposed implementation?

Chase (Anchorage Digital):

So dYdX as a protocol is going to have more institutional market makers come on and make markets on their platform. And this is something that exchanges, be they DeFi, CeFi, ATSs, everyone is very interested in having the deepest liquidity. It means that people who come to trade on your platform are one, going to have tighter spreads, potentially less slippage, and you generally become a more attractive place to send flow. And even if that's routed from other places or if that means that if the markets are tighter and a market maker gets filled on another exchange and they're going to hedge that flow with a taker order, we're encouraging that sort of trading by bringing these large sophisticated institutional players onto the platform.

Peter (Anchorage Digital):

The only thing I would add to that is that in my mind, what we're doing is we're using or facilitating a borrow of currently idle $DYDX tokens to both increase the activity on the platform, and then also diversify the community's treasury. So we're going to pay back in $USDC.

Cliffton (dYdX Foundation):

Yep, makes sense. Thanks. Another question for you, will the market makers and our counterparties be visible and made known to the community? And would you guys be reporting on how they're using these tokens or is it strictly just for fee purposes? Chase (Anchorage Digital):

Yeah. So that is an open question. Typically, when we lend in our normal course of business, we do not reveal the counterparties on one side to the other, and that's typically a function of the fact that we deal in an institutional space where people are protective of their business activities. But given that this is DeFi and the goal is transparency and decentralization, and this is if they agree, and if the community doesn't want it and they decide that this is a take it or leave it part the deal, we'd be happy to do this, especially if the market makers are willing, but we would ask for permission to disclose their borrowing activity. And like we mentioned earlier, we're going to be tracking what they're doing with these tokens on chain.

So we will be able to, if with their permission and with agreement, basically, one, tell the community who they are, maybe even some high-level information about... and even anonymize their financial health. And then additionally, hopefully we'll be able to share our tracking of their adherence to the terms of the loan. Those being, it must be staked and the voting power must not be used.

Cliffton (dYdX Foundation):

Got it. Thanks. I have a question from 0xCLR. So he is having some technical difficulties, and he DM’ed me a question of his. If possible, are there any examples that you guys can share offering a similar service that has been successfully conducted?

Chase (Anchorage Digital):

Yeah. We can't get into any specifics because of non-disclosures, but we have done something similar with a centralized exchange where we lend out their token and it's a very similar concept, you stake it, you get fee reductions and it's been very successful.

Cliffton (dYdX Foundation):

Got it. Thanks. I guess another question that I have was around liquidity risk. So I'm not sure if you guys are up to date on the dYdX's governance, but recently the community voted to wind down the boring pool, the liquidity module, and that surfaced the potential question - in the event that we urgently need the funds back, I'm not saying that we do now, but in the event that we do, is there a liquidity risk of calling open-term loans back?

I understand that these are institutional players that you guys are working with, but I believe there is still such a risk involved. So what are some of the measures that you guys have in place to minimize the liquidity risk on that front?

Chase (Anchorage Digital):

Yeah. So it's kind of inherent to this situation with the epochs used for unlocking, unbonding. We could ask the market makers to be ready to open market purchase $DYDX to be able to pay down the loan even if they're unable to stake it, but I can tell you right now that that will be extremely unpopular with the market makers. They would most likely like to stick with their ability to unstake the tokens and return them.

So it would be as we could call a loan, and then they would have to unstake during that epoch, and then return the tokens once they're unlocked, that would be the way that we would be able to charge the most to the market makers and then be able to return the most to the community. If we start asking them to dip into balance sheets to return open term loans when they're not able to unstake the tokens, they are going to charge a lot for that, or the net effect will be that they'll be willing to pay less.

Cliffton (dYdX Foundation):

Got it. That makes sense. If you guys have any other questions that you guys like to raise, feel free to request to speak and I'll bring them up on stage. Okay, I see Callen has requested, bring him up on stage right now. Callen sir, feel free to ask you a question.

Callen (Wintermute):

Hey guys, can you hear me okay?

Cliffton (dYdX Foundation):

Yep. Loud and clear.

Callen (Wintermute):

Awesome. I guess, maybe just touching on that one question about liquidity risk and please correct me if I'm wrong, but maybe one workaround is say in the chance that dYdX does need the recall of the $DYDX tokens, isn't it possible for all these counterparties to transfer the staked $DYDX balance actually to an Anchorage controlled address, or otherwise maybe the community treasury address instead of having to wait for individual on-staking of each for the epoch?

Chase (Anchorage Digital):

Honestly, I would imagine that you are a much greater expert on the finer details here. If you tell us that you think that that is possible, we'd be more than happy to facilitate that with Anchorage controlled addresses or with your community controlled address.

If it's technically possible, we're more than happy to bring it right down to the minimum amount of demand period that we think we can sustainably be able to keep the borrowers interested and not worry about having to come off balance sheet to open market purchase and return alone. Callen (Wintermute):

Awesome, thanks. And I guess it's more of a technicality if maybe the dYdX team could correct us in this, but I think it is possible that yeah, you're allowed to transfer staked $DYDX to a separate account and then that account can then request to withdraw. It's just a thought of maybe trying to, I guess mitigate some liquidity issues that may be present, and then we don't have to ask these counterparties to go purchase $DYDX off the open market. Chase (Anchorage Digital):

Yeah. We will follow up with you Callen and the dYdX team so that we understand the intricacies of what's actually happening on chain here, and we will modify whatever we can to make sure that the community stays as liquid as possible. We understand that liquidity is extremely important in an asset class like crypto, so we will do everything we can to keep the community as liquid as possible.

Cliffton (dYdX Foundation):

Awesome, thanks. So another question on my end, Chase and Peter, you guys mentioned that this would be a stage implementation if it does pass community vote. So in the proof of concept stage, what are some of the success metrics that you guys are looking at?

Chase (Anchorage Digital):

Yeah, that's a good question. We'd look for outsized demand relative to the size of the trial project. So if we launch and we're going to lend 5 million $DYDX for the proof of concept, 2.5 million to two different market makers, or maybe we do 10 million where we have four seperate 2.5 million borrows. We'd like to see that there is demand outside of that, the scope that we launch with. And if there is, we would very much look to continue the project, and that's more just on the economic market demand side.

We would also look for strict adherence to the terms of the loans and continued high quality financial condition of all of the borrowers. If something happens where the balance sheet health of one of our borrowers, which we regularly check in on, were to decrease, and if this were to happen broadly, we might want to scale back the project just to make sure that we're not potentially losing all the community's tokens.

Peter (Anchorage Digital):

So this is supposed to be a win-win-win for everybody. So obviously we would check in with the community, we check in with our market makers to ensure that the program's working as it's supposed to, that people are getting the benefits, whether it be the interest in $USDC or greater activity, greater liquidity on the platform.

And then to Chase's point, there has to be multiple borrowers. We want to enhance access and so as long as we have interest in the program, we can work out the kinks during the pilot phase of it, and then hopefully expand it to a broader reach and have a pretty good idea about the benefits for all the parties involved at that point.

Cliffton (dYdX Foundation):

Got it, thanks. Got another question from 0xCLR who again, has some technical difficulties. So outside of boosting market maker rewards and lowering their fees, are there any other use cases you guys can think about?

Chase (Anchorage Digital):

Well, there's always demand to borrow below a staking rate, but that doesn't behoove the community in any way. And there's also people who would be looking for this for quoting capital and/or to open net shorts, none of which... with the possible exception of quoting capital, none of which would really justify the community doing this. So we think that this is one of the unique use cases that works out to be a win-win-win for everyone involved, win for the community, win for the protocol, and a win for the market makers.

Everything else, all the other use cases, someone's... they're not going to come out ahead at the detriment of another, or whoever comes out ahead will happen at the detriment of another. Although we are open to ideas if anyone has any.

Cliffton (dYdX Foundation):

Got it. Thanks. Yeah, I guess if anyone has any other questions, please feel free to request to be up on stage. If not, we can look to close this up maybe in the next 10 minutes. So I'll leave the floor open to anyone who wants to request to speak on stage.

David (dYdX Foundation):

Thanks, Cliff. Maybe just one more question on my side, more of taking a step back and more of a meta point. I think it's really interesting to see a regulated, centralized finance player really participate in the dYdX ecosystem and participate in our governance. I think this follows on other large centralized exchanges participating for example in MakerDAO’s governance forms.

I'm curious what the internal kind of discussion was at Anchorage, if you can share? And looking forward, what do you think the appetite is for large CeFi players to participate in DeFi governance more broadly?

Chase (Anchorage Digital):

Yeah, that's a great question. So one of the mottos at Anchorage is ‘Build With Anchorage’. So we are aiming to be a base layer in the crypto system where people can come build tools on top of us. And one of the unique things that we can offer protocols DeFi broadly is access to the traditional finance rails and the ability to do things off chain for the protocols and to their benefit. And internally, we didn't get any pushback on this. This is the kind of thing Anchorage wants to be doing and everyone's rooting, hoping that this kind of thing passes internally because these are the kind of things we see being the future of crypto broadly, which is where CeFi and DeFi aren't necessarily working against one another, but potentially working together with positive synergies. Peter, do you have anything there?

Peter (Anchorage Digital):

Yeah, so super supportive. I want to echo everything Chase said. We feel very strongly that as the DeFi ecosystem grows, we grow. We have relationships with a bunch of other DeFi protocols, and do a whole bunch of stuff for them. And so everyone was very supportive. It's great that this is a lending angle to it and Chase and I can work on it, speak for myself and I know for Chase, we're both very excited to get this passed and then to move the ball forward.

We really want the DeFi ecosystem to succeed. We really want DEXs like dYdX to succeed.

Cliffton (dYdX Foundation):

Hey Chase, Peter, I think you guys cut out for a bit. Do you guys just mind going over what you guys were intending to say?

Peter (Anchorage Digital):

No, I was just echoing Chase's comments. Can you guys hear me now?

Cliffton (dYdX Foundation):

Yep. Loud and clear.

Peter (Anchorage Digital):

Okay. I was just echoing Chase's comments. I was basically saying that Anchorage is very supportive of the DeFi ecosystem. We serve a whole bunch of other DeFi protocols in a variety of capacities. It's great that we can potentially work with you guys on a lending related project, which means that myself and Chase and other members of our lending desk can get involved. Just something we're really excited about and we really want a decentralized exchange to be successful, to grow. We feel like that's the future. And so we're very much invested and we're looking to share in the success of this proposal, and hopefully many more to come.

Cliffton (dYdX Foundation):

Awesome. Cool. All right. Let's just give everyone two more minutes if they want to ask any questions. Everyone, if you guys want to ask your last questions to the Anchorage team, please feel free to request to speak and I'll bring you up on stage.

Josh (dYdX Foundation):

Hey guys, just one from me quick in terms of, I guess filling everybody in on next steps. I know the proposal references a community controlled entity. Just curious, have you guys had interest so far from anybody who wants to participate in that community controlled entity?

Peter (Anchorage Digital):

Are you asking us?

Josh (dYdX Foundation):

Yeah.

Peter (Anchorage Digital):

Nobody just yet.

Josh (dYdX Foundation):

Okay. So I guess open question, open comment for everybody on the call, but the proposal does make reference to a community controlled entity that's going to be working as a counterparty with Anchorage on the loan agreements, or pardon me, the agreement to actually borrow $DYDX. So please feel free to reach out if that is something that interests you.

I think in terms of discussing next steps, Peter and Chase, do you maybe want to touch on what you think the, I guess, main points that need to be decided on between the community control, the entity and Anchorage are moving forward or main points of contention?

Chase (Anchorage Digital):

Yeah, sure. So one of the things that we're going to have to do is paper a legal agreement with an existing recognized legal entity. So that means the community is going to have to set up a business entity somewhere. We are fairly agnostic as to the jurisdiction for our lenders, for our borrowers, we like them to be in good enforcement regimes, but that is going to be probably one of the hairier pieces of this. We've gone through something like this in the past and we know it's doable, but it's turning an aircraft carrier a little bit. It's a large group of people with diverse interests and they have to come together and act as a business entity just to get the paper in place.

The other elements that we need to nail down are some of the open issues on our proposal, such as are we going to have visibility into the borrowers? Our inclination is yes, but we need to confirm with some of our market making clients that they would be okay with that. I think they will use this specific structure.

There's also the finalization of economics. The current proposal as it stands today is we would pass back to the community the floating rate on the pool plus 50 basis points to one point on top, so that there is a positive benefit, there's more money than you would've made otherwise. We hope that that is enough but we're open to hearing more about that. Peter, do you have any other large open issues?

Peter (Anchorage Digital):

Yeah. So just on the community controlled entity, the reason that needs to be a real business entity is as a consequence of us being so highly regulated of having our OCC charter, our KYC, AML process is actually pretty strict. And so that entity needs to pass that process, which generally hasn't been a problem in the past. Like Chase said, we've been in somewhat similar type arrangements and we've gotten those entities across the finish line, but I would imagine it might take some time. So I just wanted to highlight that point.

Josh (dYdX Foundation):

Appreciate all the color and info guys. I think it would be helpful to go over next steps in terms of proposal process and governance life cycle, just so everybody's on the same page from here. The community needs to establish consensus on what the main terms of the proposal are going to be and get moving on the community controlled entity. Hopefully, we'll have some community members step forward and want to participate.

I think after that, this is going to require an on-chain vote, but before that, the next step would be a snapshot poll off-chain voting. If that is successful, the next step and final step would be an on-chain proposal to transfer X amount of $DYDX from the dYdX treasury to the community controlled entity, so that it can interact with Anchorage to actually borrow the funds out to market makers. Just wanted to make sure everybody was on the same page in terms of next steps.

Chase (Anchorage Digital):

Yeah. Josh, thanks for that and we'd be open to where you guys think the timeline should lay, but I think that we could have a very solid proposal that we could put to a snapshot vote by mid or end of next week, and we'd be perfectly comfortable trying to meet that timeline if we think that lines up and gives enough time for the community to consider.

David (dYdX Foundation):

Yeah, that sounds great. I guess just one more follow up question on the entity. Again, I think there's an assumption here that a community member would step up and form that entity on behalf of Anchorage. I guess from your standpoint, what would that entail and what's an ideal background for a community member to come in and really own that process?

Peter (Anchorage Digital):

So the entity would be for the benefit of dYdX, not for Anchorage, but I would imagine it would be somebody with somewhat of a legal background.

Chase (Anchorage Digital):

Yeah, likely a lawyer or someone who knows how to retain a lawyer to set up a business entity, and we can give some feedback to the community about how we've seen various DAOs set up entities, where they've set them up and how they've set them up, but that is also something that there is lots of consultancies and information around about the best way to do that, and we'd be happy to give feedback in anything that the community is thinking about as to whether or not that would pass, know your customer, anti-money laundering at Anchorage.

David (dYdX Foundation):

Great. Thanks, guys.

Cliffton (dYdX Foundation):

I think we can leave it there. Thank you so much everyone for taking the time to join this AMA session. Thanks, Peter and Chase again for all of your detailed responses. And if you guys have any questions, please feel free to post them on the Commonwealth forums. Again, Anchorage has posted this thread under the community treasury section of the dYdX Commonwealth space. And if you guys have any other questions, please feel free to DM us, either in Discord or over Twitter and we'd be happy to kind of point you in the correct direction to get answers.

This session is recorded, so post this call, what we'll do is we'll transcribe it and we'll post it on our blog, so keep a look out for that as well. And with that, thanks everyone. Have a good rest of your day/night ahead. Have a good one!