Proposal to Add $KONG Liquidity to KongSwap

We propose providing liquidity for the KONG/ICP pool on KongSwap. Establishing this liquidity position will allow users to trade the KONG token efficiently with minimal slippage and ensure effective price discovery.

Liquidity Details

Amount to Add:

ICP: 35,000 ICP

KONG: 30,085,617.02 KONG

The amount of KONG is based on the final price from the SNS sale, determined by the ratio of ICP raised to KONG tokens sold:

220,000,000 KONG / 255,936.25 ICP = 859.589 KONG/ICP

Implementation Plan

We would like to add_liquidity to the KONG/ICP pair on KongSwap such that the treasury controls the LP position on Kongswap directly. This will involve executing the following 5 steps to create the LP position on KongSwap:

  1. call the proposal swap_amount() specifying token_0=KONG, amount_0=amount of KONG, token_1=ICP which will return amount_1=the amount of ICP we need to pass to the canister
  2. Execute a TransferSnsTreasuryFunds proposal to send amount_0 + gas (10_000) to KongSwap
  3. Execute a TransferSnsTreasuryFunds proposal to send amount_1 + gas (10_000) to KongSwap
  4. Get the block_id for the transactions from step 2 and 3
  5. Execute a Generic proposal execute the add_liquidity function on KongSwap to create the KONG/ICP LP position.

Execution Strategy

Before making the Firs proposal we would like to make a test proposal that will create a minimal KONG/ICP LP position. After the successful test we’ll run the first proposal.

Since the size of the pool will exceed the weekly transfer limit of 300,000 XDR, we will implement this in two separate proposals:

  1. First Proposal (November 4–10):

ICP: 20,000 ICP

KONG: 17,191,781.16 KONG

  1. Second Proposal (November 11–17):

ICP: 15,000 ICP

KONG: 12,893,835.87 KONG

This phased approach is in line with the SNS treasury limits and also enables the Kong treasury to keep control over the treasury tokens at all times.

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As the process of creating an LP position on Kong directly from governance is new and untested, we aim to prevent unexpected outcomes. We’ll start with a test using minimal amounts of KONG and ICP to ensure we can successfully add and remove the LP position through voting. This testing process will take time:

• 5 days for the initial proposal to pass (approving the minimal amount)
• Half a day for testing (if successful)
• 5 days for the first batch of the LP position proposal
• 7 days due to the 300k XDR limit
• 5 days for the second proposal for the remaining liquidity

In total, we’re looking at about 10 days before establishing the first KONG/ICP LP position and nearly 3 weeks for the full position.

To avoid a 3-week delay in KONG trading, we propose an interim solution while fully testing the governance process. We suggest adding the initial liquidity batch via a project-controlled Internet Identity wallet. Once both legs of the LP position are created through governance, the project wallet will dissolve the LP position and return the funds to the project treasury. For verification, we’ll upload picture proof of the project wallet to the proposal.

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