CyberConnect’s CP-1 Proposal Unleashes CYBER Treasury for Cross-Chain Liquidity

By 0xGorki 09/2/23 8:22 AM

In a surprise move to address the growing demand for its CYBER token and create more efficient price discovery across various blockchain networks, CyberConnect has released an emergency proposal, CP-1. This proposal aims to utilize the unlocked CYBER tokens from the treasury to provide liquidity for cross-chain bridges, instantly reshaping the CYBER ecosystem.

The Proposal

The core of CP-1 involves the implementation of a series of active balancing strategies for CYBER token liquidity on Ethereum (CYBER-ETH), Binance Smart Chain (CYBER-BSC), and Optimism (CYBER-OP) networks. This strategic initiative is designed to bring about the following changes:

Interoperable Bridging: CyberConnect plans to deploy a bridge system, facilitated by LayerZero’s ProxyOFT technology, that will enable seamless transfers of CYBER tokens between different networks. This cross-chain bridge will empower users to move CYBER tokens between Ethereum, BSC, and Optimism with ease, eliminating the friction caused by network isolation.
Liquidity Provision: The proposal also outlines the allocation of CYBER tokens from the Cyber Community Treasury to provide liquidity for these bridges. The foundation initially plans to allocate 25,000 CYBER tokens each to CYBER-ETH, CYBER-BSC, and CYBER-OP to ensure adequate liquidity for bridging activities. The treasury currently holds 7,000,000 CYBER-BSC and 3,888,000 CYBER-ETH for this purpose.
Balancing Act: To maintain a harmonious balance across networks, the CyberConnect Foundation commits to taking action if any network’s treasury runs low on CYBER tokens. In such a scenario, the foundation will burn tokens from one network and mint them on another, ensuring that the total supply of CYBER tokens remains at 100,000,000 tokens across all chains. This measure will help distribute CYBER tokens evenly and maintain equilibrium among different networks.

The Motivation

The urgency behind CP-1 stems from the current imbalance in CYBER token distribution among Ethereum, BSC, and Optimism networks. At CyberConnect’s Token Generation Event (TGE), a total of 100,000,000 CYBER tokens were minted. However, as of the proposal date, 87,700,000 CYBER tokens are on Ethereum, 9,000,000 on Optimism, and 3,300,000 on Binance Smart Chain. This discrepancy has led to a significant price premium for CYBER-ETH compared to CYBER-BSC and CYBER-OP on decentralized exchanges.

The introduction of these multichain liquidity balancing strategies aims to rectify this disparity, providing equal access to CYBER tokens for users across different networks and streamlining price discovery.

Justification

The rationale behind CP-1 is straightforward. CYBER tokens deployed on Ethereum, Optimism, and Binance Smart Chain are essentially the same native token issued by CyberConnect. Therefore, they should be readily interchangeable with adequate liquidity support to meet demand on all networks. This approach aims to reduce confusion among users and foster a more unified ecosystem.

Considerations

CyberConnect is committed to ensuring the highest security standards for its bridging technologies. Only the foundation will have the authority to provide liquidity to the bridges to mitigate potential risks. The foundation will also maintain an optimal amount of liquidity on the bridge, subject to user demand, addressing any concerns regarding safety.

While this proposal presents a promising vision for CYBER token liquidity balancing, there may be periods where users’ requests for cross-chain bridging are not immediately fulfilled due to liquidity constraints.

Timeline

If the proposal is accepted, the implementation of these changes is expected within 72 hours of approval, contingent on technical readiness. Notably, in an extraordinary move to expedite this critical update, CyberConnect has bypassed the standard DAO 7-day voting period policy. Instead, the voting period for CP-1 will conclude exactly 12 hours after its publication.

Token Surge

In an intriguing development closely related to this proposal, the CYBER token has witnessed a remarkable surge in value. Within just four days, CYBER has surged over 500%, trading at approximately $13.7 USD at the time of writing. This marks a staggering 60% increase within the past 24 hours and brings CYBER’s market capitalization to $155 million USD.

In the past 24 hours, the trading volume of CYBER perpetual contracts has reached 9.55 billion US dollars, an increase of 210%, second only to BTC and ETH, setting a record high. The trading volume on Binance is as high as 5.63 billion US dollars, surpassing ETH to become the second. CYBER contract open interest amounted to $263 million.

CYBER/USDT 4 hours-chart on Binance | Source: TradingView

As CyberConnect’s CP-1 proposal seeks to address the liquidity and distribution issues of CYBER tokens, the market’s positive response underscores the significance of these strategic changes in the cryptocurrency space.

In conclusion, CyberConnect’s emergency proposal, CP-1, represents a pivotal moment in the CYBER token’s evolution, aiming to create a more accessible and balanced ecosystem for users on Ethereum, Binance Smart Chain, and Optimism. The proposal’s expedited timeline underscores the urgency of addressing the current liquidity disparities, with the cryptocurrency market eagerly watching the outcome of this transformative initiative.

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