Hello to all our LBI holders. Just wanted to put the feelers out on how people would feel about me running an LBI buy back? I can see several reasons to do one and some reasons not to. I am keen to gather feedback, so here is what I'm thinking.
The biggest issue I have been turning over in my mind lately is that the price of LBI in the market is so far away from our net asset backing. The market obviously does not value our portfolio at anywhere near it's book price. From chatting with some LBI holders, and the general vibe I'm picking up the main issue is one I've previously identified.
Much of the LEO community won't buy LBI as it has half it's assets in HIVE based projects that many in LEO feel are inferior to LEO
Most of the broader HIVE community don't like LEO and won't buy LBI as a result
There is very little middle ground where our investor base is likely to come from
Without demand for the token, price will inevitably drift lower and lower, as people wishing to sell for whatever reason are met with a market with few buyers.
Split the fund. I've floated this previously, but there does not seem to be much support from LBI's long term holders for a split. It would be messy for our liquidity pools, and add complexity in admin to what is in reality basically a hobby project these days. I love running LBI, but the time I put in doesn't match up with the income I get out - in blunt terms. Now I have no desire to stop, LBI is my only remaining crypto I personally hold. But splitting the fund and creating more work isn't appealing.
Restructure - we could essentially "pick a side" and focus mainly on that, either go all in on LEO and sell much of our non-LEO assets, or vice versa. Not really a fan personally of this option either, as some of these positions we hold would be hard to liquidate at fair value, and personally I think the diversity of assets and income sources is a strength for us. But it's an option.
Buy backs. We have a range of assets that we could use to buy back LBI tokens and move the price up closer to its book value. We have 9000 HIVE in power down in the PWR wallet. We have 7500 BEE also still to unstake. Beyond that we could use HBD or some other liquid assets to buy LBI tokens off the market.
LBI does not have a guaranteed buy back offer, unlike tokens like SPI which do offer a buy back at 95% of the book price. Putting something like this in place is a possibility worth considering.
My suggestion for consideration would be to do a one-off or short term buy back, staggered over a period of weeks, with a gradually increasing price.
Currently, LBI's asset value is 1.391 HIVE per LBI, but the pool price is just 0.852. Putting bids on the order book progressively stepped over time to buy at, say 0.9, then next week 0.95 then 1 and so on, stepping up the price each week in a slow, steady process.
The reason to do it gradually would mainly be about access to enough funds to hold the price levels, and the impact on liquidity providers. This is the main concern tbh with a buy back, it would lead to IL for our LP's. Essentially, as we put orders in the market above the pool price, arb bots will immediately fill by buying out of the pools and then selling on the market. This would happen in a matter of seconds, and people with pooled LBI would see their pool positions alter, decreasing the number of LBI tokens they have and increasing the "non LBI" paired asset.
Doing it this way would drive extra volume through the pools, which would mitigate the IL a bit. Also, buying back and burning tokens well below the asset value would benefit all LBI holders, as essentially the buys would be profitable trades for the fund. We would buy LBI at 1 HIVE each for example, and burn them, reducing the supply, and increasing the asset backing per token. Buying and burning the LBI token below its asset backing would push the value per token up. Win.
My first preference of course would be a healthy token price so these funds coming liquid could be put into other income producing investments. However the token price is not healthy currently, and has not been for quite a while. But that is also and opportunity for us to push the asset value per token higher.
At the end of the day, what we do is up to you all as LBI holders. Would us doing a slow, steady buy back and burn be something you would support?
As it progresses, if you have a price per LBI that you would like to exit at, then sell orders in the order book would be the way to go. If a lot of holders wish to exit the position, I can keep unlocking assets to fund continued buy backs. However there will hit a point where it will be highly productive, income generating assets that will need to be used, which is when it starts hurting the funds performance.
I really hate to see the token so far below its true value, and hate the thought of LBI holders feeling trapped in a position they may not want any more. I think a slow, steady, progressive buy back will benefit the fund overall, but I'm very keen to hear from holders your thoughts.
The feedback of our liquidity providers is particularly important, as your holdings would be most impacted. Hopefully you all understand Impermanent Loss and would be aware of what this move would mean for your position.
Thoughts, comments, feedback, concerns and opinions welcome.
Cheers,
JK
