Migration: a Based Pawth Forward

The topic of this article is a big one. Because migration is such a large topic, this article will be on the longer end and broken up into a few major sections. First, we’ll get into why we think migration is the best step forward for the project, after that we’ll discuss pros and cons of such a move, and finally we’ll talk about what the proposed steps of such a move would be. As a community we’ve had some good preliminary discussions about the idea of migration, so hopefully this article serves as a nice jumping off point into officially exploring this possibility.

Why Migrate

Each and every Pawtherian knows that perhaps the largest challenge in the history of the project has been, and continues to be, the high transaction fees on Ethereum. The hope and promise of sharding on ETH, a potential drastic reduction in gas fees, is a large part of why the project initially went forward with launching on ETH. True sharding seems to continue to be several years away. Due to this, it is likely gas fees will remain relatively high for the foreseeable future.

These gas fees are a huge barrier in several ways: Certain features that we could launch on low fee blockchains are simply cost prohibitive on ETH, on-chain voting is difficult to impossible, and our project is less attractive to potential new entrants who do not want to pay ETH gas fees. Bridging has alleviated some of these issues but has turned out to be somewhat of a band-aid.

We have an opportunity to solve these problems through migration without having the downside of a limited swap window such as with the Grumpy swap.

While there are plenty of options on where to migrate, many of us agree that Coinbase’s ETH L2 blockchain, Base, is the best bet. While this is something that we should continue to discuss as a community, we really like Base for a few reasons: it has the backing of Coinbase, who has every reason to continue to build the blockchain out for the long-term; unlike other ETH L2s, it uses ETH and has announced that it has no plan to create its own token…we think this is great, in part because the name Pawthereum still makes total sense in this context; also, Coinbase is making great efforts to make on-ramping and off-ramping to Base as easy as possible, which is obviously a good thing for any token on Base and could be a major advantage over other L2s going forward.

Before getting into pros and cons, there’s another thing to mention, which is that we think keeping the Pawthereum name is the best move. Since this would be a migration to a new contract, we would of course have the opportunity to change the name of the token (whether that be a riff on Pawthereum or an entirely different name) if that’s what the community wanted. We think Pawthereum has always had great potential in terms of the name and branding and continues to have great potential, that we have a stellar reputation in the wider crypto community under this name, and that we can still have fun with new memes and things like that without making a name change. Pawth is based, so why switch it up.

With all that said, let’s get into some pros and cons.

Pros of migration

Overcoming the Barrier of High Gas Fees

As mentioned above, high gas fees are causing several major problems. Without this barrier, we could develop new features for the project that would otherwise be impractical like fun on-chain games involving the token. These could drive more engagement and interest in the project. Having lower gas fees also means casting a wider net in terms of potential new entrants into the project. Having low fees on our main blockchain could be huge in this regard, whereas bridging seems to be a less impactful solution. Finally, we would be able to move toward true decentralization. Being able to conduct votes on-chain where there is no multi-sig in the middle is important for achieving long term goals and sustainability. It also matters a lot for certain high profile CEXs.

Development Fund Solution

There was roughly 14% of the supply that was burned after the inception of the project. At the time, this was to gain trust from potential buyers of the token, the idea being that having such a large percentage of the supply in a dev wallet might dissuade some from buying. The reality is this: funding exchange listings, marketing, and everything else needed to run a project is incredibly expensive. Due to the history of Grumpy, it’s understandable why the decision was made to burn those tokens. However, this is now beginning to cause a strain as the funds that were reserved are running low. Migrating to a new contract means we would have the option of setting these funds aside for development and operations, which would be the prudent move and would set the project up well for the future. Furthermore, there are ways to mitigate concern from potential buyers that we have at our disposal now, such as having some type of unlocking schedule.

Airdrop Would be Possible

When the project was moving from Grumpy to Pawthereum, due to the gas fees on ETH it was not possible to airdrop holders. This required a swap which had a limited window. The situation would be much different with this migration to an L2 such as Base. With fees being so low, we would be able to airdrop all holders the amount they hold based on the snapshot that is taken. There would still be cooperation needed from the community in transferring liquidity (more on that below), but this is great news and should be a relief to anyone who might have had to use “/swap” over and over again in TG for those who unfortunately missed the Grumpy to Pawth swap.

Benefits of Launching a “New” Token

We all know in the world of crypto it’s often (but not always) the shiny new thing that attracts attention for an upcoming cycle. Moving to Base would effectively make us a “new” token, though we would still retain our history and reputation. This could be a win-win for us.

Cons of Migration

Potential Loss of Chart History

This may or may not be a con depending on who you ask, however, there may be the loss of the chart history with migrating to a new token. What exactly this means depends on how the particular charting service in question handles migrations like this. Most likely, as mentioned above, we would be seen as a new token for these purposes with potentially some type of notification/link on our token pages to the new token’s chart.

Transferring Liquidity

The main hurdle in a migration is transferring the liquidity that currently resides in places like Uniswap to the new token pair. The good news is about 60% of the liquidity is currently unlocked and able to be transferred easily if the community votes yes on migration. The bad news is 40% is locked and would require coordination to transfer. This would mean, similar to the Grumpy swap, community members handing in their tokens before a set time. In order to make the process as fair as possible to those who participate in this vs. those who do not, the current game plan would be to give a staking token to those who hand in tokens before a set deadline. These tokens would then be used to earn additional Base PAWTH over a period of time, allowing participants to receive the maximum possible amount of Base PAWTH.

Okay, so now we’ve discussed the pros and cons of migration. Perhaps at this point you really like the idea, but you’re wondering what the general steps would be to make this happen? Don’t worry, we’ve got you covered. Now, this probably goes without saying, but the first step before any of the below steps would be holding a vote. If that passes, that would kick off a series of steps that would go something like this…

Proposed Migration Steps

1. As mentioned above, about 60% of the LP is unlocked. The first step would be selling the unlocked LP as soon as the (potential) vote passes.
2. At this point a snapshot of all balances would be taken. Once the new contract is launched, this snapshot would determine the baseline amount of Base PAWTH you get, which would be however much you hold at the time of the snapshot. I say baseline because the next steps will involve community cooperation and through cooperation it will be possible to receive an additional stake of Base PAWTH.
3. With the 60% unlocked portion of the LP having been sold in step 1, there is now the 40% locked portion that must be transferred. Because this part of the LP is locked, the only way to get the liquidity out and transferred to the new token is with community members handing their tokens in. This specific part of the process is similar in many ways to the Grumpy situation because the liquidity at that time was 100% locked. What will happen here is, if/when the community votes yes on migration, a deadline will be set for community members to turn in their PAWTH. In exchange, community members will receive a staking token that will entitle them to additional BASE Pawth that they can earn over a period of time. As an aside, the thing about this part of the migration is there is no perfect answer in terms of the best/most surefire way to do this if we are going to do an airdrop and there are multiple ways to approach this. This approach we’re advocating for is a cooperation/incentive based approach which, after much discussion, we prefer. Alternatives aren’t as appealing to us, such as making a hand in mandatory with a limited swap window and no airdrop. Or having some type of penalty for not handing tokens in. Participation is generally in everyone’s best interest in terms of the overall success of the token. Those who are active and participate will be rewarded with an extra stake in the new token, and those who are inactive / don’t participate won’t feel totally burned.
4. Once the aforementioned deadline passes, the remaining (handed in) tokens will be sold.
5. The new contract is launched and holders receive tokens based on the snapshot taken in step 2.

What Should the New Contract Look Like

We think the new contract should be as minimalistic as possible. Meaning, not trying to throw in crazy bells and whistles that not only may be unnecessary but could become a problem later on. The thing is, we can develop new features and “products” down the line and build on what we already have. This has already happened with our DEX, PawSwap. Our vision of the new contract is a token that only has the same two taxes as we currently have on ETH: a charity tax (of course) and a tax for development/operational/marketing costs. There are some general technical upgrades that we will include, but the idea is a clean foundation that can be built upon.

In addition, the new contract will have the capacity to be fully decentralized. Because we will be on an L2 with miniscule fees, the plan is to have on-chain voting that directly leads to an action, such as voting on a charity for a donation and automatically dispersing the funds. Early on, there would need to be some guardrails, such as having a vetted charity list that is controlled by a multi-sig. This is to prevent abuse/misuse until the project is sufficiently decentralized, at which point control can be fully turned over to the community at large.

Wrapping Up / Next Steps

That’s a lot of information about a big and important topic. Initial discussions seemed to indicate a desire to move in the direction of migration, so we hope this article serves as the next inflection point in moving the discussion forward. We expect plenty of discussion to see how you all feel about everything we have presented here today.

From our point of view, we are extremely excited about the possibility of migration and the opportunity it could bring. We think it could be the right move to be making given how things have played out with mainnet Ethereum and the never-ending saga of high gas prices. We think an L2, specifically Base, gives our project the highest chance of success and that the pros significantly outweigh the cons, making migration a great option in our eyes.

Now that we’ve laid out everything let’s have a great discussion about this as a collective so we can chart the best path forward for the project.

-The Pawthereum Core Team