We've had a thorough discussion of this in the chat yesterday, and here are some points:
C. First use the funds to revive GS markets.
A lot of people believe that the GS events happened due to market manipulations by OMO and BSIP42 exacerbating the situation, as modified feeds disincentivised buying out of margin call orders.
As for how to proceed further:
Liquidity providing via dexbot sounds like an interesting idea, but we need clear rules on how it is going to happen, and automated contingencies on what to do when market begins rapidly falling or rallying. On traditional exchanges, liquidity providing works like this: MM is obligated to keep preset amount of liquidity in the books, until certain volume obligations are met. Then it can remove one of the sides.
Before we even start, we need to agree on what percentage of the funds can OMO use daily, and do a daily check if it was profitable or not (which is okay).
In our case we need something like that to happen once the market begins moving, for example. Bot places 30 orders on both buy and sell sides, but starts removing them from one side in case 10 of them are taken on one side, without getting an order taken from the other side (or something like that).
During sideways market provision of liquidity might be profitable. During movements contingency rules would limit the amount of loss. In case of profits I suggest some of them are taken and put back into the reserve pool, with the rest going to OMO fund, and its percentages readjusted accordingly.
If the strategy for the OMO is explicitly talked about, and clear then I would support such decision but not before.
The DEXBot staggered orders strategy basically places buy and sell orders in a given range lets say $0.03-$1.00 at say 2% increments, these orders would stay on the books as long as the operation continued. Every time a sell order is filled it is replaced with a buy order 2% lower. Profits get compounded which increases order sizes, making the strategy more profitable. Which basically means that the longer the strategy runs the more liquidity will be provided on both sides of the book via increased order sizes. If price wants to pump (or dump) it has to fight through added resistance of the DEXBot orders, once it fills those orders they are replaced with ones on the other side. Resistance turns into support. This helps to stabalise the market by resisting price change. More liquidity, more stability.
The longer the operation runs the more liquid and stable the market becomes, once we have solid foundations in place we can then start talking about advancing market operations to more sophisticated strategies such as perhaps increasing smart coin supply. Until we have solid foundations, there is little point.
The only real consideration for setting up a staggered orders strategy is the range in which you want it to work, the last thing you want is price leaving the range you are set up in as then there are no orders providing liquidity around the price, no accumulation and increasing of order sizes and no resistance to price change. With it being a long term strategy, it is pretty simple to select a range that price stays within.