FloorDAO is seeking approval of a 500Ξ loan from NFTX DAO to bootstrap FloorDAO’s token launch auction (TLA). Upon completion of the TLA, FloorDAO will repay the loan in full.
This proposal is good for NFTX DAO for two reasons:
- FloorDAO is highly aligned with NFTX DAO as an “ecosystem” project, building on top of the NFTX protocol for its primary yield strategies. If FloorDAO is successful, many NFTX “blue chip” vaults will receive a massive increase in volume and TVL, as well as market mindshare. Several of FloorDAO’s core team are also on NFTX core team.
- FloorDAO intends to allocate pFLOOR (vested exercisable FLOOR) to NFTX DAO to additionally ensure aligned interests for the long term.
- NFTX DAO can kickstart a high-impact ecosystem project with a portion of its treasury, a large portion of which is idle
- FloorDAO can adhere to its “fair launch” ethos and avoid a presale to insiders
- This deal would demonstrate a viable model for accelerating ecosystem projects, DAO-to-DAO financial relationships, and collateralized lending of NFTs (see Funding request)
- Loss of funds and payback period.
In the extreme case of loss of funds, FloorDAO would need to repay the debt from revenue via bonding fees or generated yield. The repayment period would depend on volume for bonds and/or yield which is unknowable.
If NFTX DAO chooses to collateralize PUNK to borrow ETH, then there is a risk of downside price volatility of PUNK, which can cause liquidations of the PUNK collateral. There is $13M worth of idle PUNK in the NFTX treasury however, and only a ~$2M (500Ξ) loan required, which means liquidation risk should be low (15% collateralization on 50% PUNK CR)
- NFTX DAO lends 500Ξ to FloorDAO, for a 2 week term, with FloorDAO allowing 72 hours from initial request for NFTX to fulfill. This loan option expires on April 1, 2022.
- FloorDAO repays 500Ξ plus any interest accrued from the Rari Fuse pool to NFTX DAO upon completion of FloorDAO TLA, expected Q1 2022
- If debt repayment is necessary from bond revenue, FloorDAO sets aside 20% of ongoing bonding fees for loan repayment, sent monthly, at an 8% APR compounded monthly
- NFTX DAO to unwind GLYPH/ETH position (400 ETH)
- NFTX DAO to deposit $2m (8.5 PUNK) into Rari Fuse pool 31 and borrow 100 ETH (~$400k)
- NFTX DAO to send 500Ξ to FloorDAO TLA multisig account
- Discord: NFTX, FloorDAO
- Forum: https://forum.nftx.org/
- FloorDAO twitter: https://twitter.com/FloorDAO
- Minimum Quorum: More than 10% of circulating, non-treasury NFTX must participate for a proposal to Pass.
- Passing Threshold: More than 50% of voting tokens must vote FOR for the XIP to Pass. For changes to the NFTX contract, more than 70% of voting tokens must vote FOR for the XIP to pass.
- Yes, support the loan
- No, consider other options