XIP-15: Loan 500Ξ to bootstrap FloorDAO's fair launch

Summary

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.

Rationale

This proposal is good for NFTX DAO for two reasons:

  1. 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.
  2. FloorDAO intends to allocate pFLOOR (vested exercisable FLOOR) to NFTX DAO to additionally ensure aligned interests for the long term.

Effect

Opportunity

  • 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)

Risks

  1. 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.
  2. Liquidation.
    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)

Specifications

  • 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

Funding request - Yes - Implementation Requires Funding

  • 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

Communication

Quorum

  • 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

0 voters

5 Likes

Voted Yes on this proposal as I believe this is a great opportunity for the NFTX DAO to bootstrap a growth engine for the protocol at minimal risk.

Funding for 500 ETH is fairly easily managed on NFTXs’ treasury side (working on a larger proposal for more active treasury mgmt at the moment) as its’ a fixed temporary loan that can be expected to be paid back in full by end of TLA.

The impact of temporarily taking down liquidity from ETH/GLYPH will be little as the vault hasn’t seen activity in the past 90days (aside from AMM pair trading). Borrowing an additional 8.5 PUNK (we’re already borrowing 5) to the Rari Fuse pool to take out the remaining 100 ETH sounds like a solid play too. As the loan is a short-term thing, liquidation risk by the PUNK floor moving down 50+% is limited.

6 Likes

This is a very novel idea! Love the plan and it will definitely drive more usage to the Fuse pool that has been running for several months now. Really looking forward to this, and please reach out if there is anything I can help with throughout the process!

7 Likes

Agree, i’ve voted yes!

3 Likes

Great idea and definitely fair!

3 Likes

amazing news!! very excited for this

3 Likes

I voted yea, wish good luck!

1 Like

Interesting proposal, voting yes

1 Like