Hey y’all. Before getting into the nitty gritty, I want to thank everyone who has been participating in this discussion and also those who have been quietly following along. It’s nice to be reminded of how passionate the NFTX community remains after over three years of being together. I also want to make clear that I empathize with many of the concerns and some of the frustrations brought up by token holders. I, too, have shared similar thoughts during the past week and am aware that rhetoric has been used at points in the conversation. Whether this was purposeful or accidental, I appreciate that it can be concerning, and I have taken these concerns to heart while doubling down on my own due diligence. It’s been a long week, and needless to say, I have a lot at stake here, as I know others do, too. There is a lot for me to unpack, so please bear with me, and I will do my best to go through it as logically as possible.
Looking at the proposal from a bird’s eye view, there appear to be three main elements going into Project New Wind: (1) treasury/community, (2) talent/IP, and (3) major-league backing.
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The treasury and community are pretty self-explanatory. Currently, the NFTX treasury is used to support the NFTX platform by offering a baseline TVL and providing enough PUNK inventory + liquidity to ensure that we are included in market aggregators. Put another way, our treasury ensures that our platform cannot be ignored and that we are competitive with other platforms by TVL standards. Unlike FloorDAO, our treasury and community have never been split, which means we have more to offer in $ value and a cleaner project narrative.
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The talent (i.e., team members) potentially moving to Project New Wind includes team members from both NFTX and FloorDAO. Some team members have sizeable token holdings, but most do not. To the best of my judgment, these future New Wind team members are primarily driven by a passion for building something epic and potentially very valuable. In terms of IP, because neither NFTX nor FloorDAO have advanced legal structures, any protocol IP is arguably owned by the developers themselves who have designed and developed it (in part, this includes myself, but only to a limited degree, especially when considering tech in development by FloorDAO). So, in theory, it would be possible for team members to take their ideas and their work to Project New Wind even if NFTX token holders chose to stay behind with the NFTX treasury. Of course, this would be more complicated in practice, and getting into the particulars of such a scenario in this discussion is probably not productive. Still, it is an important possibility to keep in mind.
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Major-league backing (i.e., Merit Circle) offers Web3 experience and resources at a higher-level playing field typically occupied by projects with 9 and 10-figure mcaps. This includes a dedicated legal team, big-name networking, and a deep bench of strategists, marketers, and bizdevs. As an on-chain protocol DAO with a relatively small team, NFTX simply cannot fill these higher-level gaps itself. Barring some major changes in NFTX’s market cap and the creation of an advanced legal structure, we will never have a dedicated team of lawyers, or an in-house marketing team, or a deep bench of biz devs and web2 financial resources. When NFTX was launched in December 2020, these sorts of things weren’t that relevant, but since then, a lot has changed, and NFTs have gone mainstream, so having a chance at a consistent 9-10-figure market likely means partnering with a big player like Merit.
Regarding these three elements described above, I think it’s important to note that only one component, the talent/IP, is essential for Project New Wind to go ahead. Since the internal discussion regarding New Wind began among the NFTX team, I have observed increasing excitement about what is possible. The NFTX team is passionate about building something epic and appreciated. During the past years, many of our team members have felt frustrated by our limitations as a relatively small protocol DAO. As a personal example, about five months ago, I was tasked with filling out the application for NFTX to be included in the Blast launch (by Blur). One of the questions asked me what my work experience was, and I answered, “built and launched the first NFT protocol DAO.” Moments like this are a painful reminder of how much the space has evolved since our inception and how being included in the major league now requires more than passion, good tech, and a historic legacy. It also requires big backing and the benefits that come with it.
During the past week, interesting alternatives to the proposed plan have been brought up and deserve to be commented on. One of the alternatives is the OldWind/NewWind proposal, whereby treasury assets remain in an “Old Wind” DAO and only move over to the New Wind foundation after some level of success has been achieved. While I understand the attractiveness of this proposal for token holders (myself included), I believe that there is an element of token holders (again, myself included) desiring to “have our cake and eat it too.” Currently, elements #2 and #3 (i.e., team members and Merit) are eager to put time and energy into building Project New Wind in the hopes that it will be successful. If it is not successful, then they will not have the luxury of recouping their time and energy. Moreover, if it is successful (e.g.,>$100M FDV), then it really doesn’t make sense for them to hand over 33% of all tokens (over half of circulating tokens) to receive ~$22M of treasury assets in return.
Another interesting proposal brought up is for there to be a rage-quit mechanism built into NFTX whereby token holders who do not wish to move forward with the plan can take a portion of the treasury and burn their tokens. In theory, I see the attractiveness of this option, too, but my understanding is that, in practice, it can be more complicated. I have not had sufficient time to research this possibility myself, but several NFTX team members have made it clear that if any such “rage-quit” proposal appears to be moving forward, they will void their income stream and remove themselves from the NFTX team due to complex legal and tax concerns surrounding the issue. NFTX has a large community and about a dozen team members, each with varying risk tolerance levels and wealth to protect. Some people are anonymous, others are not, some have families to worry about, others do not, and all of these people combined likely come from 10 different countries or more. I have not spoken to Merit directly about this issue, but my understaxnding is that such a situation occurring just months before New Wind’s launch would be a concern for them too. So, in short, while rage-quitting is not necessarily out of the question, it could put NFTX’s participation in Project New Wind at risk, and it’s uncertain whether it could even be pushed through NFTX governance in the near future. I am assuming most holders are aware of this uncertainty, otherwise the circulating mcap of NFTX tokens would be significantly more than 1/3rd of NFTX’s treasury value.
Taking a step back, I want to address some of the concerns around Merit, the treasury, and the tokenomics. After looking into the subject in detail, I feel confident that any treasury assets moved into Project New Wind’s foundation would be untouchable for any reasons that do not benefit the project. Essentially, the treasury assets would be used to support the New Wind platform in the same way they are now used to support the NFTX platform. The primary difference is that they would be protected in a legal entity which ensures their continued “good use.” In this sense, I do not think Merit or the New Wind team is getting “a piece of the treasury” by having a vested token allocation. Nevertheless, this has 100% been on my mind as I know it has been on others’. I believe token holders have played our cards well on the forum by suggesting that a $75M FDV is reached before vested tokens can be touched. The readiness with which this was agreed to is also a good sign in my opinion. And from talks with team members I get the sense that there is strong confidence in this being achievable. (Note: this is by no means a promise or a prediction; it is simply my personal assessment of internal confidence.)
Now that I have addressed some of the major concerns, I will quickly touch on the potential positives, which the original proposal may have lacked somewhat. I do not want to break any confidences here, so all I will say is that my discussions this past week have left me with the impression that there is some awesome developments in the works. In my estimations, New Wind is a lot more than just a regular merger, it’s a merger with the potential to quickly impress the entire ecosystem. I hope I’m not stepping on any toes by sharing this personal opinion, but I feel it is only fair, given the gravity of the decision.
This post has ended up far longer than anticipated, however before closing, I would like to invite readers to head over and check out the conclusion of the original NFTX litepaper (Litepaper | v1.0 | NFTX), as I believe it captures this exact moment we are in. The original vision for NFTX was for a community of passionate, like-minded individuals to embark on a maverick adventure of creating a black hole for NFT assets. Three and a half years later, this vision has not been realized to my satisfaction, but my desire to see it achieved is as strong as it was back in 2020. I personally have a lot at stake here, as I know others do too, but I didn’t get into the space to take half-measures or drive in the slow lane. I believe this proposal has real potential, and I think it would be a shame to see the NFTX community end in a schism before taking this next step forward. NFTX was the first NFT protocol DAO and ignited the passion of builders, collectors, and visionaries alike. We began our journey as a “digital war band,” and we now have a small window of opportunity to try our hand at becoming a true empire. So I say LFG for it.
