Summary
TIP-22 outlines a proposal for TreasureDAO (“Treasure”) to implement a self-funding treasury model specifically by divesting MAGIC revenues to complement strategic raises to cover core costs of business. The strategy would be executed in partnership with Treasure’s ‘market-making-as-a-service’ partner, Flowdesk SAS (“Flowdesk”), using its funding program as set forth in the ratified TIP-21.
The amended market making arrangement will become effective only after the ratification of this proposal.
Rationale
A self-funding treasury model will complement strategic raises, allowing the DAO to convert revenues into stables to fund ongoing expenses and support future growth opportunities. The rationale for the proposal is as follows:
- Standard Practice – It is business hygiene for organizations to fund operating expenses through revenue. Treasure is in a fortunate position to be revenue generating, despite being a little over one year old. Funding core operations with revenue - even in part - gives the DAO flexibility over working capital and enables Treasure to scale the organization in key areas quickly as it grows.
- Risk Management – It is unwise for the DAO to rely on strategic raises as the sole source of funding given the impact that the macro market and FTX contagion has had on institutional investors. The DAO needs to be able to use revenues to sustain itself independent of the investment climate. This flexibility is crucial risk management.
- Capital Efficiency – Strategic raises involve long-term vesting at a significant discount reflecting an illiquidity premium (usually 30%+ off the TWAP). The DAO becomes highly capital-inefficient if covering all of its expenses using capital raises.
- Time Efficiency – Strategic raises are extremely time-intensive on core contributors. Raises tend to take three to six months and require frequent meetings with interested parties. In the past, Treasure’s core leadership has spent a non-trivial amount of its time securing capital raises simply to ensure that basic operational expenses would be met. The Flowdesk partnership will allow the team to focus full-time on growing the organization.
Flowdesk has experience in running funding programs over CEXs and DEXs for notable foundations using in-house algorithmic trading strategies tailored for each client. Flowdesk is a regulated institutional player with strong internal policies and extensive connections to CEXs, and will execute these strategies using the most liquid exchanges to minimize market impacts, with trading activity capped at 1.5-2% of daily MAGIC volume.
Proposal
Authorize Flowdesk to support the DAO fund opex through ongoing conversion of MAGIC revenue. The following conditions will apply:
- MAGIC may only be converted from revenue received by the DAO. Examples include Trove’s marketplace platform fees, Trove’s collector royalties for our native projects, Bridgeworld game revenue like summoning fees, and Smolverse-related product drops. This proposal does not authorize Flowdesk to convert tokens from other token allocations (eg. Ecofund, Mine, etc.)
- No more than 1.5-2% of daily MAGIC volume will be divested as per TIP-21.
Current operational costs refer to existing overhead, new contributors, technology and infrastructure services, and other costs incurred in the normal course of business for the benefit of the DAO.
Treasury conversion through Flowdesk’s funding program will be documented and made public in line with the best practices that the DAO has established already regarding data transparency as well as other leading DAOs.
The amended contract will become effective only after the ratification of this proposal.
Polling Period
The polling process begins now and will end on December 14, 2022 at 14:40 PM UTC. If quorum is reached, a Snapshot vote will be put up shortly thereafter.