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r3gen Finance is pleased to present the 2023 Q3 financial review for TreasureDAO. The report takes a deep dive into the financials and performance looking back over the last 6 months with a focus on revenue and expenditure in Q3 vs Q2, we also show YTD numbers and charts where appropriate for context building. Some key insights have been pulled out onto this forum post however we advise everyone reading this to review the full report (link above). Within this document we provide a Profit or Loss Account, Balance Sheet and Runway Analysis coupled with supporting notes.
The purpose of the report is to provide the TreasureDAO community with greater visibility into the current state of DAO operations and financials as well as a snapshot of recent developments and highlights. This will allow TreasureDAO community members to identify the best ways to contribute to the Treasure ecosystem and analyse its sustainability.
The objectives of this report are:
- To keep DAO members informed and enable them to make the best decisions for themselves, the community, and the expansive and growing Treasure ecosystem
- To increase trust in the core contributors and council team operating on behalf of and for the benefit of all members of TreasureDAO
- To provide DAO members a report of TreasureDAO’s asset holdings, giving the community peace of mind of the DAO’s financial position and ensuring that the DAO’s treasury and funds are not being misappropriated
- To provide a clearer, up-to-date roadmap of what is being developed and what is to come, ensuring further alignment and visibility into the DAO’s broader strategy and overall future direction while balancing commercial pragmatism
Q3 Business Development update In Q3, the Treasure ecosystem continued to see meaningful growth through significant developments led by its partnered game studios and core contributing team across product, game updates, partnerships, and overall operations. Highlights this quarter span product development updates within the Treasure platform and the launch of the ecosystem’s newest IP addition of Meem, major MAGIC milestones with the second Halvening, game updates for The Beacon, Kaiju Cards, and many others, and ongoing participation of Treasure within the broader Arbitrum ecosystem.
Product Development & Core Team Focus Treasure platform released its new shopping cart, sweep feature, and other improvements throughout the site from the badge system through to the updates on the homepage to put gaming at the forefront. Meem, the Wandering Merchant, was also unveiled to offer adventurers who stumble upon it occasional underpriced deals and opportunities within (and outside of) Bridgeworld. Throughout Q3, the core product team was focused on updates to the platform and infrastructure in a pursuit to enable more native and expanded uses of Treasure’s products to support the ecosystem’s games (eg. marketplace SDK, platform quests and rewards, account abstraction). Hiring for key roles within the core contributing team has also been underway with the CTO, Head of Art, Executive Producer, and Community Manager roles landed with start dates throughout the fall. The Narrative Director, Game Director, and Visual Designer roles remain open and continue to be a focus for the founders.
Games and Partnerships Kaiju Cards launched its month-long free-to-play Pioneer Event, beginning on September 20. After launching their Open Beta in July, Mighty Action Heroes released its first major game update with the launch of their Open Beta: Mighty Road in mid-September. On the Darkbright Studios front, the development team continues to make great progress towards their vertical slice and have begun preparing for the launch of their pre-registration process. The studio team also began preparing for their fundraise with the production of their pitch deck. Behind the scenes, Treasure’s core team has been working with a selection of its partnered studios on securing funding. Through TIP-28, the DAO earmarked ARB for use to grow the ecosystem through grants, investments, and treasury swaps with long-term aligned game partners which is continuing to see progress, with the pace being primarily driven by our partners. Treasure and Arbitrum The potential formation of the Treasure Arbitrum Representative Council (ARC) was posed to the community to discuss the creation of a new community-led council to represent Treasure’s interests within Arbitrum DAO. Key Financial Highlights Treasury
- Current Treasury holdings total $39.5M which is largely composed of MAGIC, ARB and Stablecoin Holdings
- Stablecoins make up 17.2% of the total (impaired) treasury holdings. Treasure is committed to firming up the current runway and financial sustainability of the organisation and is currently partnered with Flowdesk as its primary market maker to firm up its treasury holdings through diversification.
- MAGIC emissions have undergone its second annual Halvening on September 1 and three of Bridgeworld’s Harvesters have fallen through their Harvester Doomsday event.
- TIP-29 outlining proposals to conduct a MAGIC reconciliation mint and to assign a vesting schedule to the minted tokens as well as the tokens reallocated through TIP-25 was ratified in late August.
- A discussion post about L1 Treasures was shared with the community to discuss a potential plan to migrate genesis Treasure NFTs on L1 to Arbitrum, while managing the balance of the economy of Treasures on L2.
- MAGIC token price has seen a reduction since the end of last quarter. However September has seen a slight recovery, and we are optimistic of its continued recovery
Revenue
- Total revenue generated in Q3 is $151,592. Broken down in to marketplace fees of $81.2k and in-game revenue of $70.4k
- Revenue is currently from 2 streams: marketplace fees and in-game revenue. In time, we will also include AMM fees (from Magicswap) which will be shown in the next report.
- Revenue is primarily generated in MAGIC, so both volume and price impact monthly revenue figures. Q2 performed better than Q3 in both USD terms and volume of MAGIC received
Expenses
- Expenses totaled $3.2m for Q3 up 29.8% from Q2 (excluding Liquidity and Mining Expenses)
- The top expenditure is in relation to the Management Service Charge, Human Capital Costs and Contributor Incentive Plans. TreasureDAO has a number of relationships at an arm’s-length basis with various service companies and is charged a management service fee assessed by a managing company for the services provided to maintain, administer, or oversee an organization.
- Human Capital costs remain one of the largest expenses for the organisation, however strides have been made to reduce this and become more efficient in certain areas.
- Contributor Incentive Plans were finalised in Q3 and some longer term vests became payable, this resulted in a large expense being recognised in September and was a major driver towards the uptick in expenses in Q3. This is anticipated to normalise going forward.
- Total Liquidity and Mining Emissions for Q3 were $5,737,117. The cost is large in Q3 as MAGIC emissions have undergone its second annual Halvening on September 1 and three of Bridgeworld’s Harvesters have fallen through their Harvester Doomsday event. The MAGIC emissions are seeded annually in a single transaction.
- Liquidity incentives have reduced by 49% from Q2 a direct result of LP incentives from August start to taper down from 650,000 MAGIC per month to 140,000 MAGIC by the end of 2023 per TIP-20(b).
- For the current year, Legal Services are anticipated to be on the higher side whilst TreasureDAO builds out its legal structure and the organization ensures it is compliant with the increasing regulatory surface area covered in the crypto space. These costs are anticipated to decrease given high initial set-up costs of foundations and companies that are not expected to occur again in the near future. We are anticipating seeing a large reduction for Q4 onwards.
Runway
In the context of this analysis, the total assets encompass stablecoin holdings and the MAGIC holdings that are not earmarked for specific use cases. To clarify, assets like those allocated for contributor vesting packages are excluded, as the sole intention of such wallets is to fund contributor vesting arrangements. The monthly expenditure is calculated using a 3 month moving average to help smooth out short-term fluctuations and provide a more stable and representative view of spending patterns. The Runway is calculated as follows for each asset: Total Asset Holding at end of month / 3-month moving average expenditure in USDC and MAGIC The chart in Fig 15 displays the total holdings runway when taking into account stablecoins and MAGIC, which at the end of September is 26 months. ARB holdings have been excluded from the calculation as the use of ARB for runway purposes would need to be approved by the DAO, however if we were to include this then the runway at the end of September would be 32 months.
Close We invite all stakeholders to review this financial report in detail. We hope this report sparks good discussion, feedback is welcome and we will continually iterate and improve it throughout the next few quarters. Please share any thoughts or comments either directly on the forum or through this link on what you would like to see in the next iteration of this report.