Proposal: Seed NFTX vault with floor SAD

Suggestions
#1

Authors

quag (Core @ NFTX, proud owner of many SADs)

Summary

This proposal suggests using a small portion of DAO Treasury funds to purchase a fixed amount of SAD songs and pair them with the corresponding ETH in an NFTX vault.

Rationale

Song-A-DAO provides ‘Protocol Owned Liquidity’ (POL) of their NFTs with a permanently liquid price floor; giving total confidence to participants that they can instantly buy, sell, and swap their songs. The DAO acts as a buyer of last (or first!) resort while capturing the fees of this activity. The benefits of this approach are starting to become more obvious and The Purrnelope’s Country Club project seeded an NFTX vault as part of their roadmap. Having a liquid $SONG token opens up opportunities throughout DeFi as we are slowly beginning to see the possibilities of backed NFTs (such as borrowing against PUNK on Rari) in the landscape.

The biggest potential downsides I can see are impermanent loss and missing royalties. The former can be mitigated by NFTX’s imminent release of ‘single side staking’, where you can earn fees by staking only the NFT and not pairing with ETH. The latter I believe would at least partially (and maybe more) be accounted for in the form of vault fees from the buy, sell, and swap activity in the vault.

Effect

Opportunity

  • Song owners can swap, buy, and sell instantly
  • Composable $SONG ERC-20 token that is backed by the NFTs
  • Song owners could stake their $SONG to earn yield
  • Continues to show participation in web3 space
  • The DAO becomes the primary fee capturer of fungible SAD activity (POL)

Risk

  • Impermanent Loss
  • Royalties

Specifications

  • Clear a budget to purchase ~80 SAD NFTs (~2% supply)
  • Pair 50 with the corresponding ETH to supply liquidity in NFTX vault
  • Stake the remaining 30 to provide additional inventory and offset impermanent loss

Funding request - Yes - Implementation Requires Funding

  • ETH (TBD based on floor price, treasury)

Vote

  • Yes
  • Not in current form, see comments

0 voters

#2

I AM SO INTO THIS. But I will also admit that I don’t totally understand all of it. Whenever the talk turns to defi-y stuff, my eyes start to glaze over.

The one thing that really jumps out to me is the $SONG token part. I’ve designed everything really purposefully to have no token (beyond the NFTs themselves) at this stage. I want to sort of wait until the DAO has proven it’s value to the world (a la ENS) before we have any kind of token. And then, if we ever do have a token, I was hoping to fractionalize a meaninful song a day to be the token.

I am going to discuss this with you on Discord too.

1 Like
#3

Hey! I probably explained that poorly:

$SONG (example name) is just the token that maps 1:1 with the NFTs that are in the vault. It’s just a function of how NFTX works, it’s not a project “token”. When one NFT goes into the vault, 1 SONG is minted, when one NFT is redeemed from the vault, 1 SONG is burned. Etc etc. Always a perfect balance. Literally just a fungible wrapper so people can buy/sell/swap from the vault :slight_smile:

#4

Ahhhhhh ok! This is just about my total ignorance of how this works! My friend Matt has explained NFTX to me many times, but I am never able to 100% get it.

I’d love to put this up to a vote for Voters. Let’s check with @boris but I think it sounds like a great idea.

#5

No checking required, just the hard work of getting full voting setup!

I messaged @quag thanking him for this very nice “governance style” proposal. Likely we’ll want a poll to do a “temperature check” and then move on to a snapshot vote. And we have work to do to set up smart contracts for SS.

Are polls cool?
  • Yeah
  • Nope
  • Meh

0 voters

I also think a “Governance” category is where we’ll put formal votes. We want lots of broad suggestions, and then workshop with people to move their stuff from Suggestions —> Governance Proposal.

#6

Question: Is there a way to set it up so the DAO treasury collects part of the trading fees? Since right now 10% of the secondary sales on OpenSea do indeed go to the treasury.

1 Like
#7

Yes! I imagine it would be the gnosis/multisig DAO wallet that would create the pool and seed the liquidity and therefore that would be the wallet that “owns” the position and accrues/claims the trading fees and rewards.

2 Likes
#8

So I’m going on bankless next week and it would be rad to set this up. Ugh! We should just do a vote in discord.

2 Likes