FIP#15 - Approve Putty as a Treasury yield strategy

Summary

Approve Putty Finance as a yield strategy for the Treasury.
Following discussion from FloorDAO <> Putty Finance, FloorDAO would be able to allocate funds to underwrite options on Putty, starting with a trial run for 5 FRWC put options.

Motivation

FloorDAO’s goals are to both generate yield from its collections, as well as provide liquidity for them.

We’re accomplishing these goals so far with

  1. spot buying and selling via Sushi and the NFTX vaults (eg. 60% APR L30d for wizards)
  2. lending and borrowing via Rari Fuse (eg. 20% APR for punks)

Options markets would be a 3rd avenue that would both generate yield (in return for selling volatility), as well as provide liquidity for those seeking to buy puts or calls. Initial estimates for selling WIZARD ATM 30d puts are roughly 132% APR.

Proposal

  • FloorDAO would execute a trial run for a delta neutral yield strategy starting with 5 FRWC puts
  • FD to sell 2.5 WIZARD to ~6.25 ETH (short 2.5 delta to offset long 2.5 delta from selling puts)
  • FD to approve ~12.5 ETH to be used on Putty
  • FD to use ~12.5 ETH as collateral to sell 5 FRWC ATM 30d puts, targeting at least 10% premium (1.25e)

Two outcomes:

  1. If FRWC is above the strike price at 1mo conclusion, then FD earns 120% APR on its ETH
  2. If FRWC is below (or exercised for some reason), then FD purchases 5 WIZARD at the strike price for ~12.5 ETH, and would pair with ETH and deploy as additional liquidity to Sushi and NFTX

Poll

For: Approve Putty as a yield strategy starting with trial run
Against: Amend proposal

  • For
  • Against

0 voters

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