FIP#39: Implement RAMOS
This proposal aims to align incentives amongst all FloorDAO stakeholders by ensuring $FLOOR price is tangibly connected to the value of the FloorDAO treasury. This ensures that the team, holders, and other participants can focus on winning and growing the protocol together.
To do this the team, with aid from TempleDAO, would implement RAMOS: Random Automated Market Operations Support. RAMOS is an AMO-styled liquidity manager contract that will allow FloorDAO to support the $FLOOR price when it trades below Treasury Value and Recapitalize the treasury over time when $FLOOR trades above Treasury Value.
At the time of writing this proposal the Treasury Value is roughly $8.65m, a breakdown is provided below and can be found at this zapper link:
|Otherdeed 25846||1 (13.4E OS Best Offer)||$24,419.22|
|Otherdeed 25844||1 (2.03E OS Best Offer)||$3,699.60|
|WETH Liq (WETH/FLOOR pools)||411.615||$738,684.29|
Treasury Total: $8,650,984.0442
FLOOR Total Supply: 1,617,078.26
FLOOR held in Treasury Wallet: 153,578.45
FLOOR held in DAO provided Liquidity: 195,109.827
FLOOR with a claim on the Treasury: 1,617,078.26 - 153,578.45 - 195,109.827 = 1,268,389.983
At the current price of $3.82 per FLOOR, this puts FLOOR MC with an eligible claim on the Treasury at $4,845,249.73506, this is a 56% discount to the Treasury Value. At fair value where FLOOR MC == FloorDAO Treasury Value, FLOOR should trade roughly at $6.82, all else equal.
This proposal asks to implement RAMOS with bi-weekly refills as needed such that FLOOR MC trades within 5% of the FloorDAO Treasury Value, making the discounted backing value $6.48.
Over the last few months, the team and DAO members have been engaged in multiple discussions around ways of bringing FLOOR back to its treasury-backed value (TV). From these conversations, there seems to be a consensus that doing so is net-positive for all holders. When FLOOR trades below backing, members of the DAO that need liquidity sell their tokens at a loss compared to the fair treasury value of the token. Additionally, every time a user buys FLOOR from FloorDAO provided liquidity, the protocol is diluting themselves by selling FLOOR cheaper than what it’s worth. Meanwhile, each purchase made by the treasury, at current prices, will result in an instant return of approximately ~56% for the capital deployed. This presents a clear opportunity for the treasury to create value for its members by increasing the value of their holdings – there are very few opportunities to generate such a substantial risk-free return from the market in NFTs.
By bringing Market Cap in line with Treasury Value, holders of FLOOR get access to their liquidity at fair value while the DAO gets to accumulate FLOOR at a discount to backing, making it accretive to the protocol. In addition, any FLOOR that’s bought back can be burned upon redemption or added to liquidity pools. A token burn would further benefit remaining DAO members by increasing their percentage of ownership in the protocol and the Treasury Value per share of remaining FLOOR tokens.
This helps to align incentives between all stakeholders in FloorDAO:
Holders: Their token is valued fairly and therefore govern an equivalent amount of the treasury. As RAMOS buys and burns tokens below TV, the claim that 1 FLOOR has on the treasury increases as the supply is lowered.
Team: Focus on shipping rather than dealing with unhappy holders. The value of the treasury increasing is directly related to the value of FLOOR tokens and therefore can focus on making FLOOR win through treasury management. Bringing MC in line with TV also shows future investors that the protocol cares about their interests.
RAMOS is a low-barrier way to achieve such a task that requires no dev time while Floor transitions into V2. The TempleDAO team will need 1 week to implement the RAMOS system in tandem with the FLOOR team.
Additionally, liquidity can be migrated from a Uniswap position to Balancer allowing FloorDAO to farm AURA/BAL rewards while providing liquidity. In this scenario since FLOOR trades at TV, instead of having FLOOR buybacks on the Bi-Weekly gauge vote FloorDAO could have ETH bribes to vlAURA holders as an option. This would allow the Treasury to gain value at an even faster pace given, at the time of this proposal, $1 of bribes == $1.5 of Aura/Bal emissions that would be entirely farmed by FloorDAO.
Details about RAMOS
RAMOS stands for: Random Automated Market Operations Support. RAMOS is an AMO-styled liquidity manager contract that will allow FloorDAO to support the $FLOOR price when it trades below Treasury Value and Recapitalize the treasury over time when $FLOOR trades above Treasury Value. This mechanism is currently implemented at Temple DAO. The temple DAO team has committed to assisting in the implementation of this process.
How it works TLDR (from Lasso of TempleDAO):
- RAMOS holds Balancer BPTs (in Temple case), but can be modified to uni or curve (balancer + aura is easiest and has been used by TEMPLE)
- In the case of Temple, when the price is below the target price it can rebalanceUp and by single asset withdrawing TEMPLE from the pool it makes TEMPLE price go up.
- If the price is above the target the opposite takes place with rebalanceDown (minting TEMPLE into the pool)
- FLOOR can set thresholds for when it’d trigger relative to the target price (5% of backing), how random you want it to be (and its frequency) and what percentage of the gap between the current price and the target price you want to close.
- On top of the price support mechanisms since it’s Balancer you can pair it against yielding tokens (bb-tokens for stables and smth like wstETH for ETH)
- All parameters and randomizations are fully customizable
- On top of this it is already automatically implemented to use aura pool, so FloorDAO could farm aura+bal with the LP (need a gauge from balancer for this of course).
- Managing the floor price in RAMOS: the DAO would have to use a preset backing number (5% lower than TV, $6.48 in this case) that is adjusted monthly based on treasury value and floor supply, but backing price could be based on an oracle price (or automate other way)
- In order to gauge initial liquidity, FLOOR should release a non-binding signalling snapshot asking FloorDAO members to vote YES or NO if they’d like to participate in RAMOS when its implemented. Based on the amount og gFLOOR that would like to participate, the DAO can allocate capital accordingly, sell NFT assets if necessary
Given that FloorDAO’s treasury consists of mostly ETH/WETH + tokenized NFTs through NFTx (also a small amount of USDC) the way you could use RAMOS is by having a Balancer FLOOR/WETH or wsteth pool with decently wide spreads (given the volatility of NFTs) and randomly triggering rebalances to keep the discount to backing value at minimum (so not encouraging to try to arb the backing value) - We have linked temple’s docs on RAMOS below to see how it works:
- If snapshot vote passes, Floor would engage with the Balancer team to secure gauge vote (this can be done concurrently w/ RAMOS development and wouldn’t be a blocker to development)
- Floor will release a non-binding snapshot vote to its community to gauge how much Floor will be traded once RAMOS is live, capital will be allocated accordingly including the selling of FLOOR assets if necessary to provide initial liquidity to the Balancer pool
- RAMOS will be implemented with the support of Lasso and the TempleDAO team to ensure its executed properly
- Liquidity will be moved into Balancer LP
- Once complete, RAMOS will be announced to the FloorDAO community
- RAMOS is topped up with capital once per week if necessary
Benefits of Implementing RAMOS
- Buying FLOOR at 5% under backing is accretive to the DAO
- RAMOS and liquidity on Balancer keeps the treasury ETH profitable as FLOOR can farm with the LP (would be good to try to get a gauge for ETH/FLOOR LP on f.e. Balancer+Aura)
- FLOOR gets to farm the LP and obtain swap fees, along with balancer and aura rewards where $1 = $1.3-1.6 in reward value
- Implementing RAMOS ends the debate around backing so team can focus on building a solid V2 product
- Fairly easy for FLOOR to get the Balancer gauge due to connections members in FLOOR has with the team there
- Implementing RAMOS could be done in tandem with the TempleDAO team shortening development time
This proposal aims to provide a framework and process that will allow for the implementation of RAMOS for the reasons described above.
Step 1: Discussion: Community Discussion to Approve the implementation of RAMOS via Forum - will be posted to the FloorDAO Forum for 3 days before it goes to a community snapshot vote
Step 2: Community snapshot vote mentioned the above proposal will be live for 7 days. If passed proceed to step three.
Step 3: FloorDAO posts a non-binding snapshot vote to gauge how much FLOOR wishes to utilize RAMOS when live and prepares the treasury to meet that demand (if the treasury needs to sell/swap assets, they’re given 10 days to complete the task)
Step 4: FloorDAO Team works with the TempleDAO team to prepare the RAMOS implementation (timeline 2 weeks from the RAMOS snapshot passing - this timeline can be adjusted if there are time limitations from the TEMPLE team)
- Include liquidity migration from Uniswap → Balancer so the above farming mechanism can be implemented at the same time.
Step 5: FloorDAO team will announce to the community when RAMOS is live and implemented
The discussion period for this proposal begins at 19:00 UTC on 2023-04-01 and will continue for 2 days until 2023-04-03 at 19:00 UTC.
The voting period for this proposal begins at 20:00 UTC on 2023-04-03 and will continue for 7 days until 2023-04-10 at 20:00 UTC.
For - Implement RAMOS and bring MC = TV
Against - Do not implement RAMOS