FIP#39: Implement RAMOS

Lux · 1 April 2023 16:43

FIP#39: Implement RAMOS

Summary

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:

https://zapper.xyz/bundle/0x91e453f442d25523f42063e1695390e325076ca2,0xa9d93a5cca9c98512c8c56547866b1db09090326.

Token	Balance	Value
ETH	421.0917	$754,861.55
WETH	46.3657	$83,116.57
USDC	3,471.2142	$3,471.2142
Otherdeed 25846	1 (13.4E OS Best Offer)	$24,419.22
Otherdeed 25844	1 (2.03E OS Best Offer)	$3,699.60
NFTX Positions	/	$6,972,275.60
Sudoswap Positions	/	$70,456
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.

Motivation

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:

Implementing RAMOS

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

Proposal

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

Discussion Period

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.

Voting Period

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.

Snapshot Poll
For - Implement RAMOS and bring MC = TV
Against - Do not implement RAMOS
Abstain

For
Against
Abstain

0 voters

Lux · 1 April 2023 16:44

Additional resources on how RAMOS maintains price: Maintaining $TEMPLE price - TempleDAO

aeto · 1 April 2023 20:22

tks for the detailed proposal.

due to the illiquidity of NFTs, it’s hard to immediately yeet large chunks of the treasury into buybacks without nuking our collection price floors, which is opposite of what we want to do. we also likely need some amount of ETH for opex (which we try to keep very low with only two ppl taking salary), as well as some amount to kickstart the v2 weekly gauge yields to prove out the mech

so with that said i’m in support of

moving most POL (FLOOR/WETH) to Balancer 50/50
setting up Balancer gauge to enable BAL+AURA emissions
using yield voted in to FLOOR from our floor gauge votes to bribe our gauge
collecting emissions for either a) more FLOOR buyback or b) ongoing lock (eg. vlAURA) to bribe

i’m also more in favor of “passive” market making rather than “aggressive” market taking — the former would be deploying eg. Charm limit orders, where the latter (afaiu) would be eg. RAMOS.

pros of the former include more capital efficiency, higher trading fees, and potentially more “lindy” implementation (Charm has been in prod for 1+ years and we’ve already used them successfully for MILADY). the con would be a “slower” market effect, since we would rely more on external market demand rather than our own buying. (<-- also a potential pro since it’s less likely we give immediate exit liquidity to mercenary capital that are more interested in numba go up than the protocol itself)

caps · 1 April 2023 20:57

Thanks for putting this together and the detail to support it.

A few things from my side but overall I am against this proposal:

capital expenditure required to move FLOOR price to treasury value does not consider opex costs
no gauge of how heavily this will be used, ETH drawn on by RAMOS risks putting V2 in jeopardy
the use of RAMOS requires manual action for execution and “treasury price index” (TPI) moving the DAO further from decentralization (a core goal of the DAO)
support for this proposal has been overwhelming majority of discord members who joined earliest in December 2022 and most in last 1-2 months

I’m against this implementation but in support of alternatives such as aeto’s, which balances expenditure costs, avoidance of mercenary capital and the benefits of supporting the FLOOR token.

Lux · 2 April 2023 03:39

Hey Caps, thanks for your response here. Just to follow up on your points:

you mentioned increased opex costs - what opex costs do you imagine this proposal creating? Can you be specific? The DAO has paid staff and members from TempleDAO have offered to help in the implementation.
ETH budgeted for RAMOS can be calculated and accounted for using a preliminary snapshot vote. How much will V2 cost the DAO to build? Theres been no clarity from the team on that and no accounting presented to DAO members.
RAMOS’ manual action only require minimal input once ever two weeks and can easily be folded into the responsibilities of a team member. The process can even be automated with a price oracle as mentioned in the proposal
In Floor 1 gFloor = 1 vote, 1 floor makes someone a member of the DAO and their opinions and thoughts should be given the same amount of weight as someone who’s been in the DAO from day 1 since class based voting doesn’t exist here. Are you saying those who bought into the DAO months ago shouldn’t have a say in how their opinion is expressed? Should their vote hold less weight?

javery · 2 April 2023 07:24

Two initial comments from me.

First is on the process outlined…

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

The vote and discussion here should be in favour of proceeding with the proposal to go from step 1 to step 2.

The second is more to do with the proposal itself and further clarity.

At the core of it this is a funding request to the DAO but no monetary amount specifically listed.

What is the initial funding request to move the token price to $6.48
What are the ongoing funding requirements if there is resulting token sell (20% holdings)?
is there any return for the DAO if the token goes above? Say it pushes to $7, does the DAO sell off back to 6.48?

lasso · 2 April 2023 12:25

hello ser, just commenting as I think it is misinformation on RAMOS side to see it as only “aggressive”. Like we already talked with Caps in detail about RAMOS, it is fully customizable. So if you would like to set it up to any on chain or off chain target (f.e. current price), it could be done. What makes it (imho) better than Charm limit orders, is that the orders would be random and not visible as a limited buywall for everyone.

RAMOS main intention is to bring stability, so don’t see it personally as a aggressive way. Both Charm and RAMOS can be used passively and aggressively.

To answer javery about upside price action, RAMOS is fully customizable for that too as it has a function called RebalanceDown. So you could f.e. set it up in a way that if token is trading at 20% premium to target, there would be 1% chance per hour to rebalanceDown and close the gap by 5-10% (imaginary percentages here just to make an example)

caps · 2 April 2023 14:00

Thanks, just in response:

Opex costs in that the proposal doesn’t account for the DAO possibly burning through runway that would jeopardise future efforts (V2, new hires, new products).
Price oracles will require path to decentralisation and costs associated with that. Alternatives do not have the same costs and are easier to decentralise.
1 gFLOOR = 1 vote but as we’re in the discussion phase I feel that we should consider the motivations of the proposal and those backing it, which seems majority mercenary capital with no long term interests in the DAO (noted by how little V2 is discussed by the same users outside of a buyback mechanism).

aeto · 2 April 2023 18:05

to clarify here, it’s the “order type”

passive == limit orders (eg. charm)
aggressive == taker orders (eg. ramos)

Cmande3 · 2 April 2023 23:43

I resonate with all Lux’s statements here - as a long term $floor holder - the teams actions going against their v2 ethos around price = treasury value, The lagging buybacks, the lack of communication regarding v2, and so on. I think RAMOS is a great way to benefit all holders and get price back up to where it should be. I am for!

mainevent · 3 April 2023 00:26

I’m in favor of implementing RAMOS. $FLOOR is currently trading at a 60% discount to treasury value and acquiring tokens at this price is the best use of the DAO’s treasury in my opinion.

jeff · 3 April 2023 08:17

disclosure: i have bagheld templeDAO extensively throughout 2022, and also milady.

Wanna make a few points clear:
RAMOS is pretty much just random buybacks.

It works rly well when you have a Farming-as-a-service (FaaS) token (like temple) where you’re basically rugged as a holder if the token isn’t worth liquid USD backing.

But to be completely honest - any type of buyback works well when you’re trading under treasury value. Adding RAMOS seems like unneccessary smart contract risk when the temple team has a history of making products that get hacked [stax] and you could just do this manually, if you really wanted to.

I’m not sure the extent to which RAMOS has any edge at all over just doing twap buybacks.

I’m also not sure the extent to which $floor is meant to represent a claim on treasury value. Remember that templedao built this for their own treasury, which was basically entirely in stablecoins - the liquidity profile of which is very different to nft’s.

if you’re doing buybacks, have a separate vote on that first, and then have a vote on how to do it imo.

Instinctively I wanna say don’t let these guys anywhere near your product. But I was very exposed to temple during 2022, which was a bad year for them. Idk how they’re doing now, I think the treasury is smaller and ppl are happier.

best of luck with this tho.

zon · 4 April 2023 07:19

I’m generally in agreement with the problem statement of the proposal that FLOOR should loosely follow TV because gauge sweeps arent enough and I don’t see the value of floor without that. I also think once tv == mc is established, stayooors and new entrants are actually here for the protocol and not to make a buck off discounted assets which is important for floor long term. The quicker that’s enacted the better since outsiders wont be waiting to sell and the dao can get the upside for all - without it this disconnect will plague floor forever just like it did with temple until they built ramos.

I think there are a few things that need clarity before this goes to a snapshot vote though and would appreciate engagement from the team (cc: @Caps , @發發, @nobi ) so that in the case it does pass snapshot there is at least some alignment on these parts.

will the team abide by whatever is passed? I assume yes
does the forum vote mean anything? I assume no since it’s meaningless as votes arent done with gfloor, just a sentiment check but now muddled by folks outside the dao
inclusion of opex costs in the proposal: remove 2 years of team runway from the treasury for tv calculation, team can always request more in the future
what floor tokens should actually count in the calculation of backing per floor? I think removal of dao owned and LP are reasonable but up for debate
what range of TV is reasonable? I think +/- 10% from tv is fair given NFT illiquidity
what to do if MAYC eth isnt enough? I reckon tap into the punks given how stable they are and how many we own
is there a way to gauge how much eth it’ll take to stabilize at backing? I’ve seen lots of estimates thrown around and I’d agree it’s likely around 1m but perhaps a sentiment snapshot with gFloor could tell more

javery · 4 April 2023 07:38

The proposal in the current form is not backed through the voting on the forum.

I don’t think it makes sense to move it straight to snapshot without further discussion allowing the community to move forwards with a solution the majority can get behind.

This is a funding proposal with no details about the total up front funds required from the DAO to execute the request, and what the ongoing financial commitment needs to be

Cmande3 · 4 April 2023 13:43

aeto has stated that the votes are easily sybiled on both ends so in reality the forum discussion and comments are the only metrics the team is using. So not sure why we are even talking about the vote.

Agreed I think Zon has made some good comments towards a middle ground solution - can you comment on those?

We have ran calcs and assume around 1m would most likely take care of the issue. But this will get larger and larger the longer we trade this significantly under backing.

floorDAO · 4 April 2023 14:47

Adding @Cmande3 comments here because they’re difficult to read above.

aeto has stated that the votes are easily sybiled on both ends so in reality the forum discussion and comments are the only metrics the team is using. So not sure why we are even talking about the vote.

Agreed I think Zon has made some good comments towards a middle ground solution - can you comment on those?

We have ran calcs and assume around 1m would most likely take care of the issue. But this will get larger and larger the longer we trade this significantly under backing.

javery · 4 April 2023 15:19

Please bear with me while I ask all the dumb questions and make some assumptions.

Would the amount get lower and lower if the price continues to improve in the lead-up to V2 and beyond? i.e. is there a rush for this to happen within a specific timeframe?

There’s a note from @Cmande3 that the estimated amount required is $1m USDC to bring the token to treasury value.

It would then be my assumption that the next proposal will be to allocate $1m USDC to FLOOR buybacks via RAMOS to maintain it at the $6.48 value and that once the money has been depleted that the token then trades at the market value moving forwards.

The first buyback would be to get it to $6.48, and then every two weeks, random amounts would be purchased to keep it there (or sold to reduce it to that amount)

Some queries on that

The $1m USDC is the full amount required? Or is that the initial amount to get it to $6.48, and additional funding is required to maintain the token price? If the latter, what are some projections of ongoing funding required?
The $6.48 amount, does this relate to the current treasury holdings, or does it take into account that the treasury is spending $1m more towards acquiring Floor and the $6.48 is the value minus the $1million. Or, even though USDC/ETH/NFTs are being used to get the token price to go back up is the current treasury considered to remain at the current value?

Keen to understand this more

yieldchad · 4 April 2023 16:48

I am actively involved in governance for many DAO’s and never have I seen forum votes as used for anything other than a temperature check. These are easily sybilled for obvious reasons, and we have already had one team member go on twitter to pump their side of the vote (which is inappropriate imo, you would want an impartial team that can be trusted to execute the will of the DAO). Proposal rules and guidelines are mentioned on this website and do not state that the proposal must pass an up down forum vote to make it to snapshot (for good reason!)

yieldchad · 4 April 2023 16:57

Temple team has offered to help with RAMOS implementation, costs should be minimal
$1mn has been proposed to seed RAMOS with (this $1mn can be contributed over time, as well). For reasons I will explain in my next post, $1mn reduction in treasury value serves NO risk to the future of the DAO and v2
The TPI is simply a calculation of the value of the treasury, this is not a significant feature nor is there any moral hazard wrt centralization here

Cmande3 · 4 April 2023 17:12

Yes the amount in theory would get lower as price gets closer to TV - but if you take the last year of performance and trading vol youd see that the market is valuing FLOOR consistently under TV. Even after the document release for v2 (which i might add totally slashes the use cases for the floor token) the price barely moved - signifying the treasury needs to step in.

Yes after RAMOS implementation does pass (assumption) then we would need to dive into funding - we have asked the team multiple times to take a signal vote to see how much capital is looking to exit. Current projections based on the people that confirmed to me they wish to exit / capital needed to reach TV estimates around 1m (this could be a over estimation as it seems the team thinks v2 is bullish and thinks people would want to stay around for this)

The 1m would go towards buying back the token near (10% or so) TV due to the nature of NFTs - how we handle the funding further if that amount is depleted can be discussed upon further. It is hard to know without a true signal - to my point, the longer we are here the more people are going to look to exit/mercenary capital. So this is why the “Rush”.

It would be the amount looking to buy us back to TV levels and provide enough liq for people who wish to exit - the ability to.
Yes it relates to TV at the time of posting - I will defer to @Lux and @yieldchad on this further