This proposal calls to burn all DAO owned $FLOOR tokens held within DAO wallets. Additionally, this includes all future DAO procured $FLOOR tokens acquired through gauges, wars, buybacks, or any other strategies. This does not include FLOOR POL.
Since inception and according to the original docs, the value of FLOOR is determined by a combination of assets owned by the treasury and is a token backed by ETH and ETH-denominated NFT assets. This means that each FLOOR token in circulation represents a proportional claim of the DAO treasury.
Current DAO Held FLOOR
Currently the FLOOR DAO holds ~185,580 FLOOR Tokens which is roughly worth $751,600 ($4.05/FLOOR). These tokens however are considered out of circulation, do not have claim to the treasury, and have no purpose to ever re-enter circulation. If they were to do so, they would only serve to dilute the backing value of all existing holders. Therefore to cement this, the roughly 185.6k FLOOR tokens held by the DAO should be sent to the burn address to ensure there is no possible way these tokens ever re-enter circulation.
Future DAO Held FLOOR
As the DAO continues to acquire additional FLOOR tokens in the future, through whatever mechanisms, these too should be burnt. Typically this happens through the bi-weekly gauge war system wherein the DAO buys FLOOR off the market with a portion of the yields generated that epoch. Thus far, this mechanism has been quite beneficial to all holders given the MC of FLOOR has been significantly lower than the value of the DAO’s Treasury for quite some time. When 1 FLOOR is bought for less than the value of its treasury claim, the delta between claim value and bought value is then shared between all circulating FLOOR assuming the bought back FLOOR is removed from circulation.
A quick example to illustrate:
Circ Supply = 100
MC = 400 → Market Price = MC/Supply = 400/100 = 4
TV = 800 → Treasury Claim = TV/Supply = 800/100 = 8
1 token is bought off the market at 4 and it is burned
Circ Supply = 99
TV = 796 → Treasury Claim = TV/Supply = 8.0404
Backing per token in this example went from 8 → 8.04 as the $4 difference between purchase price (4) and backing (8) was split between all remaining tokens (4/99 = 0.0404).
This simple example shows how a token procured below TV that is removed from Circ Supply is beneficial for all holders as it serves to increase the backing of all circulating tokens.
Like argued previously, to ensure these DAO procured tokens benefit all holders and never re-enter circulation in the future, they should be burned immediately upon procurement. Therefore, with the passing of FIP#46, all future procured FLOOR tokens from gauge wars, buybacks, or any other strategies should be immediately sent to the burn address rather than the DAO treasury unless otherwise agreed upon.
DAO held POL
Further, the DAO currently holds an additional 164.5k FLOOR tokens (~$668k worth at $4.05/FLOOR) used for Protocol Owned Liquidity. As argued above, all DAO owned tokens are not considered in circulation and therefore these tokens too do not have claim on the treasury.
While the DAO could burn these LP tokens, it would be unwise to do. There are plenty of liquidity strategies the DAO can enact with these tokens for the benefit of all holders, such as the currently used mechanism of Charm automated UniV3 LP vaults which Aeto often likes to call Floor DAO’s “Shield”, or even other strategies like Temple DAO’s RAMOS. These tokens exist for the benefit of all holders, as FLOOR token liquidity is important, however the passing of FIP#46 will ratify that these tokens shall be solely used for POL and are forever considered out of circulation without claim of the treasury.
On the passing of FIP#46 the following tasks should be enacted by the DAO’s elected Treasury Manager:
- Send all current DAO held FLOOR (~185,580 Tokens) to the burn address within 48 hours
- All future procured FLOOR tokens shall be sent directly to the burn address rather than the DAO treasury upon procurement
- Cement that the current FLOOR tokens used for POL shall not be used for anything aside from POL unless otherwise voted upon in the future.
All in all, these steps and actions serve to benefit all holders of FLOOR and ensure that the treasury backing of FLOOR tokens can not be diluted with non-circulating tokens in the future.
This is in the explicit best interest of all FLOOR holders as new tokens entering the circulating supply for things like bounty work, pay, community contributions (which have never been done in the past) only serve to dilute existing holders’ backing and voting power.
What if additional tokens are needed in the future?
If a situation arises in the future where additional FLOOR tokens are required by the DAO, this should be addressed through a DAO vote + the minting of new tokens rather than keeping some of the current DAO tokens in the treasury “just in case” since it is no light matter.
As proposed by Javery, an additional option will be included to only burn the DAO owned FLOOR tokens that have been bought back through Gauge Votes/Wars in the past, rather than all DAO owned FLOOR.
Using rough data gathered here as an approximation: Gauge Vote Floor - Google Sheets
There have been 33.05e spent on FLOOR buys via Gauge Wars in the past totalling 15,405.75 FLOOR tokens.
This option would only call to burn these 15.4k FLOOR tokens along with future FLOOR tokens bought through Gauge Wars. This would still leave over 170,000 FLOOR tokens in the DAO (excluding those for PoL) that could re-enter circulation.
Please see the RFC of FIP#46 here: RFC FIP#46: Burn DAO Owned FLOOR
This FIP#46 Forum post will be left on forums for 24 hours before proceeding to snapshot on June 15th, 2023.
The snapshot vote will have the following options:
- A: Burn all DAO owned FLOOR
- B: Burn only DAO owned FLOOR bought from Gauges
- C: Do not burn any DAO owned FLOOR & Amend
Given A and B both call for burning DAO owned FLOOR and to prevent vote splitting issues, if (A+B) > C then the higher of A or B wins.