FIP57: Time to Move the DAO Forward with Rage Quit

Lux · 16 August 2023 16:37

FloorDAO Rage Quit: Time To Move The DAO Forward

Summary:
This proposal aims to offer a rage quit option for token holders ahead of FloorDAO’s V2 launch in order to give V2 the best possible chance to succeed with unblocked governance and a passionate, aligned community while making good on investor promises made to holders since the founding of FloorDAO.

By passing this proposal every party can get what they want. The team still gets to build V2, holders that are excited about V2 can participate without non-aligned holders, and holders that want out of the DAO due to differences with V2’s direction get to leave with their fair share of the treasury as promised. Nobody is left worse off and it is exclusively beneficial for everyone in the ecosystem.

Bringing Market Cap (MC) equal to Treasury Value (TV) was a mechanism originally highlighted by the team as a ‘must have’ in V2 for the protocol to succeed and after months of failed efforts to bring MC in line with TV, and disagreements between the team and community over critical components of V2’s design, offering a rage quit option now would give unhappy token holders a chance to exit thus setting up V2 FloorDAO for a smoother launch.

Why Now Is The Time for Rage Quit:

It’s been 1 year since the FloorDAO team communicated their intentions with FloorDAO’s next big protocol upgrade through their V2 Litepaper, and within those 12 months, there’s been constant dialogue, discourse, disagreements, FIPs, proposals, and parameter reworks between the community and team.

As it stands now, V2 is still in the planning and implementation phase with the community and team disagreeing on major critical components like the vote-locking mechanism and how V2 improves FloorDAO’s growth in the market, and how value accrues to holders of the token.

A lot has been riding on V2. It’s been touted by the team as a panacea to solving most of the problems affecting FloorDAO token holders including its falling share price (down 95% from ATH) and the lack of organic interest from NFT collections and their communities.

FloorDAO Is Struggling With Product Market Fit

Sadly, an NFT collection hasn’t been added to the DAO in over 6 months and only 1 of the 8 NFT collections added to FloorDAO has been actively participating in the protocol. This reflects a product-market fit issue and at the moment, it’s unclear how V2’s design helps bring product-market fit to the DAO.

Additionally, it’s been made abundantly clear by the Floor community that efforts and capital should be allocated to bringing Floor’s market cap in line with its treasury value. In 15 out of 16 gauge votes (Sweeps), the community has overwhelmingly voted to buy back the DAO’s token instead of sweeping more of an NFT collection. A strong signal that bringing MC=TV is a top priority for the community. Since MC still isn’t equal to TV at the moment, it’s clear that the current team-proposed solution of Gauge vote sweeps and the Charm pool is not sufficient to solve the problem.

This voting pattern of sweeping $FLOOR will likely continue over into V2 until the DAO’s market cap equals treasury value, meaning that under V2, 10E per week will go towards buying back $FLOOR instead of sweeping NFTs, putting V2’s success in a precarious place. This in turn hampers the DAO’s ability to execute its stated mission of becoming a valued and dominant NFTfi market-maker/liquidity provider thus becoming less attractive to NFT collections, further exasperating Floor’s product-market fit problem.

A rage quit before V2 would allow those who’ve been prioritizing $FLOOR buybacks to exit the community at fair value, thus making it possible for NFT communities to actively participate and win in Floor Sweeps and Collection Addition votes.

Promises of Backing are Wrongly Being Backtracked by the Team

Another core reason why the community should implement a rage quit mechanism relates to the team’s desire to remove the investor’s promise that the $FLOOR token is backed. When FloorDAO launched, its investor marketing material and protocol documents stated explicitly that “ If FLOOR is ever below the treasury asset backing value, then a theoretical arbitrage exists where FloorDAO can dissolve and distribute assets that are worth more than the market value of FLOOR”, expressing that $FLOOR holders are entitled to their pro-rata share of the DAO’s assets should the protocol shut down or redeem. In the last few months, the team has been trying to get rid of this key investor protection without a vote or going through due process. This is made clear by the DAO’s new publicly facing V2 docs that mention the token under the new protocol design isn’t backed. This is a serious attempt by the team to control and centralize the DAOs resources and makes every holder worse off. If the team wishes to remove backing, they should do the fair thing and let holders exit under the current investment terms under V1.

Governance is Blocked, Reducing the Effectiveness of the DAO

As it stands right now, FloorDAO is going through a governance struggle that will likely hamper V2’s ability to attract new community members and succeed in the NFTfi ecosystem. This governance block has created a hostile mood in Discord that detracts from the DAO’s mission and hampers collaboration between the team and the community. There have been multiple instances where the team’s vision for V2 and the DAO have been at odds with the community’s and there is consistently a disconnect between holders that want to see MC=TV and the team who has discounted that request. By allowing a rage quit before V2, FloorDAO community members who do not align with the current direction of V2 can exit at the token’s fair backing price, allowing the DAO to enter V2 with a dedicated and aligned community, arguably giving the DAO the best opportunity to govern and allocate capital more efficiently and effectively under the V2 roadmap.

Additionally, Marketing for V2 would be a wasted effort if new participants came into Discord to find it filled with FUD and disgruntled holders. New buyers could be unwilling to enter knowing that FloorDAO wouldn’t be able to effectively purchase or sweep their favorite NFT collection because of the focus on buying back $FLOOR. If Floor was to find product market fit, the token would be under significant sell pressure too at MC=TV, meaning it would be hard for the token to trade at a premium which could detract from new investors buying the token. By removing this sell pressure now, V2 will launch under the best conditions for success.

Rage Quit:

If the team truly wishes to remove token backing and implement long locking periods, FloorDAO should offer a rage quit option to community members who no longer align with the new direction of the DAO and want to exit at fair backing. Doing so would unblock community tensions and set V2 up for success upon launch.

Rage quit simply means that holders will be able to swap $FLOOR for their pro-rata share of the treasury.

Rage Quit Method:

FloorDAO holds a significant amount of its assets in NFTs, particularly CryptoPunks staked on NFTX. Currently, FloorDAO has 2.93 Punks in NFTX inventory and 22.732 PUNK + 1,084.901 ETH in the NFTX PUNK liquidity pool. This position is worth approximately $4,243,836. Given the size of the position, this will be the first position to be partially unwound to cover the cost of a rage quit.

Punks are a good option to fund a rage quit because they are actively traded on Blur and Opensea and from a yield generation perspective, they are Floor’s worst-performing asset. Partially liquidating the Punk positions by 50% would cover the cost of rage quit while leaving FloorDAO in a good position to earn a high APR yield from its most active pools like Milady and Remilio without damaging the DAO’s relationships with these high-value communities.

As a way to mitigate any unintended negative impacts on NFTX pools, NFTX will get the right of first refusal to purchase the FloorDAO Punks needed to cover the Rage Quit at a 3% discount to the average 14-day TWAP sales price on Blur calculated as of August 16th. That average TWAP sales price is 46.16 ETH per Punk. NFTX can purchase all the Punks FloorDAO wishes to sell or a partial amount. This allows NFTX to increase the amount of Protocol Owned Liquidity it controls, strengthening its pools while purchasing a grail NFT asset at a discount to market.

Rage Quit Cost Estimate:

The rough estimate of $FLOOR tokens that would want to exit the DAO is approximately 80,000-85,000 gFLOOR representing $1,900,474 to $2,022,236 of $FLOOR at $6.77/FLOOR. Meaning that approximately 13 Punks would need to be sold and 585 ETH pulled from the Punks LP position to accommodate the amount of $FLOOR that wished to redeem.

Selling Punks to NFTX or into Blur bids will come at a cost as we’ll likely be unable to sell the Punks at their floor price. This means that the backing value of the treasury will be reduced as will the redemption price of $FLOOR (likely by 2.5% or $0.17 per $FLOOR). New backing calculations will be determined and announced 1 week before the rage quit UI goes live.

If FloorDAO is unable to sell an adequate amount of Punks to cover the cost of the redemption, FloorDAO will explore allocating ETH from its other positions to make up the difference. This includes using ETH in the DAO’s stETH position or partially removing some ETH liquidity from the DAO’s other NFT positions or $FLOOR token liquidity pool.

Alternatively, the DAO can explore other funding methods like allocating its stETH position to the rage quit process as a way to sell fewer Punks, or it can evaluate selling other NFTs in its vault/inventory or unwinding and partially selling off some other high-value, low-yield NFT positions like Squiggles. This is up for discussion during the 7-day conversation period on the FloorDAO forum. If there’s no consensus on an alternative funding method then the plan to sell Punks will go forward.

The DAO will release a snapshot vote to signal how much $FLOOR wishes to redeem their tokens for treasury assets and liquidate the CryptoPunk position/allocate DAO-owned ETH accordingly.

Book Value Calculations:

Book value is calculated as Treasury Assets - Value of Protocol Owned $FLOOR / Circulating Supply of $FLOOR - Protocol-owned supply of $FLOOR.

$9,476,742.86 / 1,561,523 - 162,120
$9,476,742.86 / 1,399,403
Backing = $6.77
Less slippage/Cost of Punk Sales (est. $0.17/$FLOOR) = $6.60

As of August 16th, the current Book Value for $FLOOR is $6.77, a 33% increase to the market price of $5.10 (number will change between now and rage quit). $6.60/$FLOOR represents a 30% premium to market price.

Backing calculations and treasury assets can be found here.

Rage Quit Process:

This proposal will be posted to the FloorDAO forum for 7 days of discussion. Going on Snapshot Aug 23rd.

During that 7-day discussion period, Twade can get started on evaluating rage quit/redemption contracts used by other DAOs and look to spec the front-end UI design that would allow for the token swap. Identifying a forked contract of a proven redemption contract should work.

After 7 days of discussion on the FloorDAO forum, a rage quit Snapshot will be launched on FloorDAO’s Snapshot page asking $FLOOR holders to signal their interest in rage quitting the DAO - the snapshot will be up for 7 days.

Snapshot Vote:
- Do you wish to participate in FloorDAO rage quit before V2 is live?
  - Yes/Abstain/Amend
Vote shall pass if yes votes equal or exceed amend votes
- In the event that amend wins, we’ll go back to a 7-day discussion period to fix the proposal and take into consideration community changes.

If Rage Quit is approved, a Whitelist Snapshot will go live 24 hours after asking holders to whitelist their wallets for redemption - this will be up for 7 days.

Twade will start work on implementing Raqe Quit contract and UI design.

At the same time as step 3) FloorDAO will give NFTX 1 week to evaluate the right of first refusal offer. If NFTX doesn’t wish to purchase Punks, on the 7th day FloorDAO multisig will start removing 50% of the Punk position on NFTX. Sending the ETH to the multisig and commencing selling its Punks on the Blur NFT marketplace or Opensea (whatever has the highest bids).

In total, 14 days is allotted to this step. 7 days for NFTX to decide on purchase, 7 days to sell Punks and allocate treasury to rage quit.

At this point it’s been 5 weeks - After assets are sold and the rage quit contract and UI is in place, whitelisted $FLOOR holders will be given 30 days to swap their $FLOOR for treasury ETH. All unclaimed assets after that period would be returned to the DAO.

This proposal does not set a precedent when it comes to the expectations of a rage quit among the community. Its sole goal is to provide a path forward for the DAO and its holders as the protocol goes through a dramatic transition into V2. A non-passing vote does not mean $FLOOR is no longer backed in V1 or V2 nor does it restrict the DAO’s ability to execute another rage quit attempt in the future.

Thank you for reading this proposal, any and all comments, suggestions, and iterations are welcomed.

Should we allow for an RQ before V2?

Yes
No
Abstain

0 voters

javery · 17 August 2023 12:31

I’d love to see a rage quit mechanism developed as part of the V2 options.

I have been formulating some thoughts around this over the past few months, need to collect them together, but for starters here’s an initial brain dump.

to give V2 the best possible chance to succeed with unblocked governance

The way I read this is “V2 won’t have a chance to succeed because goverance will be blocked if this proposal does not pass.” ~ not a great start to work together to find a suitable solution.

By passing this proposal every party can get what they want.

By passing this proposal it is the token holders that don’t care about the protocol or community — but instead only care about being able to exit at the treasury value to maximise their profits when buying up tokens at a lower value and then only pushing the RQ or RAMOS proposals — get what they want.

It is perfectly fine to try and profit, but it should be seen for what it is.

Bringing Market Cap (MC) equal to Treasury Value (TV) was a mechanism originally highlighted by the team as a ‘must have’ in V2 for the protocol to succeed and after months of failed efforts to bring MC in line with TV

There’s a tweet https://twitter.com/FloorDAO/status/1530260093345865730 which is rolled out to support the ‘must have’. This is a tweet which links to the article here https://publication.floor.xyz/vefloor-scaling-floordao-and-the-floor-wars-538f4330f1c7 which contains everything in detail.

Please go read the article now for context. The next steps, which are reasonably detailed, included

aligning the protocol rewards with treasury yield (done)
vote locking for gFloor (vote against by the group pushing RQ or RAMOS)
deploy liquidity to univ3 for better use of capital
look to expand yield strategies (voted against by the group pushing RQ or RAMOS)

In the last paragraph there’s a reference to Looking to the future, based on accomplishing the tasks above (including the vote locking). There are three bullet items, one of which is

Enabling the ability to burn FLOOR for treasury assets (“rage quitting” with limitations)

Based on the tweet and related article “rage quitting with limitations” is something the token holders can expect the team to look at as soon as V2 is launched along with token vote locking.

Further from Lux

disagreeing on major critical components like the vote-locking mechanism and how V2 improves FloorDAO’s growth in the market, and how value accrues to holders of the token

^ there shouldn’t be any disagreement here as it is a precursor to the RQ mechanism that is requested as part of this proposal. Fortunately there was a 51% majority vote for some kind of locking mechanism which is now going through another round of discussions on Discord and the Forum and it looks like a good balance has been met.

In 15 out of 16 gauge votes (Sweeps), the community has overwhelmingly voted to buy back the DAO’s token instead of sweeping more of an NFT collection. A strong signal that bringing MC=TV is a top priority for the community.

In shocking news, token holders vote to increase the value of their token.

One year ago today the token price was $5.55, while today it is at $5.13 which represents an 8% drop in token value during a hefty bear market (I’m going to ignore that anyone that had locked floor actually receieved more tokens as part of rebases so net positions are even better).

I think the DAO has done a good job of helping the token price by including the tokens as part of the two weekly sweep and implementing a charm strategy with the POL. This is pushing the token price nicely towards the goal which @Lux has set out above with the RQ, but at a slower more natural rate.

When FloorDAO launched, its investor marketing material and protocol documents stated explicitly that “ If FLOOR is ever below the treasury asset backing value, then a theoretical arbitrage exists where FloorDAO can dissolve and distribute assets that are worth more than the market value of FLOOR”, expressing that $FLOOR holders are entitled to their pro-rata share of the DAO’s assets should the protocol shut down or redeem.

This can still be found in the documents https://docs.floor.xyz/v/en/floor-token

Go and read through it to get a feel for V1. It has both these things…

a theoretical arbitrage exists
each FLOOR is intrinsically backed by 0.001Ξ (1 finney)

This is a serious attempt by the team to control and centralize the DAOs resources and makes every holder worse off.

This is sensationalism. There is no drive to centralize the DAO or the DAO’s resources, but I’d like to ask @Lux to go into detail on that because it’s a pretty serious accusation.

This governance block has created a hostile mood in Discord that detracts from the DAO’s mission and hampers collaboration between the team and the community.

The proposal then goes into Governance is Blocked, Reducing the Effectiveness of the DAO and what I read as threats, akin to “Give us what we want or we will make sure V2 fails”.

Additionally, Marketing for V2 would be a wasted effort if new participants came into Discord to find it filled with FUD and disgruntled holders

With that all said, I’ll focus on the actual proposal.

The questions I would ask are…

1. Do we need a rage quit?

Token holders buy tokens and when they want to exit they can sell the tokens. This group of holders seem to prioritise the MC=TV and not care about the protocol or the community itself, so should they be given a way to reduce the treasury holdings of the Floor community so that they can make more of a profit?

Looking at the book value amount defined it is $6.60 based on the calculations above we can also look at the trend since January 1st then on the current trajectory the 6.60 would be reached sometime in February of 2024. If we remove the big jump from January and look at it from March this year at 3.66 you get to 6.70 around April 2024.

2. Should rage quit involve a penalty fee?

The tweet and article which is always shared contains “Rage quitting” with limitations, what should those limitations be? My thought is that it comes with a penalty or x% on the treasury value. Should this be the same as the slippage against the sale on the open market? Or a percentage of the slippage? Or should the limitations be based on the size of the holdings, or the length of time the user has held the asset?

3. Does FLOOR need to sell an NFT assets?
The primary purpose of FLOOR is to earn yield by providing liquidity against NFT collections and opening NFT-Fi opportunities. Selling assets and redistrubting ETH to a RQ mechanism is in direct contrast for this goal.

Doing some initial numbers for NFTX V3 liquidity provision specifically against the PUNKs it looks as though FLOOR could create a tighter range for their 23 PUNK tokens deployed as part of the Suhshi LP but with only 60% of the ETH capital. This would provide FLOOR with approximately 400ETH to redistribute. I think that should go back into the ecosystem in the form of more liquidity, but it could be used to provide a RQ mechanism in V2.

4. Are these the right voting options?

Do you wish to participate in FloorDAO rage quit before V2 is live?
Yes/Abstain/Amend

What about users that don’t want to participate in the RQ? What about RQ as part of the V2 deployment? Where are the votes on the definition of the RQ (at what price, what is the penalty, who is elligible).

Vote 1:
Should there be a RQ mechanism?
Yes, before V2
Yes, as part of V2
No
Abstain

Once agreed, then we can all look at what rules are applied and vote on that.

5. Timeframes

The timeframes assume that people are sitting on their hands waiting for something to do

Twade will start work on implementing Raqe Quit contract and UI design.

If we want a UI built we need a designer/front end person to build this out and hook it up to the contracts that are written. The contracts need to be written (or forked) and then adapted to suit this approach. They should also get audited before we even think about putting it into production.

I can’t see all this happening within the current timeframes outlined.

6. NFTX to buy the PUNKs

This would need to go to a governance vote on NFTX so your timeframes would need to extend to take the governance process into consideration. Blur is risky because you will need to wrap the punks before selling.

That average TWAP sales price is 46.16 ETH per Punk

The TWAP probably won’t cut it in the open market. The Blur bids are currently

4 * ~45.5 ETH
4* ~44.5 ETH
5 * ~43.5 ETH

This nets around 577ETH, assuming that the bids don’t drop dramatically based on the wrapping and quick sales. I think the best bet, if this was something that was voted in to source the backing, would be to approach someone like PunksOTC to do a batched deal, and you could use xPUNK as the trade.

The group pushing for this has no long term focus on the success of Floor and I think selling off the most stable valued asset during a bear while at the lowest price in the market for a while is a net negative for the protocol and the remaining tokens holders. If the the RQ is voted in, and then the rules around it are voted through, then we will have a clear idea about what value needs to be extracted to cover the process.

It is probably worth at this point to capture the list of rage quit addresses and vote on how the pot will be funded seeing as it will be the non-rq’s that ultimately need to move forward with the decision.

=====
The bits I would like to look at closer are

1. Who gets to rage quit?
Is this for every token holder or just the group that want to stop the progress of the protocol? If it is for every token holder I would like to see a mechasim that rewards longevity as a token holder. The RQ mechnism could then work in tranches. 500ETH goes into the first tranch at the current book value (minus a 10% RQ fee) and all the holders that bought within the first three months can exit. Tranche two would be 4-6 months, tranche three 7-12 months etc.
Any ETH left at the end of the tranche remains in the pot, and is then topped up to reach the 500ETH amount again, and then next tranche is able to claim at the new book value (i.e. minus the amount redeemed in the first RQ).
This rewards long term holders who would like to exit, and not users that have purchased tokens in the past 24 hours.

2. What should the limitations be on the rage quit mechanism?
It was communicated there would be limitations, what should they be? Is there a RQ fee? What should happen to that fee? Is it a limitation on holding time?

3. Timings
This was covered a little earlier, but the timings are too compressed IMO. Even if it went ahead and the PUNK positions were going to sell, I’d like to see a steady sale of those assets to maximise the value.

(last bit)

I also want to thank @Lux and team for taking the time to write it up and to look at some potential solutions, and while I disagree with the manner in which context was set, I’m keen to look at more of this.

Lux · 17 August 2023 15:12

Hi Jav, thanks for your response here! I’ll do my best to respond to each section of your reply. Again, my opinions here are my own and I welcome others to chime in.

I’d love to see a rage quit mechanism developed as part of the V2 options.

Is this really your true and honest perspective? RQ is a V2 addition that I and others have been requesting the team to consider for nearly 6 months now. Members of the team have continuously discounted the concept. In Discord in the last 4 months, you’ve said, “I don’t see the point in introducing a rage quit mechanism at the moment…” and “…I was never under the impression that there would be a RQ at treasury value, and I have no idea how that would ever benefit me to think that way.” If there was an openness and a concrete willingness to include RQ in V2 with a shared understanding of the KPIs that would trigger it I don’t think this proposal would be up right now. Opinions and perspectives can change though - do you think an RQ mechanism is now a required feature for V2?

Your interpretation is not how that sentence is intended to read. That statement isn’t a threat. Its a statement of opinion. The opinion of myself and others, including long-term small holders who see a fractured community. Governance right now is blocked on both sides. Community led proposals are blocked by the team, team proposals are pushed back on by the community. That’s all that is meant by that statement.

By passing this proposal it is the token holders that don’t care about the protocol or community — but instead only care about being able to exit at the treasury value to maximise their profits when buying up tokens at a lower value and then only pushing the RQ or RAMOS proposals — get what they want.

This is statement categorically false and aims to portray anyone who supports rage quit as an uninvolved bad actor.

The reality of the situation is that the people who’ve been unfairly portrayed as ‘mercenary capital’ (myself included) have been the only active participants in the DAO’s discord and the only group putting forward proposals that would benefit the DAO in maximizing yield, thus returning value to everyone involved.

Community-led proposals by this group of token holders include Diversifying Floor’s Treasury, Staking Idle ETH to stETH, Burning Floor Tokens, and Selling depreciating and flagged MAYC assets, Sending LP to other protocols with higher APYs. This group also spurred the Nascent Investment conversation led by Nobi and Toes.

I would even argue that Charm (a mechanic the team loves to highlight as a success) was only implemented as a response to the RAMOS proposal.

The fact of the matter is that the team has been a blocker in experimentation. Caps and others have mentioned multiple times that a reason for not executing a community-suggested proposal was that executing anything relating to treasury management is a ‘severe operational burden’ on the team. This does not inspire community confidence.

Personally, I’ve been extremely vocal and collaborative when it comes to discussing V2 features, some of which would have been severely dilutive to gFLOOR holders, like the NFT staking idea presented by the team. That feature was scrubbed because of the conversations initiated by ‘bad actors’. If it went through, voting power of gFLOOR holders could have been severely impacted.

The idea that Rage Quit only exists to maximize profit is a false one. Its main goal is to provide holders a fair exit when a DAO isn’t working or the vision/mission/direction of the DAO is changing dramatically. Labeling anyone who advocates for rage quit as extractive is a misguided attempt at diminishing the character and contributions of token holders who have a different perspective than yourself.

Based on the tweet and related article “rage quitting with limitations” is something the token holders can expect the team to look at as soon as V2 is launched along with token vote locking.

I will reference my first point in this reply and the various quotes by the team in Discord where they mentioned a rage quit will not happen. Until the team comes up with a plan, design, and timeline (like I did here) that highlights how they would implement RQ post V2 any broad stroke statements that say “holders can expect RQ after V2” are not backed by the team’s past historical words on the matter.

Holders wanting a return on investment is not a negative. Especially when the chart looks like this:

In fact, ROI is logical since $FLOOR is an investment and not a non-profit, despite the protocol’s best effort to present as one.

I think the DAO has done a good job of helping the token price by including the tokens as part of the two weekly sweep and implementing a charm strategy with the POL.

The impact of the biweekly gauge sweeps on the token price is overstated. floorintern.eth started buying back in April 2023. Since April 1st buybacks have made up ~4.9% of FLOOR purchased on Uniswap. If you factor in Charm burns, the most the two initiatives have contributed is ~8.6% of gross buys. These initiatives help, but you can not logically attribute a 180% increase in price since December to Charm or Sweeps. You could possibly attribute it to the increase in treasury asset value and conversations surrounding V2. However, correlation does not equal causation.

Also, the point of FloorDAO and Sweeps is not to sweep $FLOOR endlessly until it hits TV. Its to Sweep NFT collections, incentivize NFT communities to participate in FloorDAO, and build liquidity positions. Sweeping $FLOOR takes away from that mission. Voters know this takes away from the mission but they do it anyway which signals how important returning value to $FLOOR holders is. Sadly, until RQ this is the only mechanism holders have to support $FLOOR’s price.

Go and read through it to get a feel for V1. It has both these things… a theoretical arbitrage exists/each FLOOR is intrinsically backed by 0.001Ξ (1 finney)

Thank you for confirming my point that the token is backed. Both statements are true and not mutually exclusive. The way the documents present is that the token is guaranteed to be backed by 0.001E and theoretically an arbitrage can exist if the assets that back the token push the Book Value of the token above 0.001E. Theoretical here means that an arbitrage only exists if the treasury value goes above 0.001E, which might not happen. If that doesn’t happen then no arbitrage exists. Hence the word theoretical.

This is sensationalism. There is no drive to centralize the DAO or the DAO’s resources, but I’d like to ask @Lux to go into detail on that because it’s a pretty serious accusation

As a DAO, the community owns the assets of the protocol. This is a well-known, established, and uncontested concept in crypto. In Floor’s investment documents this is confirmed as the token is backed (see above). This is also confirmed as FloorDAO is a DAO. The fact that team is trying to claim that the token is no longer backed implies that the community has no claim over the DAO’s treasury and resources. Only the multi-sig has a true claim over the treasury. This centralizes the DAOs funds under the control of 5 people. If that is not an attempt to centralize and control the community’s funds then I dont know what is.

The proposal then goes into Governance is Blocked, Reducing the Effectiveness of the DAO and what I read as threats, akin to “Give us what we want or we will make sure V2 fails”

This is not a threat, only a statement of opinion given my vantage point as a community member.

Do we need a rage quit

This group of holders seem to prioritise the MC=TV and not care about the protocol or the community itself

This is a sensationalist comment and not rooted in reality. See my point above regarding the contributions of these bad actors.

If we remove the big jump from January and look at it from March this year at 3.66 you get to 6.70 around April 2024.

Personally, this is an unacceptable timeframe for me given the problems I see in the DAO (centralizing treasury, blocking community proposals, hostile statements towards community members that want to strategize around ROI) and the lack of clarity around a RQ mechanic during V2 and beyond. Others might think differently.

Should rage quit involve a penalty fee?

After the whitelist Snapshot we can recalculate backing and take the equivalent of ETH and punks to match that backing. We’ll mark punks at floor price. Then any slippage on sale of punks from floor will be penalty. This would result in likely no more than 3% slippage from Book Value.

A 10% rage quit fee seems overly extractive especially given the decline in $FLOOR’s token price from ATH. Anyone and everyone who owns $FLOOR gets to rage quit as 1 $FLOOR = 1 $FLOOR. overly complicating this to punish a small number of last-minute arbers does not make sense in my view. Plus the Whitelist Snapshot after the RQ Snapshot passes will protect against this to some degree.

4. Are these the right voting options?

Revised voting options could be considered. The Yes/Abstain/Amend format has been the preferred format for many of the team proposed Snapshot so I’m just following precedent here.

Timeframe

This RQ proposal and the work that goes into it will supersede the work being done on V2 since this mechanism aims to be released before V2 goes live. We will work with @Twade to see how much time he would need for contract + audit, costs, adjusting timeline if it sounds reasonable. @Twade could you scope something like this out?

Many DAOs have audited redemption contracts that could be forked which would save plenty of time. I don’t think 1 month is an overly aggressive timeline for RQ to be ready given a pause on other tech development.

6. NFTX to buy the PUNKs

How much time would NFTX need to consider this offer @javery ? If it is overly burdensome to kick start the process of evaluating an OTC sale to NFTX then we will scrub this plan and go the route you suggested, approaching PunksOTC for a batched deal.

The group pushing for this has no long term focus on the success of Floor and I think selling off the most stable valued asset during a bear while at the lowest price in the market for a while is a net negative for the protocol and the remaining tokens holders.

Incorrect again and a broad and false statement to paint anyone who advocates for a RQ as uninvolved and extractive.

It is probably worth at this point to capture the list of rage quit addresses and vote on how the pot will be funded.

I proved a rough estimate on the amount of gFLOOR that could exit the DAO, but a whitelist snapshot would provide more clarity.

Thank you for your comments @javery - I appreciate you taking the time to discuss this!

floorDAO · 17 August 2023 16:47

(@javery accidently posted below response from FloorDAO admin account while upgrading)

javery · 17 August 2023 18:11

Woah, you type quick. I haven’t come back against all your replies because I think we just fundamentally disagree on them and no amount of back and forth is likely to resolve that.

Here’s some bits I think is worth chatting through.

No, I don’t think it is a “required feature for V2”. But, I would love to see it included in V2 if the community feel it’s a required part of the puzzle. It goes along with the vote locking and full onchain governance approach.

The goal of V2 is to move everything across to an onchain governance. If that isn’t an attempt to decentralise then I don’t know what is.

Aside from the RQ proposal, what else could be done to reinforce that stance and attempt to go decentralised?

This is the second time you claimed centralisation is the target, and as someone who has been vocal in the collaborating of ideas you certainly are aware this is the target.

The DAO isn’t centralising treasury, it is moving towards a decentralised approach which will allow community proposals to be executed and protected.

If we went back to the timeframes, or at least the order of things to be done, the RQ mechanism was something for the future post onchain locking for voting.

There’s no reason why that order doesn’t stay the same, that way it accurately reflects what has been said in the past. This could still be within the timeframe of a more natural increase in the token price.

Back to your timeframes, what is a suitable timeframe for you for the token to naturally return to the treasury value?

This assumes the liqudity would come from Punks. I think we should look at the following approach/voting squence

should there be a RQ mechasim?
what does the RQ look like, is there a penalty (I think there should be)?
who is able to access the RQ mechism (plus an opt in along with a snapshot of those addresses)
vote to how the RQ will be funded by the remaining locked token holders, excluding those exiting

Anyone wanting to exit the protocol should have a say in 1, 2, 3, but not on how that would be funded. This then removes any potential penalty against the PUNKS, so a penalty should be defined as part of step 2.

Anything you’d change there? Or reasons why the holders that have opted to hold should have a say in where the funds come from?

Don’t follow those please, I’ve mentioned this a number of times. There should be a for, against, amend, abstain as a minimum, with multiple for/against options as needed

If it is decided that Floor want to use the PUNK position we would need to put this onto the Forum for 5 days and get a minimum of 5 votes, with a more than 50% vote For to pass. It then gets moved to Snapshot for a 4 day vote (minimum), with a minimum quorum of 10% circulating supply and a more than 50% in favour. Finally, it is staged on Aragon, again with a 7 day minimum timeframe and a threshold for quorum and for votes. So you would be looking at a minimum of 3 weeks.

It doesn’t say that anyone that advocates for a RQ is uninvolded and extrative. It says that the group that is pushing for it does not have a long term focus on the success of Floor. The best way to separate the two groups would be to have a vote to enable RQ, and a second for who wants out on the first RQ tranche. IMO this separates the two. But I also think the tranches should be organised to benefit long term holders first.

From my point I’ve voted against non-NFT related yield strategies because it goes against the original purpose of FloorDAO. I’ve seen proposals from the community and the team get blocked, your comments are not a fair reflection of the situation.

So back to the bits…

what should the penalty fee or the “Rage quit with limitations” entail?
If the 3% slippage isn’t part of the process do we use the 10% RQ fee? I’m not well versed in the RQ mechanisms for other protocols, are there any standards for this?

Yes, this might punish a small number of arbers but the main point of it is to reward the early participants in the protocol as a first option. One of your points is about the tumbling token price from launch so I’m sure you’re be much more interested in providing RQ to users that bought between the launch of the project and the time at which the token price first dipped below the current price, which is almost a year ago 19th August 2022.

Anyone else who bought AFTER that date is currently in profit (except for the sales between 17:30 — 18:00 on May 10th) so the call for RQ at book value would become extractive (which you’ve already said is not the case here).

I’m not arguing that everyone shouldn’t have access, but I think it would be more beneficial to be done in traches .

taxil · 17 August 2023 20:11

can’t see any TGE participants (myself) jumping in on RQ. hostages

doodee · 18 August 2023 02:51

hello lux thank you for the proposal this is very substantive and you put a lot of work!!!

I have a few questions:

what is the timeline for v2 launch! and does v2 do anything to bring mc = tv more than what is currently done with charm and buybacks?
charm and buybacks have helped the price come up, no? do you have concerns with it? If buybacks and charm are doing the job maybe we just wait a little bit and there is no need for time / resources on behalf of twade spent on rage quit!

I will also say - in terms of who is able to access the rage quit if it happens, I think FLOOR would be classified as a security legally, in which case it would be unlawful to distinguish holders by factors like how long they’ve held, their active status, etc. So every holder would have to be treated alike! which is the right way imo, I like to think everyone agrees that all FLOOR holders are equal

mst · 18 August 2023 08:56

I see these RQ attempts as nothing more than opportunistic traders that bought the lows when they saw a potential treasury redemption arb. Given that Floor MC is almost equal to treasury … what exactly is there to argue about other than providing them an exit ?
The only reason now seems to be to provide exit liquidity at protocols and remaining holders cost (most early holders bought quite higher). These traders are already in great profit. Why should the protocol suffer a liquidation at the lows just to provide them sufficient liquidity so they can sell for even greater profit.

Floor dao did mention some mechanism to honor redemptions and there is perhaps a case that it should be included in V2. However it shouldn’t take the form that is provided above which is merely to liquidate the protocols treasury so these opportunistic traders can have a highly liquid and profitable exit (wtf even lmao) … floor dao never promised on demand exit liquidity.
A slower mechanism that involves paying out from yield and maybe slow liquidation of underperforming assets (via v2 voting) should be explored.

caps · 18 August 2023 10:00

To extend this, there is a whole legal can of worms that needs proper thought with a RQ mechanism.

If @Lux (or the group that advocates for RQ) are happy to write, deploy and activate the rage quit contracts and take on the full legal risk then this proposal would be easier to discuss.

In the meantime, working towards full decentralization is the safest way for token holders to activate whatever they choose to vote in, which I think is a reasonable alternative and a goal that the DAO has held from the outset.

In response to your other points @doodee

We’re targeting end of September if all testing goes well. First code review complete, Omniscia audit starts on Monday, and front end is currently in development.

I know this is directed at Lux to add some context the price chart shared in the OP is also quite misleading as it doesn’t account for rebases (explained further here: Discord)

Lux · 18 August 2023 17:05

Thanks for the continued discussion @javery - as hard and as binary as they may seem to be I think they’re always productive.

On top of moving to on-chain governance, the attempts and desire from the team to remove holder’s claim to the DAO’s treasury need to end.

The DAO isn’t centralising treasury, it is moving towards a decentralised approach which will allow community proposals to be executed and protected.

The DAO is only partially moving to decentralisation since sweeps and nft collection additions are the only onchain mechanism at moment. Actual DAO governance is still off chain and is still considered ‘signalling’ by the team. Removing the ‘signalling’ caveat would improve the image of aiming to be decentralized.

Anything you’d change there? Or reasons why the holders that have opted to hold should have a say in where the funds come from?

I think how the RQ is funded should be a whole-of-DAO decision rather than a siloed decision from folks who are remaining in the DAO. I’d love for there to be a conversation around that piece here in this discussion forum.

Don’t follow those please, I’ve mentioned this a number of times. There should be a for, against, amend, abstain as a minimum, with multiple for/against options as needed

I’m happy to explore adding additional voting options to the snapshot, but this is a reoccurring pattern of ‘Do as I say, not as I do’ when it comes to presenting options to holders in governance votes. I hope going forward you (team) make good on your statement above to add No options and be more flexible to voting option feedback from holders.

The best way to separate the two groups would be to have a vote to enable RQ, and a second for who wants out on the first RQ tranche. IMO this separates the two. But I also think the tranches should be organised to benefit long term holders first.

One could look at RQ as a positive for the long-term prospects of the DAO. 1) it shows to holders (current and future) that backing is not a meme and the DAO offers some financial protection mechanism and 2) it clears out a tranche of holders who are less aligned with V2 and likely future versions.

I’m under the impression still that 1 Floor = 1 Floor regardless of the time of entry as there are no differences in share classes among $FLOOR holders and time of entry doesn’t give someone preferred status.

From my point I’ve voted against non-NFT related yield strategies because it goes against the original purpose of FloorDAO.

Many NFTfi suggestions have been proposed.

If the 3% slippage isn’t part of the process do we use the 10% RQ fee? I’m not well versed in the RQ mechanisms for other protocols, are there any standards for this?

I think any penalty beyond slippage/operational costs to implementing RQ might actually be viewed as unlawful. I think RQ penalties are discussed on a case by case basis and there seems to be no status quo. Most do not have a penalty though.

overly complicating this to punish a small number of last-minute arbers does not make sense in my view.

My point here was that a 10% penalty is steep, and implementing this to punish last minute arbers also punishes community members.

Tranches are an interesting concept - how would you go about it?

Lux · 18 August 2023 17:11

Hello Caps,

To extend this, there is a whole legal can of worms that needs proper thought with a RQ mechanism.

What legal can of worms do you foresee from RQ? The DAO is already in a very legally precarious position since $FLOOR is an unregistered security that has been sold to investors in the US and other regulated geographies. The team is also based in geographies that have securities laws. And the DAO isn’t incorporated in any jurisdiction, yet it pays salary and probably no taxes. If anything a rage quit solves many of those issues.

Regulatory risk is not zero here.

I’m not sure how community members writing and deploying the contract solves things here but if that makes the concept of an RQ more palatable, this is something that can be explored.

edit: I see DCFs response below and wouldn’t be opposed to using the devs he knows to create the contract since their contracts are battle tested.

charm and buybacks have helped the price come up, no? do you have concerns with it? If buybacks and charm are doing the job maybe we just wait a little bit and there is no need for time / resources on behalf of twade spent on rage quit! @doodee

Charm is fine and a value add to price protection.

Buybacks via sweeps are anthetical to the mission of FloorDAO in some way, and while they help bring price up they take away from the main selling point of participating in the DAO which is to have the nft community sweep their collections. So while buyback impact is overstated (it wont take us to valhalla) its helpful and somewhat effective but it comes at a cost.

dcfgod · 18 August 2023 18:17

Hey all

Just created my forum account, I didn’t want to use this space after learning nobi is tracking IP addresses and would figure out exactly where I live if I goofed up and didn’t use an IP. So I’m hoping to discuss more in discord and less on here.

But after reading everything I wanted to chime in on some stuff:

On how we got here / token holder rights: I think every party (holders that want backing and team) are being a little petty with the background. Fighting about this will get us nowhere and it doesn’t matter. At the end of the day FLOOR has always been a treasury backed ohm fork that advertised a backing. OHM itself protects this backing, and its only the ohm forks lead by shady teams that trade below backing and do nothing about it. From what I saw this team is literally the nftx team so I bought having no fear that the team would be acting against explicit promises.
Legal: It’s a bit crazy to me that after running a bonding event, selling ongoing bonds for eth, advertising a backing price, tweeting that v2 would have a rage quit, being the one to provide liquidity, conducting buybacks, and advertising and giving yields… the rage quit is the “legal risk”??? A rage quit (either now, in v2, or after v2 if needed) would more likely be clearing out legal risk on past promises rather than creating new legal risk. Regardless, if the team wants I can introduce to lawyers that will provide an opinion for not a lot of money.
Shipping / auditing a contract: I know 2 devs that will do this for about $10k. This will be on fully audited contracts, and may even include frontends. One of which did the rome rage quit contract (processed more than the floor treasury) and the other which did the rook rage quit contract (also processed more than the floor treasury). Both can ship with 1 - 2 weeks of effort.
Fee: I dont think there should be any fee. But I agree the team / stayers should be able to decide how to fund the rq (which assets to sell off). Leavers are floor token holders who own a pro rata piece of the treasury, they have done nothing wrong and shouldn’t be punished for being floor holders. The people who distrust the dao / team sold and left. These are people still holding, trusting that the dao will do right by them and make due on its promises. If the team wants, a proportional amt of every asset (nftx liquidity, eth, punks, milady, etc.) could just go into the contract but I feel that would hurt v2 and not help it.

caps · 19 August 2023 06:38

This sounds like a route that may be feasible, and a handful of community member addresses can be whitelisted to allow them to fund and initiate the contracts.

Javery has thoughts on breaking this into steps, the first being a vote on whether to add rage quit before V2 or TBD again at a later date. What do other feels about this?

Maggy · 20 August 2023 09:06

A few quick thoughts on the above proposal:

Not really interested in getting into an argument about who promised what when. But I think it’s pretty clear we need a better mechanism in place to ensure MC >= TVL. The votes in the recent floor buybacks are a strong signal of that. So I would support most proposals that look to solve this.
I also think selling punks is a bad idea. I think allowing the DAO to vote on this is a no-brainer.
As a community member, I am frustrated with the progress the DAO has made. The dependency on V2 to solve all the things, the lack of support for community proposals, and the lack of collections added.
I’m also super concerned about the DAO’s ability to account for their assets or provide an accurate picture of total ROI. But that is likely a discussion for another time.
I also continue to feel that we are giving a lot of value to NFTX for not much in return. I know there is a lot of support from the NFTX team to floordao, but think we would benefit from this arrangement being more formalized if it’s going to continue to exist and with so much governance and control coming from NFTX or people who work for them.
If we do implement a RQ, I would support some penalty. But this could hurt the ultimate goal of bringing MC in line with TVL.

Lux · 20 August 2023 13:54

Hey @javery - does Floor have any other positions that would allow for a tighter range, like Milady, Squiggle etc? Perhaps we can take this approach across a few pools and preserve the NFTs rather than need to sell. @zon also suggested reducing liquidity in the PUNKWETH pool to remove the eth but preserve the PUNKS. We also have unstaked NFT inventory. That could be sold to make up the difference if there’s a gap in the amount of ETH needed.

I’m coming around to this approach. It makes sense to bring a vetted, outside dev to support w/ the rage quit contract and to fund rage quit with a vetted/approve community-led
wallet if the team desires distance/separation from the process. @dcfgod could you let us know if the dev you had in mind is available?

I’m not a big fan of putting a timeline/restriction around a ‘no’ outcome - ‘no’ to me signals ‘not yet, more to be discussed’. Also if ‘yes’ wins, I think it should follow the proposed timeline/stages outlined above rather than go back to a discussion stage. We have till Wednesday to discuss funding mechanism etc in more detail here.

@Maggy thanks for your insights and your perspectives here.

Yah this is a tough one… A penalty kind of goes against the whole $FLOOR is backed at TV argument.

priest · 20 August 2023 14:47

first post on this forum so bear with me. Im fully in support of a rage quit, in whichever form it will take, considering floor was always supposed to be fully backed and past documentation and discourse implied the same.
Regarding what assets should be sold, I think we can leave this discussion till after a general ragequit vote has passed. In principle I agree with @Maggy that it should be up to a DAO vote with several options including one that gives the team full autonomy on how its conducted which would be my preferred choice as to avoid frontrunning.
Im also in agreeance with @Lux concerning time restrictions should a no outcome fail, especially if it gains sufficient votes as to make up a significant share of the community. In my opinion that would only serve to alienate those members for that time period and just in general not really be conducive to reaching a solution that works for everyone.

doodee · 20 August 2023 17:52

oh ya that’s a good point!! I like having an option that gives team autonomy (within a voted-upon or agreed-upon time period) on how any asset liquidations would be conducted. this would prevent frontrunning and minimize losing money for the DAO. So something like:

Whitelist to determine those who wish to exit
Based on whitelist and current valuations, a rough valuation of how much assets need to be prepared
Team has autonomy over liquidation of assets to reach that amount
After assets liquidated, BV recalculated and firmed, and assets sent to redemption contract

quag · 22 August 2023 13:56

@Lux probably much easier to do deal directly with PunksOTC. Doesn’t require any governance or delays.

Simplest outcome seems to be something like:

Run a ‘RQ’ vote (yes/no/abstain)
Calculate treasury % required to liquidate for ‘yes’ addresses
Remove the necessary PUNK/ETH SLP (sell PUNK ERC20 directly to PunksOTC for ETH)
Place ETH into a claim contract (with UI) for yes voters, spun up by @dcfgod contacts.
Peace on earth

It would need to be made clear/decided whether this was a one-time event or something that is done at a regular cadence.

Lux · 22 August 2023 16:06

gm all -

@quag - thanks for sharing here. I like the simple approach. I think PunkOTC is the way to go instead of NFTX right of first refusal. I’m treating this RQ as a one-off based on extenuating circumstances. I think a recurring RQ cadence should be explored/discussed more by the DAO in a separate conversation. And yes, peace on earth for all when/if this passes.

Given the discussion and feedback above, the following changes will be made to the rage quit method when posted to snapshot tomorrow.

Rage Quit Process:

This proposal will be posted to the FloorDAO forum for 7 days of discussion. Going on Snapshot Aug 23rd.
After 7 days of discussion on the FloorDAO forum, a rage quit Snapshot will be launched on FloorDAO’s Snapshot page asking $FLOOR holders to signal their interest in rage quitting the DAO - the snapshot will be up for 7 days.

Snapshot Vote:
- Do you approve of a FloorDAO rage quit before V2 is live? (Voting yes doesn’t mean you’ll Rage Quit, just that you approve of the concept. You’ll need to whitelist in a separate vote if you wish to Rage Quit).
  - Yes/No/Abstain/Amend
Vote shall pass if yes receives the highest % of votes.
- In the event that no/amend wins, we’ll go back to a 7-day discussion period to fix the proposal and take into consideration community changes.

If Rage Quit is approved, a Whitelist Snapshot will go live within 24 hours. This asks holders to whitelist their wallets for redemption - this will be up for 7 days.

Voting options: Would you like to whitelist your wallet for FloorDAO Redemption? Yes/No

After RQ is approved, @dcfgod will engage with his developer contacts to build the Rage Quit contract. DCF will mention the price of development in the FloorDAO discord to be approved by the DAO. The estimated cost is $10,000, estimated time to develop the contract is 14-days.
At the same time, FloorDAO will enter into a 5-day discussion period about funding the redemption event. After 5-days, a 2-day snapshot will go live asking the DAO to vote on their funding choice. If no consensus is reached in the discussion period, or no alternative funding methods are presented then the original plan of removing PUNK/ETH LP will proceed. Punks will be sold to PunksOTC as close to floor price/trait price as possible (whatever is higher). If not all punks are sold OTC then the rest will be sold into Blur bids.
The DAO has approximately 14 days after the funding discussion to procure the funds necessary to fund the RQ contract proportional to the amount of gFloor that has been whitelisted. Procuring funds can come from rebalancing LP positions, selling Punks/other NFT collections, removing stETH position, any combination of the above etc etc. Any slippage or costs from the funding process will be incurred by the DAO and factored into the rage quit price.
At this stage, contract is ready to deploy and contract is funded. Whitelisted $FLOOR holders will be given 30 days to swap their $FLOOR for treasury ETH. All unclaimed assets after that period would be returned to the DAO.

Change Log:

Add: Voting options - Yes / No / Abstain / Amend
Add: Text about community-sourced devs working on RQ contract w/ cost and time estimates
Add: 7-day funding discussion period occurring in tandem with 7-day whitelist period. 5-days of funding discussion followed by 2-day Snapshot vote.
Add: PunkOTC sale option
Remove: NFTX right of first refusal
Remove: Any mention of Twade working on RQ proposal

zon · 22 August 2023 23:06

Given this is going to snapshot, I wanted to give my take as well.

tldr: for rq

I’m torn between the timing of RQ and whether it should happen now or in the future once V2 has a chance to prove itself.

I fully agree that the past year of trading below backing has been a poor look on the DAO and outright should have been protected, it is unfair for any holder to get less than the share of the treasury they are owed. The best time to do this would have been back in April when RAMOS was first proposed, which would have required less treasury funds and provide lasting backing protection into the future FIP#39: Implement RAMOS - #5 by Lux.

I think V2 could have a chance to entice more actors into playing the game and push users to floor but like I had mentioned in the Locking pt2 discussion I’m not sure it drives additional value to the floor token itself - which is my primary concern as a floor token holder. There is always the ability to wait and see.

I think one of the strongest arguments Lux has made is that a RQ before V2 is the best way to set up V2 for success. If a RQ were to not happen, I believe status quo would simply continue whereby every gauge vote results in a significant share being for FLOOR buybacks - this clearly nullifies a core benefit of v2 which is to have it be enticing enough of an opportunity for NFT collections / fans to come allocate 10e a week to sweeps.

The DAO would simply be hindering it’s ability to bring in a new community of engaged and active participants due to past promises unkept. Why do this? It is easy to see that the most fair and beneficial thing to do would be to RQ and move forward with V2. Further, if the DAO wishes to remove backing as a concept to untie MC&TV entirely it should do so after letting people exit or stick with it and protect it - this is real people’s money…

Oh also: Redeemed FLOOR should be burnt of course XD