This proposal seeks to define the structure of a key addition to Floor and the Floor DAO. If passed, this framework will go live as part of Floor V2 and will allow the DAO to explore new treasury strategies by allocating capital to burgeoning NFT-Fi projects and protocols.
Floor will allocate a fixed amount of capital during a specified trial “Season” to a group of NFT-Fi projects that provide financial primitives following a specific theme, such as perps, options, or lending. The aim of this exercise is to gauge the yield generating capacity of these projects when granted a set amount of capital. Each “season” will last for 1 quarter, with capital allocated simultaneously across all projects. This capital deployment is intended to create a level playing field by eliminating the variable of fluctuating market conditions. We propose 100 ETH per year, or 25 ETH per season.
Upon the conclusion of each “season”, a comprehensive analysis of each project will be made public, providing data to FloorDAO community members voting in the Floor Wars. This not only improves Floor’s status as a source of knowledge in the NFT-Fi space but also enhances its prominence within the ecosystem as a tool for liquidity deployment.
Protocols that prove to be the most effective will be considered for integration into Floor’s treasury strategy. This could lead to larger capital deployments, bolstering the expansion of financial primitives crucial to the financialization of NFTs as an asset class and strengthening Floor’s position in the NFT-Fi landscape.
Despite the emergence of numerous promising NFT-Fi projects, Floor’s treasury team has remained cautious in adopting new protocols due to concerns about smart contract risk and the DAO’s core philosophy of risk aversion.
However, as the NFT-Fi space continues to expand, the DAO risks missing out on potential yield generation opportunities and relationships with emerging top-tier projects.
This proposal outlines a systematic process that allows for testing of promising projects in a way that mitigates risk, enabling the treasury team to make data-driven decisions, achieve optimal yield generation, and cultivate an ecosystem of high-performing partner projects.
The inaugural season will concentrate on perps/options protocols chosen by the treasury team. The protocols participating in each future season will be determined through separate proposals and governance votes, thereby allowing each project the opportunity to present their offerings to the community.
The first season will use 25 ETH to seed strategies. A total of 25 ETH in token equivalents (ETH, MILADY, USDC, etc.) will be allocated each season, distributed equally amongst projects that have passed through the governance process.
Liquidity deployment strategies will be custom-tailored to each project through collaborative efforts between Floor and the respective protocol’s team. This ensures that the strategies truly represent the unique value proposition of each project.
The key performance indicator will be Yield Generated, while Risk Control will serve as a secondary metric factored into the analysis.
In summary, this proposal introduces a systematic approach to deploying treasury capital, enabling the Floor treasury to make more data-driven decisions and bolster its relationships within the NFT-Fi ecosystem.
Throughout each season, Floor will retain full custody of all funds via a 2 of 3 multi-sig wallet managed by the core team.
The following risks have been identified:
- Sub-optimal yield generation due to experimental strategies.
- Potential loss of funds due to system exploits.
- Diversion of significant resources from the core team, potentially affecting other initiatives.
This proposal will remain live on the Floor forums for 4 days before moving to Snapshot.