FloorDAO to provide liquidity on Gondi, NFT lending protocol

Governance
1

Summary

This proposal is to get feedback on a new lending strategy for FloorDAO powered by Gondi.

Gondi is a peer-to-peer NFT Lending protocol where borrowers access liquidity by using their NFTs as collateral. All loans on Gondi have a 40-60% LTV (loan-to-value), meaning that the value of the collateral is always higher than the loan amount, providing an opportunity for FloorDAO to acquire portfolio NFTs at a steep discount or alternatively a good yield on WETH.

Motivation

FloorDAO has over 3,500 ETH provided as liquidity to NFTX pool earning a 3.73% APR. See details: CryptoPunks Pool | NFTX Yield

Loans against CryptoPunks have averaged 16% during the last 30 days on Gondi for those loans denominated on WETH…

Goal of the proposal is to help FloorDAO treasury get a healthier yield on a risk-adjusted basis.

Why on Gondi? Gondi is the fastest growing NFT lending protocol going from $0 to $25M in TVL within 7 months as well as the most flexible and competitive protocol. Outstanding loans can get refinanced by lenders allowing faster capital deployment and higher utilization rates.

Proposal

FloorDAO to allocate 122 WETH to lending strategies on Gondi Protocol during a period of time.

Refinance the following 3 loans against Cryptopunks:

Loans are currently at 19.99% APR. Upon refinancing from FloorDAO, APRs on loans will be 18.99%. The interest profit left will be 7.63 WETH per loan giving FloorDAO a maximum of 22.89 WETH in profit minus gas fees.

Each loan will require 40.37 WETH approximately to refinance as it needs to include accrued interest by the current lender in order to refinance. Such an amount will be repaid at the end of the loan alongside the principal and interest profit.

Note that loans at Gondi could get refinanced again or repaid early. In such case, capital can be reallocated to NFTx pool.

Potential Risks

The following risks have been identified:
Access to capital: the capital being lent will be locked for a defined period of time, reducing FloorDAO’s available liquidity
Smart-contract: Interacting with smart contracts provide inherent risk

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2

Thanks for putting together this proposal, ser! I quite like the increased ROI compared to the existing NFTX strategy.

What I like more is the ability to acquire a core Floor Collection at a steep discount compared to market if the borrower defaults.

The negative I see is that the funds immediately become illiquid, locked up for the 365 days of the loans term. This reduces the surface area for Floor to benefit from a discounted Punk via default.

i.e. If there were four 90 day loans on Punks versus one 365 day loan, Floor would 4x the probability of acquiring a discounted Punk via a defaulted loan.

3

Interesting strategy and thanks for the proposal. To give some background, all of our core Floor strategies are now being deployed onchain with WETH yield feeding back into the Floor Wars at https://floor.xyz, this creates a few conditions:

  • Ability to interface with Gondi and calculate (onchain) WETH yield to allocate to the Floor Wars
  • Development of the strategy contract
  • Justification development (low ongoing overhead, long-term yield, reusability etc)

We’d also need to interface with buying defaulted assets (and likely selling to continue to denominate the strategy in WETH).

This is super interesting though, and would be good to connect you guys with our protocol lead @Twade. Alternatively this could fall under the nascent yield strategies that are currently being proposed and handled by a multi-sig but I am not sure of the available liquidity cc @0xtoes

4

Hey Toes, there are dozens of shorter loans. They don’t need to be 1 year. FloorDAO would lend against 120 day loans maximum. This will allow high APRs and only locking liquidity for a relative short period of time.

5

Happy to chat anytime with @Twade and the rest of the team. All of the conditions mentioned can be addressed.

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