Note: This is a special authorization, meaning that the request is being posted directly to snapshot without a 3-day discussion period.
Please discuss the initiative below!
Brief Authors: glory, NiftyFifty, 0xgregory
Project lead: NiftyFifty
Squad: Acquisitions
Creative approval: NA
Abstract
Due to the recent market volatility we see some borrowers accepting very attractive terms (for lenders) on Squiggles, e.g. 21 ETH loan on a hyper at 72% during 30 days, 10 ETH on a pipe at 40% 30d, etc.
Although we have started an “NFTfi Lending/Borrowing Program” with 25 ETH and we have 4 loans outstanding, we think this is an excellent opportunity to have another 25 ETH available and make some opportunistic loan offers.
Motivation
The extreme market conditions are generating some interesting opportunities, including in the NFT lending market. One of the ways to take advantage of those opportunities is to make some opportunistic loans backed by Squiggles.
The outcome might be: 1) in the case of default, we acquire Squiggles at a distressed price (an integral part of SquiggleDAO’s mission) or 2) if the loans are repaid, we generate a high yield on our -otherwise idle- ETH.
Besides generating some yield and acquiring some Squiggles below floor prices, we also see this program as a service to the Squiggle community and a way to increase the value of Squiggles by always having liquidity available at a reasonable cost.
Finally, it helps us -as a DAO- to keep building our brand and reinforcing our reputation by positioning SquiggleDAO as the main lender for Squiggles.
Some background on why this is a good opportunity now: our current loans are around 80% LTV (of a conservatively calculated value for that particular Squiggle taking into account its nuances, which gives us as a DAO a competitive advantage vs most NFTfi lenders that don’t have such a deep knowledge of the different Squiggle traits and relative premiums). Currently, we are seeing borrowers accepting loans at ∼20% LTVs for high end Squiggles (hypers, pipes, bolds, etc). That is a pretty attractive opportunity for the DAO to acquire a Squiggle at a heavily discounted price in the case of default.
Regarding APRs, our loans are at a 20% APR (as already mentioned, we also see this as a service to the Chromie Squiggle and to the Squiggle community). That APR is pretty competitive, but loans on blue chips tend to have low APRs (we have seen loans on Squiggles around those levels and even below 20%). Under current market conditions, borrowers are accepting loans with 70-80% APRs (and low LTVs) so, again, a great opportunity for us to generate an attractive yield in the case of the borrower repaying the loan.
Specification
Fund the lending wallet with another 25 ETH. Glory and Nifty will do opportunistic loan offers.
The goal is to use these funds during this period of volatility to offer loans at significantly higher APRs (and lower LTVs) and once the storm passes, this ETH will be included (subject to the DAO’s approval) in the lending ongoing program. As mentioned before, we have 4 outstanding loans under the “NFTfi Lending/Borrowing Program” (i.e. SDIP22) and once those loans mature we’ll report on the results and create a new proposal for an ongoing expanded program.
Once the loans expire, we will report on the performance of the program and any remaining balance will be returned to the Treasury wallet.
Success Conditions
- We are able to issue another 25 ETH worth of NFTfi “opportunistic” loans during this period of increased market volatility from the current wallet (for a period of 30d)
- At the end of the program, any remaining balance is returned to the Treasury wallet
- Data collected from these loans is fed into the SDIP-22 program for deciding on further action
Costs
na
Rewards
na
