Brief Authors: glory, NiftyFifty
Project lead: glory, NiftyFifty
Squad: Treasury, Acquisitions
Creative approval: N/A
After a successful execution of our NFT Lending MVP (see “Motivation” section for details), we propose that Treasury and Acquisitions keep working together doing Squiggle-backed loans on NFTfi with an expanded budget of 200 ETH (if Gnosis multisig wallets are still not in production on NFTfi, we propose a reduced budget of 100 ETH).
By offering loans collateralized by Squiggles, we accomplish the following primary goals:
- Acquire more squiggles (if the loans default) - integral part of SquiggleDAO’s mission
- Generate some yield on our -otherwise idle- ETH (if the loans get repaid)
- Build our brand (by positioning SquiggleDAO as the main lender for Squiggles)
- Help the Squiggle (the more liquid the NFT, the more valuable)
- Help the community (by having liquidity available at reasonable rates)
This is another step towards our long term goal of becoming the primary liquidity provider for Squiggles.
Last April we voted and approved SDIP-22: NFTfi Lending / Borrowing Program. One of the primary goals was for this to serve as an NFT Lending MVP in anticipation of launching an expanded lending program.
As Gnosis vaults were still not in production on NFTfi, we used a single-sig hardware wallet (controlled by the Treasury Squad) with a lending budget reduced to 25 ETH.
With the 25 ETH, we did 4 loans taking into account all the Squiggle nuances (not only traits, but also day zero, double-digit, color spread, aesthetics, etc.). In addition, we adjusted the LTVs based on the moment of the cycle (i.e. it is not the same doing an 80% LTV loan when floor is around 5 ETH vs 15+ ETH), we are more aggressive when we are near the bottom of the range and would be significantly more conservative after a quick run up on Squiggle floor prices.
All loans were done with a maturity of 30 days and at 20% APR. Now all the loans have been repaid and we generated a 2% ROI and a 22% IRR on average.
One of the limitations we identified was that making loan offers on NFTfi is a time intensive process, hence our Interim Developer (Arkaydeus) is working on a bot to automate it.
We are proposing an expanded NFT Lending program as we have more 850 ETH on our Treasury and Squiggle backed loans fit us perfectly. If the loan defaults, we acquire a Squiggle at a discount (one of our primary goals as a DAO). If the loan gets repaid, we generate double digit yield (NFT lending provides the best returns in ETH at the moment). Also, it is important to mention that we are not using any ETH for acquisitions to be conservative with our Treasury assets in a bear market.
Finally, NFTfi has already confirmed an airdrop and this program will allow us to increase the probability of being included in it.
- Issue 10 loans successfully
- Participate in the NFTfi airdrop
- Earn at least 10,000 USDC equivalent in NFTfi tokens during the airdrop
- Experiment with different loan terms (maturity, APRs, LTVs, etc) to learn the preferred borrowers’ choices
- Track data required to expand the program (unfulfilled loan supply, trackrecord, ETH utilization, max ETH loaned, etc.)
- One 2 out of 3 Gnosis wallet will be set up for this activity (NFTfi Lending wallet) - proposed signers: Gregg, glory, and NiftyFifty
- Lending wallet will be funded with ETH from Treasury
- If Gnosis wallets are still not in production, we propose to use a single-sig hardware wallet (controlled by the Treasury Squad) with the consequent reduced budget (as per “Abstract”)
- If an NFTfi airdrop does occur, a vote will be held in the “Ongoing Votes” channel in Discord to determine what to do with the tokens (sell, keep, etc.)
Project will be launched according to the specifications above. We will launch a marketing campaign (ideally with NFTfi) to make sure the community is aware of our program.
200 ETH (though some or all of this could return back to the treasury depending on the outcomes of the lending activity).