Two or three sentences that summarize the proposal.
As DAOs become more mature there is a need to start operating as a business which can sustain economic growth and provide value back to the DAO and community.
Successful companies invest and effectively deploy capital from the corporate treasury. Likewise, community run Decentralized Autonomous Organizations (DAOs) share a similar imperative.
DAOs that put in place a treasury management strategy early will reap the benefits in the future and mitigate risks of low funding or bankruptcy.
Diversifying the treasury ensures APE DAO can reduce volatility of holding 100% ApeCoin. Diversifying into stETH specifically will help to achieve long term capital appreciation and minimize risk in order to support growth and development of the APE Ecosystem.
Motivation
A statement on why the APE Community should implement the proposal.
APE Dao should diversify it’s treasury from holding 100% ApeCoin to converting approximately 20% of ApeCoin equating to 26,000,000 ApeCoin of it’s available treasury in stEth. Reducing the volatility of holding one coin in it’s treasury.
By holding stEth as a treasury asset, APE DAO will start earning yield on their treasury providing immediate income that can be used for operational expenses or invested back into the DAO and/or community.
Creates sustainable and predictable income for the DAO.
stETH has deep liquidity and network of integrations for additional treasury management strategies.
Encourages decentralization of the Ethereum network with minimal additional effort.
Educates NFT users about the fundamentals and power of decentralized finance.
Rationale
An explanation of how the proposal aligns with the APE Community’s mission and guiding values.
Holding stETH aligns directly with growing and developing the APE ecosystem by earning yield on Eth in the treasury. APE DAO can utilize yield to help pay for expenses and infrastructure to support the DAO.
Key Terms (optional)
Definitions of any terms within the proposal that are unique to the proposal, new to the APE Community, and/or industry-specific.
stETH = Staked ETH on Lido Finance
Specifications
A detailed breakdown of how to convert APE to stETH
Since APE DAO holds 100% ApeCoin in treasury we need to convert ApeCoin to stETH with minimal impact to the price of APE. There are two recommendations to make this conversion happen with the least impact on APE price:
Utilize an OTC Market Maker, i.e. Wintermute or Jump Trading. A professional Market Maker will know the economics behind this conversion and most likely provide the best rate and least impact on ApeCoin.
Spread the conversion of ApeCoin->stETH across 3 months. Similar to how the Covid Relief fund sold SHIB after Vitalik donated 50 Trillion tokens or ~$1 billion. That would look like:
Month 1 30% ApeCoin sold
Month 2 50% ApeCoin sold
Month 3 20% ApeCoin sold
Steps to Implement | The steps to implement the proposal, including associated costs, manpower, and other resources for each step where applicable.
Or work with Lido BD for more white glove treatment (no cost)
About Lido Finance
Information about the protocol Eth would be staked on.
Lido is liquid staking provider that allows users to stake Eth tokens through Lido Finance, helping secure the Ethereum network, and receive a yield bearing derivative token called stEth that can further be used in defi protocols.
Lido is the second largest defi protocol and largest liquid staking service provider in the web 3 space with ~18 bil total value locked across multiple chains (Ethereum, Solana, Polygon, etc)
Largest liquid pool in DeFi - $5BN for stETH/ETH
Stable peg price of ETH/stETH
Timeline
Relevant timing details, including but not limited to start date, milestones, and completion dates.
There is no lock up period. ETH can be staked at any time and stETH can be swapped to USDC or ETH at any time.
Overall Cost
The total cost to implement the proposal.
There is no cost to the DAO for staking ETH with Lido
We have also seen a proposal from babylon.finance… benefits over babylon? I know the babylon proposal did include a budget so there is one benefit right away. I feel like these top level defi plays will be structured by the club rather than a proposal through the forum.
I feel these proposals are more geared towards self starters within the club trying to propel the ecosystem with A) their token B) their minds, not necessarily how we utilize the treasury to increase liquidity within another ecosystem besides our own.
@jeffalomaniac thanks for the response! I think it’s super important to A) Understand what the protocol you are staking with actually does and how it derives its yield and B) Understand how safe that protocol is.
Lido Finance can be compared to the BAYC of Defi https://defillama.com/. Lido has over 18 billion in assets staked. What does it mean when you “stake” your assets with Lido finance? The Ethereum network allows you to run a validator which verifies the transaction that we constantly put through the system. In order to run a validator you need 32 ETH to do so plus the hardware and technical software capabilities to do so. This is limiting to many users. When a validator is being ran the Ethereum network pays rewards to those validators in the form of Eth for the service they provide which is ultimately decentralizing and securing the network. Lido strips the 32 eth requirement and hardware/software requirements away and creates a service where Lido spreads the Eth staked with the protocol across many trusted validators.
SO TLDR know where APR comes from! APR from Lido comes from decentralizing and securing the Ethereum network.
As far as Babylon I see they have 22mil staked with them and looks like they are a defi profit sharing club that splits ROI from their investments. A treasury management solution. I do not know enough about them to comment any further.
With such a well known brand like Ape Coin it’s important to earn SAFE yield from well known defi protocols.
As far as increase liquidity within another ecosystem. This is actually increasing liquidity within APE DAO. Ape already (I believe) holds Eth. Ape can either hold Eth which doesn’t earn yield or hold stETH which earns ~4% APR which on millions of dollars can easily pay DAO salaries etc. Check out the above Nounsdao use case for Lido.
I’ve included a couple links to a podcast with Kevin Rose and our founder and a Bankless article if you’d like to dive into it more. Feel free to ask any additional questions!
Lido Finance Founder on Kevin Rose Podcast Modern Finance
Apple, Google, etc podcasts
This is exactly the explanation a lot of the folks in here are looking for. More understanding of what the plays involve and what they should even be looking for. I came from defi to NFTs so I’m familiar with most of these plays but a nice refresher never hurts.
Question on Lido, if you meet the 32 ETH requirement do you run the validator for a solo community with fees of course?
I think we should be a little bit more broad in this thinking and perhaps consider the DAO doing a wide range of “DeFi activities” with elected managers perhaps. I have high confidence in the Lido team and believe we should consider this as well. Thanks for the write-up!
Ya totally depends on the Risk Curve of the DAO. Lido being Safe but lower yield. However stETH, since a derivative can be used in a plethora of ther defi protocols like Curve, Aave, Yearm to further earn yield if the DAO wanted to do so. Nice think about staking Eth is its not complex so a management service isn’t needed and can swap immediately to USDC or ETH if needed without unwinding a bunch of stuff.
So with Lido you don’t need the 32 eth requirement, hardware or software to run a validator. The 32 eth requirement is from the Ethereum network and you need to have your own hardware and run the software if you want to operate your own validator. Running it is adds another security level to the ethereum network.
Lido has a many trusted validators that are already being ran as a service for it’s customers so anyone can take any amount from .1 eth and UP and stake with Lido which the eth gets spread amongst it’s trusted validators to secure the network.
I think this is a very reasonable proposal; although, the DAO doesn’t own any ETH. It’s worth exploring if we want to diversify the treasury by selling some APE for ETH and then generating revenue for the treasury with it. We definitely would want to employ a market maker like WIntermute or similar to help us liquidate efficiently OTC.
It makes sense IMO to own ETH, considering we build on ETH.
A list of the treasury addresses can be found here: ApeCoin
APE can be used as an environmentally friendly BTC, and its price is higher than BTC, and it can even replace it. Whether it is staking mining, or hanging card mining (refer to Ppkemoney game), it is a great contribution to the earth, environmental protection, carbon reduction and electricity consumption. Computers mine and play games. You can even pledge and borrow other people’s game characters to earn commissions. I have played mining with mining machines that consume too much power and generate high temperature. I also tried Chia hard disk mining. Electricity is also sold out. After contacting the Binance Sports Player NFT card to pledge mining, and then pledge with Pokemoney card, battle mining thinks that it can replace BTC. Existing mining situation of ETC>
Thank you @Chiefer for your ideas and the ApeCoin DAO community for the thoughtful discussions. A moderator will get in touch with the author to draft the AIP in the appropriate template. Once the AIP is drafted and meets all the DAO-approved guidelines, the proposal will be posted on Snapshot for live official voting at: Snapshot
Follow the here as further updates will be posted here in the comments. @Chiefer please see your messages for the next steps.
This proposal has been deemed Return for Reconstruction by the Special Council. After thoughtful debate, the Council concluded that establishing a holistic DAO treasury management and asset allocation strategy is necessary before diverting a significant amount of treasury funds to a specific asset. Once such a strategy has been put together, the proposal would be in a stronger position to take into consideration.
The author or any community member is welcome to submit a proposal for a holistic treasury management strategy, and/or bring the matter up for community discussion on the Discourse forum.
