HIGH PRIORITY: First treasury diversification sale - community decides

Withdrawn AIPs
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PROPOSAL NAME:

HIGH PRIORITY: First treasury diversification sale - community decides.

TEAM DESCRIPTION:

Furious: DAO believer since March 2022.

Twitter & Discord: @furiousanger

PROPOSAL DESCRIPTION: (VERY ROUGH FIRST DRAFT.)

This AIP proposes a simple plan to achieve our first treasury diversification sale; ensuring our treasury is financially robust; enabling operations, initiatives and growth to continue.

Question is not whether treasury diversification should happen, but simply how many tokens are to be allocated, into which asset(s), and the timeline.

This AIP will be finalised using the community’s input. So let’s propose, adjust, argue and reach consensus asap.

Facts that need to be added:

  • The treasury is held 100% in our native token $ape.
  • To establish a “true” treasury balance locked tokens should not be included, meaning we can attribute a dollar value of close to ZERO for apecoin DAO’s treasury.
  • Approved AIP grants & operational costs have seen a treasury of 470m $ape reduced to around 130m $ape in less than two and a half years (340m $ape spent or allocated to date).
  • All remaining $ape yet to be spent or allocated is realised through token unlocks. (Basically the $ape we have left = locked $ape.)
  • We have no reserves this means our operational timeline is linked to (or probably better defined as determined by), highly volatile market conditions.
  • Runway cannot be assured or determined as the treasury is completely reliant on $ape’s market price.
  • The treasury has generated revenues to date (inflows) of $5,000 dollars.
  • The current situation is to spend and allocate $ape until there’s nothing left - with no plans to ensure the long-term sustainability of the DAO & the treasury.
  • Community approved grant AIPs from JAN-AUG ’24 totalled $18.5million USD & 112million $ape.

Nonsense that needs to be added:

  • Selling treasury tokens will impact the market price of $ape.
  • Treasury diversification is a complex subject, which only “experts” are qualified to talk on.
  • $ape is going to $50 dollars.
  • No need to worry Webslinger are managing our treasury - it’s their responsibility.
  • Only viable if we can do OTC sales vs market selling.
  • It’ll all be fine - trust me bro.

Initial thoughts/ideas:

10% of the remaining treasury to be stabled into USDC.

Set a minimum of 10m $ape - expecting 13m $ape (as estimates are we have 130/140m $ape net).

The sale will be achieved via a mixture of OTC and market selling.

The price target for conversion will be set at a minimum of 1 $ape = $1 USDC.

Above sentence determines that our first treasury diversification sale would commence when apecoin reaches a market sale price greater than $1 dollar.

Determine usage terms within this AIP or future AIPs?

BENEFIT TO APECOIN ECOSYSTEM:

  1. Dampen total portfolio volatility.
  2. Offset future operational expenses.
  3. Increase the resiliency of the DAO during periods of market disruption.
  4. Encourages future diversification into a variety of tokens and blue-chips.
  5. Will continue to add.

DEFINITIONS:

DAO Treasury diversification: A risk mitigation strategy focusing on creating stable treasury reserves by reducing exposure to more risky assets such as DAO native tokens which are less resistant to market volatility.

USDC Stablecoin: USDC is an asset backed stablecoin whose value is pegged to the U.S. Dollar; every USDC token in circulation is backed by $1 USD in cash or cash equivalents.

$ape: Our native governance token launched March ’22; has since lost 97% of its value.

STEPS TO IMPLEMENT:

Populate more as final drafts are compiled.

REPORTING EXPECTATIONS:

Populate more as final drafts are compiled.

OVERALL COST:

Total amount requested from the ApeCoin Ecosystem Fund = 0 $ape

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Not sure anyone can write anything about our financial situation without pointing directly at the latest (Q1/24) financial disclosures. So, let me do the honors Ape Foundation Transparency Report - 2024 - Q1

As to this idea, I don’t see how it would have any meaningful impact. A $10M token sale is as immaterial to our current situation as applying a bandaid on a leg fracture. We might as well just sell the monthly $7M token unlocks going forward and hold those in USDC.

Also, as per that Q1/24 report PDF, we had about 42K USDC and 235K USD. And so, saying " The treasury is held 100% in our native token $ape" isn’t accurate.

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These are irrelevant nominal figures which fluctuate - currently $100k on treasury dashboard - and are not held in reserve, more than likely used for payments whenever necessary. So as close to 100% native token makes no difference.

People said that when the topic was raised and we had a treasury that they valued at multiple billions.

Doing this would be seen as dumping; that we have no confidence in our token, and market prices would reflect. Instead my approach ensures price impact will be non-existent/negligible. Ensuring we become resilient to $ape price volatility gradually over time - potentially with more treasury diversification into other tokens and blue-chips happening in the future. :pray:

Thanks.

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uhm, they’re not irrelevant. The point there is you stated that the treasury is 100% in $APE. It’s not. And I don’t consider a total of $277K ($42K + $235K) to be “irrelevant”.

We know that most Apes don’t read, but if you’re going to write up proposals that deal with numbers, it’s always best to be as accurate as possible. I am getting a feeling of deja vu here, friend. :stuck_out_tongue:

Well that’s the point that I am making there. It’s too late now for anything like this to have any meaningful impact; other than if we sold tokens for USDC, we’d end up with $10M in USDC instead of a fluctuation token. And so, IF we’re going to do that, what’s the point of only doing $10M when we could very well sell the entire treasury of tokens?

Right. So you don’t think that selling $10M worth of tokens is dumping? To me it is because we have no purpose for doing so other than the fact that - as your own proposal seeks to proclaim - we need fiat not tokens. And that communicates a lack of confidence in the token - otherwise, why even do it?

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It would be good to calculate what are the approximate USD Liabilities per annum of the ApeCoin Foundation. Then consider how much of that to convert and hold in a stable coin.

GWG for example, we did the following:

  1. Had agreed to have contracts in APE where possible.
  2. Within the first week, we paid out a significant amount of our USD liabilities (including payments in APE but contract value pegged to USD).
  3. We then converted 100,000 USDT (happened to have less slippage than USDC when we did it). Covering about 70% of our remaining USD liabilities. N.B. To use OTC and centralised platforms, we need to KYB the GWG Non Profit DAO. This should be done, but at the time, the risk of Token price dropping was greater than the slippage cost.

After we did these actions the token dropped up to 60% from our Grant value. We had expenses during this time and now APE has recovered but is still 20% lower than our Grant value.

Is USD terms on an approximate 1.3m USD Budget, that is a drop between 780,000 USD and 260,000 USD.

If we did not make these actions, it would have been impossible for us to deliver our OKRs and have positive outcomes on the DAO.

Key Questions.

For Treasury Diversification - Is 10% of the Treasury a reasonable amount to have in Stables?
For covering USD Liabilities - What is the amount need per annum?

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Thanks Derek.

The bullet points are only there for now in this draft to add context for readers - final version I see a sentence or two being sufficient to convey.

Happy to change if necessary to “The treasury is held 99.9% in our native token $ape” - dependent on some details confirmed from foundation.

Thanks for great input as always. :handshake:

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Great questions. Thanks for all the information too which adds more detail. :muscle::handshake:

Added these all to the list. :handshake:

Sasha tried 25% in BTC which is a little different ofc. So felt to get the ball rolling needed to opt for a figure that’s gonna be more palatable to voters.

Still trying to figure out if usage of the assets should be stipulated within this AIP. Or whether it should specifically state to be decided by community at a later date.

Would be great to get those figures confirmed so we have that option of specifying for runway usage and can give a definitive TL these funds would secure - will reach out to Mo, G, Wabaam and Matt (WS) shortly.

Really hoping more people jump in and comment. Topic is not complex, put simply the question is do we keep all our eggs in one basket? Think people here are too scared to tackle these bigger issues, and lazy as the results will not include some sort of self-enrichment. Many are just happy to be directed always and told what to vote for. We need a new era with apechain imminent - start to think more long term by tackling these bigger topics instead of just ignoring always.

Maybe I’ll get some polls up in the future. Probably will want to wait until all the events have ended etc.

This is certainly a very rough draft to get people thinking. Will take a lot of work to get it right. :handshake::muscle::pray:

Really do appreciate your input and Derek’s always too. LFG. :muscle::handshake:

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Found this from Amplify. Would mean we pay $4,656,000 per year for coinbase fees. :person_facepalming:

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Unless 10 months in a year :wink: it will be 12x that number.

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@mo_ezz14 @Waabam @BoredApeG @Hazel @Airvey @Ape.Admin

Making a freedom of information request. :grimacing: Not sure what else to call it.

Can you please provide approximate USD liabilities per annum of the apecoin foundation. A very brief breakdown would be helpful to the whole community, as totals of are only ever given in $ape.

Thanks.

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I should link in Sasha idea - some reason I thought this went to vote already and was unsuccessful (was offline for a month roughly).

Not sure 3 year lock is a good idea, also 60m $ape is more like 45% of remaining treasury not 20%, but agree with the points and the plan to diversify treasury. :muscle::handshake:

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Linking AG report thanks to BigBull.

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I would say that requesting budget payouts in USDT/USDC is best and also has a lot less friction. We can’t get away from the fact that the treasury is sitting on a token that’s absolutely going to zero (as in $0.00nnn). There is no doubt about this in mind or according to my metrics. It’s just a matter of time. While ApeChain will generate some revenue and transactions, it’s just not going to be enough to stop or curb the token depreciation.

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This is an extremely good thread/article on the need for diversification by DEVANSH MEHTA working group lead at Arbtreaury (treasury and sustainability working group):

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Hi @furiousanger it’s good that you’re raising awareness for this very important issue. As you may know, we wrote a Sustainability Report on the ApeCoin Treasury while working with the Governance Working Group earlier this year. If not, you can find it here: Avantgarde Research - ApeCoin DAO Economic & Treasury Sustainability Study.pdf - Google Drive

I believe there is general agreement that a plan should be put in place. Happy to continue the conversation with the community if there is interest. Thank you!

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I remember this, but I’m afraid it may be too late now. Have you seen our Q1/24 financial report? Ape Foundation Transparency Report - 2024 - Q1

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Hi @furiousanger ,

The community feedback period for your proposal would be ending in less than 24 hours.

  • If you’re content with the feedback received, your next steps are to finalize your proposal using the AIP Draft Template.

  • A moderator will reach out to the author to finalize the AIP Draft. Upon receipt of the final Draft, we will review and provide instructions on the next steps.

  • Are you ready to proceed to the next phase or do you wish to extend community discussion for another 7 days?

We look forward to hearing from you.

-@Facilitators

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Withdraw please. Thanks.

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Hi ApeCoin DAO Community,

@furiousanger has requested to withdraw their application. This AIP will be moved to and remain in the Withdrawn AIPs category.

Kind Regards,

@Facilitators

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