Protect Treasury: 20% -> BTC, Lock for 3 years

PROPOSAL NAME: Protect Treasury, Lock Up 20% as BTC for 3 years

PROPOSAL CATEGORY: Ecosystem Fund Allocation

PROPOSAL DESCRIPTION:
To future-proof part of treasury against accidental or organized drainage and as a step to diversify treasury, ApeCoin DAO Foundation will create a BTC wallet and convert 20% of treasury reserves into BTC. Not only is this probably a smart move financially (historically, BTC has far, far outperformed APE), and thus potentially one of the easiest yields for the DAO, it’s also an insurance policy. Having less available treasury for 3 years (though still very substantial) will help us think more carefully about spending on a per-AIP basis.

For simplicity of calculation ,20% means 20% of USD value of all DAO reserves on the day of this proposal going up for a vote minus any amount already approved/earmarked for previously-passed proposals.

Example: the reserves on hand on the day this AIP goes up for a vote are 1M when converted to USD (using that day’s market price). The DAO approves proposals with total cost of 100K during the same voting period. We then calculate the 20% as 20% of 1M, not 20% of 900 thousand.

BENEFIT TO APECOIN ECOSYSTEM:

Save 20% of Treasury from potential drainage and, possibly, grow the treasury by selling BTC at a higher price 3+ years down the road. The underlying assumption is that if BTC fails, everything fails; is there really a world where APE thrives but BTC is in the gutter?

STEPS TO IMPLEMENT:

ApeCoin Foundation buys BTC with 20% of Treasury funds upon proposal approval via either:

  1. OTC, to avoid market price impact on $APE (preferred method), or
  2. weekly purchases spread over 3 months to minimize $APE price impact (19 to 20 total transactions); the daily volume for $APE is ~50M USD, or 350M / week, so this weekly operation would account for ~1.5% of avg daily volume.

Regardless of implementation method, the 20% is calculated as indicated above and earmarked at the time of proposal approval.

The 3-year lock-up period begins on the day of the last transaction, i.e. when the full 20% are converted.

OVERALL COST: OTC fee or dex/cex fees to convert APE to BTC. Estimate: <$5,000, or 1/20,000th of the converted amount, i.e. less than 0.005%.

RISKS: It’s possible that ApeCoin price will increase faster than BTC price. This risk if for you, the DAO, to decide on. Historically, quite the opposite has been the case. Please keep in mind that ~80% of Treasury will remain unlocked, so the real question is - should we risk everything we have on $APE price fluctuations, or hedge our bets by locking up some of it in BTC?

I actually don’t hate this idea.

But the areas I would push back are as follows

  1. Converting 20% of the treasury to btc would absolutely obliterate the price of apecoin rn

Would love to see a scheduled diversification plan for the treasury if we’re looking to derisk.

Helps derisk while not tanking / spiking any one coin in the process.

1 Like

Hi @Sasha ,

The community feedback period for your proposal would be ending in roughly 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

Do you mean “100k” here?

I’d add in a clause to ensure that the sale will happen OTC, to prevent negative price impacts.

1 Like

High level, the diversification of the treasury has legs, but to swap a % straight for BTC will not only have a negative impact on price in the short term, it would also tie us to the price of Bitcoin and the impact that has across the different phases of a market’s cycle.

The onus should be on diversifying assets of other builders / DAOs to also act as a user acquisition strategy. Something I will go into deeper outside of this thread.

Hi @Sasha

Thank you for your ideas [and the ApeCoin DAO community for the insightful discussions].

A moderator will reach out to the author to finalize the AIP Draft using the appropriate template.

  • Once the AIP Draft is confirmed by the author and meets all DAO-approved guidelines, it will receive an AIP ID number and move forward for Draft Analysis Review.
  • @Sasha please see your messages for the next steps.

Follow this Topic as further updates will be posted here in the comments. In accordance with DAO-approved guidelines, if the author does not respond within 30 days, the proposal will be automatically transferred to the Withdrawn category, and the author can re-submit the idea.

-@Facilitators