A naive proposal on use of treasury - fractionalize Blue Chip NFT

Since we have over 600 ETH of the treasury (and it will grow rapidly in the future!). I wonder if we could create a fund to purchase some Blue Chip NFTs (Cryptopunks, BAYC etc.) and fractionalize them, then give them back to the community members (almost all whales hold blue-chip NFTs?), such that we have a hard bone backup. (I know we are really solid now and will become a blue-chip NFT soon!!)

What I see from HeadDao, is that they fractionalize blue-chip NFTs, in other words, they use their treasury to buy Blue Chip NFTs in a vault, then allow owners to stake their NFTs to earn tokens ($HEAD), and the number of $HEAD tokens determines the %share of the vault (as of 2021/11/6, it holds 11 NFTs, such as Cryptopunks, BAYC, AB Curated, etc.)

This would make the community more vibrant and more stable - not only do people want to buy our NFTs because of NFTs themselves, but also do they want to gain exposure to the $Tokens and underlying blue-chip NFTs, which will boost their loyalty.

What HeadDao doesn’t do well is two things (which we don’t have these two disadvantages):

  1. The pfps of HeadDao looks almost the same as NounDao, which means they are not original, causing HeadDao NFTs to not even get verified by Opensea, in contrast, we are one of the most original creators and artists.
  2. The holders are too concentrated (as of 2021/11/6, they only have ~909 holders of NFTs and Tokens), in contrast, we have nearly 5000 holders.

There are several benefits by doing so:

  1. Expanding the Dao’s capability - Dao has become a buzzword, and it fits our community’s purpose - community-driven.
  2. Fractionlize blue-chip NFTs is now a popular trend, Fraction.art, NFTX, Unicly.
  3. Increase the community’s loyalty. By staking NFTs, owners will not able to sell it, but they will gain $token to increase their share of the vault.
  4. Free marketing here. Every blue-chip sale will be tracked by millions of people, buying these blue-chip NFTs will help market ourselves.

There are several risks:

  1. Risk: loss of the vault. There will always be some risks of coding the protocols I mentioned above, leading to the vault getting hacked.
    Solution: Fraction.art is able to secure most of the vault and if we have more experienced developers, the issue could be resolved.
  2. Risk: not too many people are interested in staking their lovely NFT to earn $Token, and to gain a share of Blue Chip NFTs.
    Solution: more education, increase

Why this proposal fits our vision:

  1. Doodlebank: a new marketing channel: purchasing blue-chip NFTs, we will gain more exposure from people in the NFT space, as purchasing a blue-chip NFT will always be headline news.
  2. Partnerships: partnership with all cryptopunk holders, no need to say how much value we could gain from the resources of cryptopunk holders ( holders help each us).
  3. Product: we will create a token to incentivise holders to stake Doodles NFTs, giving back rewards to royal owners.
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Don’t really feel this is a good use of funds, at all. Just need one example along to explain it. Say you deploy all the vault funds or half to buy these NFTs, 600e/300e. Split this over 10,000 owners of doodles as each NFT should get a fraction.

That results in 600/10000 or 300/10000. You now have a basket where each doodle is backed by 0.06 worth of fractionalized NFTs if the full amount is spent or 0.03 if half is spent. In other words, very inefficient usage of funding.

Please stop suggesting these, because they are the worst usage of funds out there. If you are in similar products, I suggest you really think about it and re-evaluate. Having a basket of backed assets does not do anything for the NFT or add value to the NFT you hold.

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Thank you for your thoughts on that. I totally understand why you have these conerns, and please allow me to clarify the claims that you made:

  1. Split this over 10,000 owners of doodles as each NFT should get a fraction. This will never happen, because I said only owners that stake their NFTs may get the partial value of the vault, also the longer they stake, the more $tokens they own, the higher ownership they get from the vault. You may ask why bother staking, because this creates extra incentives to the loyal Doodles owners ($tokens can also be tradeable).

  2. That results in 600/10000 or 300/10000. I am not suggesting using all the fund, 200 eth is already an astounding amount. In addition, the value of vault will increase if 1. the price of underlying blue-chip NFTs increases, even a pessimistic growth of 20% return annually would be a good return (are you sure you could make that return from other use of the fund?). 2. higher the price of the $token , more valuable the vault will be ($token represents a certain share of the vault), remember $token can be bought from the secondary market? So more people buying the $token, the higher value the vault would be. (you may never lose value because there is a decent floor price for blue-chip NFTs).

  3. worst usage of funds out there, we never know if this would succeed, do you know how SharkDao works? Only time will prove it :slight_smile: I understand you may not like this idea, and it is too premature, so I say it’s naive, thank you for the suggestions.

In the end, really appreciate your input to this idea.

There have been several suggestions about this topic. Searching discord will show a few responses from the founders and community members against this.

  1. Doesn’t support the vision laid out for Doodles
  2. DAO projects → risk of being treated as a security, can of worms, unnecessary risk as the utility of Doodles is foremost the community and what it creates together with the community treasury. People want to buy into Doodles for this reason and I feel this is reason enough.
  3. DAO competition, as you have mentioned, its fractional ownership DAOs are now dime a dozen. Panda, Mutant, Head, etc, etc. It is a commodity with a superficial layer of ‘art.’ While it’s for the utility of those projects, I’m optimistic we can create more value from the treasury in other ways.
  4. Treasury strategy from exposure to blue chip NFTs has to be seen in comparison to investing in other assets like BTC, holding ETH, etc. Blue chip price appreciation is after the fact. You’ll be hard press to beat the performance of even ETH with where these projects are at now. Please reference: Strengthening the DoodleBank - A Phased Strategy - Phase 1: Buy Bitcoin for the detailed discussion on this.
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