Discussion Topic: NFT Vault for Bankless DAO

The purpose of this post is to gauge interest around developing an nft-vault that could be a revenue channel for the DAO. If the discussion goes well then I will write up a more formal proposal.

Summary

Many of us have been enjoying the member perks of the nft-club and the subculture that is starting to form which has been great. We are minting new projects, taking big risks, and pioneering this space in hopes to help build and support other NFT communities. The sick jpegs and ridiculous profits is nice too :wink:

However, the gas wars are real and the battlefield is bloodied with the gwei of our enemies. Despite this, we continue to invest in the NFT cultural revolution because we believe the value of these ‘jpegs’ will endure. I proposition the group to consider creating an NFT vault that we as DAO members can contribute to. The vault would then be used to purchase and sell NFT’s on behalf of the DAO. The vault would follow standard governance protocols and would have a multisig wallet set up. Bankless Members are then able to contribute eth to the vault which is then pooled together purchase and sell NFT’s. The decision on which projects to invest in requires voting and transactions require multisig by the NFT Guild ? (is that alpha??).

Benefits to the DAO

Several benefits exist including:

  • Increased liqudity for the DAO. Because members are contributing ETH to the vault we are accruing value. In the case of a financial emergency the DAO could vote to tap the NFT vaults assets for liquidity

  • ***EDIT: NFT’s could be fractionalized as well to offer to all members for buy in one example solutions below. Revenue opportunities from collateralized loans and lending protocols. As we build up our assets we can loan these out NFTs or attempt to earn yield. While there are less NFT options available there are platforms available (https://www.nftfi.com/ as an example). This would give us passive income for the DAO. https://fractional.art/

  • Revenue opportunities from passive membership perks and benefits of owning the NFT. We all know how truly incredible some of these communities provide (random NFT drops? :exploding_head:) By HODL we have yet another passive income stream for the DAO

  • Rapid expansion of our social capital. In this space who you know is mission critical for our success. We are competing in an ecosystem. By joining exclusive clubs and investing in these nft communities we enhance our own ability to form strategic partnerships and source opportunities.

  • Finally my favorite benefit we all save on gas fees! This one is obvious, if we all have more ultrasound money in our wallets then we collectively have more resources for the DAO.

For Context

This idea came from business problems we began to identify from conversations we have daily in the nft-club. Shout out to those who I represent on this post: @jameswmontgomery.eth @CryptoBushi

Let the discussion begin!

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New users can only tag two people but

New users can only tag two people but DavidBankless, perchy, Oktal, Kouros , and RedVan are a part of this conversation!

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This is important, DAO can and should long term HODL these high-value assets such as BAYC, penguins, punk comics that basically provide passive revenue just for having these. Also, DAO can allocate some of its funds into the NFT Vault to diversify the treasury.

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Agreed. I think we would want to agree on a portfolio distribution. Something like bluechips/surer bets as foundation, promising long term plays with moderate risk, riskier hodls but but high potential for value, ones we want to flip. Plus need to maintain eth for liquidity as well.

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I also feel like the NFT guild is necessary for this. Does anyone see some cons of NFT Guild?

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We would need to coordinate with Treasury Guild and have a bit of a more structured Governance model. Any offical Bankless member could contribute but only Guild leaders can decide what to invest in. The multisig wallet would be restricted to a handful of those from the nft-club along as a handful of those from the treasury guild/mods etc…

tagging @Bauhaus who I believe is in Legal Guild. What do you think of this discussion anything we should consider from a legal entity/risk perspective?

Edit: I’ve updated this with further thought.

This is a great idea, almost similar to what Visa itself has done just this past week…

Having said that, why limit our mindset to only the future?

Does anyone think there will be a future market for the digitization rights of current artifacts of value (artwork, jewellery, etc…)?

Maybe the DAO could find a niche market in the purchase of current forms of high-end artwork for its digitization rights, marketing those limited NFTs accordingly and then the physical asset is donated by the DAO to a leading Museum.

What about forming a relationship with current leading artists (Banksy and Van Gogh, may be a bit out of reach :rofl: - who want to market their current real world work with also a digitized version alongside it?

I really like the concept for blue chips as HODL, and good community new releases for early/mid term flips. However, I am trying to think through one solitary issue. Anything purchased is a loss if it doesn’t outperform $BANK which is up 5x over the last 5 weeks. Granted, $BANK will likely be down 50% in 1-2 weeks, but how likely is it for another asset to beat BANK over the next 6-12 months. Meanwhile, shouldn’t NFTs have a 50% regression during the next 6-12 months. Maybe the answer is to have a war chest ready to pounce on the dip.

Can you explain how buying NFTs is a source of revenue for bDAO?

Also be careful of securities law if you’re raising funds from the members, considering fractionalising NFTs, or tokenising real world assets.

Maybe a separate entity would be appropriate, something like fight club is doing?

Interesting project! Is this the next flamingo DAO?

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I am very much in favour of this proposal.

In fact, I’ve been advocating for the same for some time and even mentioned this idea during one of the NFT club hangout sessions. I am really happy to see other people from the DAO reaching the same idea on their own! It shows that it is a good one.

The purpose of this thread then becomes to iron out the details regarding the implementation of the NFT Vault.

Before we make a formal proposal, we need to establish how:

  • we decide which NFTs will be purchased and sold;
  • who is part of the multisig;
  • who will curate the DAO museum;
  • who will pick the museum architects, etc…
  • which NFTs will be fractionalised;

There are two possible ways to do that:

  1. Form/elect a committee that will make decisions regarding the established points above

pros: The committee will have a unified, long-term vision
cons: Less people participate in the decisions

  1. Vote on each decision either by Discord polls or by Snapshot votes.

pros: More participation
cons: less direction and cohesion.

I am leaning towards option 1, but I would love to hear other people’s opinions on this.

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" 2. Vote on each decision either by Discord polls or by Snapshot votes." - we were also talking about DAO Haus being the right tool for this.

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I think what you propose is a nice idea but almost sounds like a DAO in and of itself. I think there are lots of artists who would love resources, support, and consultation in how to get into NFT’s but with this post I am more focused on acquiring existing NFT’s for the DAO as opposed to curating for others. And personally I think we should stay away from things like gold etc. We should stay as far away as possible from anything our pesky U.S. legislation might consider securities or investments etc.

Your numbers seem pretty pesmimistic here and i think your calculations have some unknowns you are making assumptions around. Why do you think both $BANK and NFTs might lose half their value this next year? I don’t know if I agree. Will every single NFT that drops sell out and 10x on the first day? Probably not. But will the entire market collapse? Probably not. The people in the nft space are some of the most passionate hype machines I’ve ever seen. I have been on all these different twitter lives and discrds and most of these people don’t know even really know what defi is or what a blockchain is. But they love the art and the community and are willing to drop thousands. Now… If ETH crashes then yes NFT’s go down (in which case we start scooping up as you suggest!). But I think eth is looking pretty good tbh. If. A big if… If are prices do not crash around Nov-Jan then I think we have officially broken the ‘multi year cycles’. If not? Then I lost thousands on jpegs in 2021 haha

Also be careful of securities law if you’re raising funds from the members, considering fractionalising NFTs, or tokenising real world assets.

Thank you for raising what is the most important thing to consider here imho. I tried tagging someone from legal guild but will coordinate with them directly if we choose to proceed. Mechanically I do not have this figured out but I will say this. Spending a few minutes on Flamingo DAO website we are def NOT doing that. It seems like a very elitised DAO that is restrictive in membership. They require accreditive investors which is unfair to many of our DAO members as most of us are not accredited. U.S. law just made up that term so that ultra wealthy have access to more wealth building opportunities than normies. It’s all a sham. I think of this more like pooltogether for NFT’s. The primary goal of this would be to 1) save money on gas 2) build an NFT portofolio we all benenfit from. Just need to figure out mechanically how to achieve those two goals without becoming a full fledge investment firm.

How does this bring revenue to the DAO?

The DAO can lend out NFTs and receive loan payments. We can flip them obviously. All the passive membership benefits we receive from holding various NFT’s in wallets (Free drops etc). I also don’t know what type of yield farming protocols are available for NFT’s but something else to explore. Maybe Bankless DAO builds the first NFT yield protocol?! :exploding_head:

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Excellent thought process @cart_collector and I agree with your conclusions. I think there is a healthy balance in that we have a committee that establishes the strategy and makes executive decisions BUT the community then gets a vote on those decisions. Sorta a checks and balances approach. For example we all may decide that one drop is fire and we want to spend 4 eth or something. We then pose that decision to the community and they vote on if its a good idea. Just sorta brainstorming here but I think option 1 is the way to go but I want to make sure we engineer some democracy into the process to stick with our ethos. I think we should probably set up a meeting to discuss as a group. Perhaps one of those running nft calls we already have to keep meetings minimized.

I agree with what you are saying. I am just looking at historical data and I always expect ETH to drop 50%. Bank is down 25% from my post. That being said, I think all 3 are great investments. I just think it will be hard to beat BANK over a 6-12 month period, and the DAO essentially only has BANK to utilize. Diversified investing is of course smart and the best reason to get Apes and Punks.

I see. Yeah if eth crashes NFT’s crash so def something to consider. Like I said if we avoid a big crash going into holidays and into 2022 then that is a testament that we our out of that big crash multi year cycle. In your opinion what is the best way to create liquidity for the DAO that is not necessarily bank? Or do we really just need a whale to buy a bunch of bank and then be LP?

Yeah, that’s the problem. If you believe you are on a money tree what do you do while waiting for the blossoms? You probably have to a break off a few branches to make fire for the winter. I try to listen in on the tokenization discussions but usually have conflicts. Ultimately, this is a good problem to have. Long answer for HODL a few blue chip NFTs and be really aggressive with fresh minting on promising new releases. I like Crypto Bushis process.

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Would love it to encompass more than the Lv1 ETH blockchain. If we can use a roll-up to put our solution on Lv2, that would be great. Also would like to be able to integrate the WAX network on EOS Blockchain, where most of my NFTs are - maybe too big an ask for now maybe

I think my only concern is the tax implications. I assume this would be a capital asset to be depreciated over time. It could result in higher profits showing in the year of purchase because we may not be able to fully depreciate the asset in year 1. That might mean a potential higher tax liability in year 1.

Also, I would suggest holding assets longterm to take advantage of long term capital gains tax breaks. Something to consider when/if selling the assets.

And if we are aggressive on the depreciation, it means higher capital gains when/if we do sell

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