Alternative Honeypot Strategy - A Simplified Approach

Hey BBH Community,

First and foremost, I would like to thank everyone who read over my previous Honeypot Strategy and provided valuable feedback. The level of involvement in this community is top-notch :ok_hand:!

If you haven’t yet read over my previous Honeypot Strategy and would like to do so, you can find it here:

What’s This Proposal all About?

As the title suggests, simplification. While most of the feedback I received on my previous Honeypot Strategy agreed with what I proposed, some Bears voiced the opinion that funds were stretched a bit too thin in some areas. In addition, some felt it was a bit too complicated and that we could benefit from a simpler approach. After mulling these sentiments over, I agreed. The acronym KISS could certainly apply here. So I went back to work and revised my strategy with simplification in mind.

aBinaryMind’s Honeypot Strategy - Simplified.

As Bear holders, we have the pleasure of gaining secondary exposure to whatever the Honeypot is invested in. With that said, we should be targeting investments that the average Bear cannot obtain on their own. This gives us Bears an opportunity to own the best the crypto space has to offer. The areas we should be collectively targeting are NFTs and the Metaverse.

In the event of a NFT market downturn, a well balanced portfolio can help hedge against unrealized (or realized) capital losses. In my opinion, a good balance between NFTs, Metaverse Content, DeFi Content, and Ethereum can provide stability while still providing immense upside.

What I am Proposing:

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Allocation Reasoning:

  • Metaverse Content at 30%. Reasoning: the Metaverse has tremendous upside. Many feel that the Metaverse is the next big thing in the crypto space. I agree with this sentiment.

  • NFTs (via Investment Committee) at 20%. Reasoning: this allocation has already been put into motion at the time of this proposal.

  • NFTs (via Community Proposals) at 10%. Reasoning: there have been plenty of Bears who have expressed suggestions on NFTs that we should invest in. So let’s give the power to the Bears to propose NFTs they are adamant about. The very nature of our governance system dictates that we must collectively agree or disagree on proposals for the content within the proposals to take effect. If an NFT proposal is made via community member(s) and the community can get behind it, chances are high that we have made a good call, collectively.

  • DeFi Content at 20%. Reasoning: other than NFTs and the Metaverse, DeFi is another area in crypto we should be allocating some of our Honeypot to. It can provide a steady form of income in the form of ETH, allow us to invest in promising DeFi projects, and provide a slight hedge against a NFT market downturn. With DeFi being just as hot as NFTs and the Metaverse, it makes sense to allocate a portion of the Honeypot to it.

  • Spending Reserve (as ETH) at 20%. Reasoning: going with a simplified Honeypot Strategy resulted in cutting out some of the suggestions Bears had made. A 20% Spending Reserve gives Bears the chance to submit proposals to allocate a percentage of the Spending Reserve into other areas they are adamant about. In addition, holding Ethereum provides us a liquid reserve to pick up investments when we are in a healthy market pullback.

The Pie Chart:

Closing Remarks

I know we are all anxious to get this Honeypot Strategy finalized. However, it is important that we formulate a sound strategy first. I think we are very close, if not already there, with a Honeypot Strategy we can agree on.

I think taking a simplified approach makes a lot of sense. It allows us to start simple and increase the complexity as we go. We can learn from our investment outcomes and adjust it accordingly. If not for nothing, a simple Honeypot Strategy should help us all focus a little better on the main objective here: putting the Honeypot to work.

I would like to finish this off with a poll. So, please take a moment and vote. Also, drop some feedback below. I look forward to reading what everyone thinks of my simpler Honeypot Strategy.

Thanks for taking the time to read over my proposal.

Cheers,
aBinaryMind

  • I prefer this simpler strategy, let’s move on to a BIP proposal.
  • I prefer your previous strategy, let’s move that on to a BIP proposal.
  • I don’t like either strategy.

0 voters

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This is really fantastic @aBinaryMind! Nice work! I agree that a simpler approach is better, and I enjoy the way you’ve worked through this in good detail. This ‘simpler’ plan can add a little flexibility in the resource allocation, and give the various committees some movement.

My only comment, would be the rather large jump in the allocation for ‘Metaverse Content’; 30% here, and the largest proposed allocation… This is double what was initially proposed by @OverAnalyser at 15%.

I fully support having exposure to the Metaverse; either buying land, MVI tokens, or both, however I’m not certain this should be our largest allocation. I understand your methods in making the adjustments and looking at sentiments, so I’m just bringing this up as a point to be aware of.

I’m open to it being 30%, just voicing my initial thoughts here for bear discussions :slight_smile:

Perhaps, reducing the Metaverse to 25%, and increasing the DeFi allocation to 25% - balancing these two allocations would be an option?

So in total; 30% NFTs - 25% DeFi - 25% Metaverse - 20% Reserve

Love it! Bears smort! Bears strong!! :hearts: :bear:

Really appreciate all the effort that has gone into this @aBinaryMind its really above and beyond.

Personally I think I am still more aligned with the original proposal made by @OverAnalyser. I like the idea of having a chunk of stETH which really acts as the main reserve fund - I’m not aware of any reason not to do this and then have a much smaller percentage of ETH.

I’m also not to keen on the community proposal nft allocation. Do we have some idea of what that would look like? I feel it would be both tiresome and ineffective way to buy nfts. Would we have to propose and vote on every purchase and then also sale, potentially multiple times until its actually sold? Maybe I have miss understood and there is a better plan?

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I completely understand the uncertainty with having a large amount of the Honeypot allocated in the Metaverse. My reasoning on this is really for two reasons: I believe heavily in the Metaverse and the community feedback on @OverAnalyser proposal, along with some of the feedback on my other Honeypot Strategy, suggested a large allocation in the Metaverse was desired.

With that being said, I am not opposed to bringing this down 5% and sticking it in DeFi Content. I would be interested in what other Bears have to say.

Thanks for the feedback!

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You bring up some fair points.

To you liking the original proposal by @OverAnalyser: that is quite alright. I am just trying to keep the ball rolling here on this and proposing alternatives that people might take a liking to.

To your comment on stETH: wouldn’t this fall under DeFi Content? This area is not reserved for just coins but for all things DeFi. The Spending Reserve is just money to keep on the side to take advantage of dips or allocate towards other ideas.

The Community Proposal would need more definition. I envision a committee that handles all NFT investments internally (just to help speed things along a bit). These members would be appointed by the community themselves. Again, we would still need to define all that but the point is that the community members should be given the power to propose NFTs. There are lots of people well versed in NFTs (some even in our community, I am sure).

Thanks for taking the time to drop some feedback.

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Thanks again for the reply. Your clarification about it being a commitee rather than commnunity vote helps me get to grips with it.

What is the benefit of not having the majority of the reserve eth in stEth?

To be honest, I think this one is debatable. I like the idea of having just good old fashion ETH that is not currently staked to be used to buy dips or allocate to other ideas that Bears propose. It is just a pool we, as a community, can pull from whenever we need to for whatever we vote on.

Maybe clarification on how stETH is similar to (or exactly the same as) ETH would help me see a clearer picture.

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Yeah maybe it is a bit in the detail for how we manage the reserve. My (probably simplified) understanding is that we can mint/burn stETH as we choose meaning that our reserve can be working but then should we wish to reallocate we just burn the stETH for ETH and carry on.

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I agree with @Hardly that 30% feels like too much for metaverse vs the basics, I agree that claiming space early in that space is important but I am concerned that putting too much weight on long term holdings might not leave enough in the pot to cover near term budgetary needs. For example say we wanted to pay for some billboard, other promotional activities, expansions, or something like funding/taking over other NFT brands as suggested in the discord today, that would have to come out the spending reserve I assume which may get burned up too quickly. I would suggest balancing this more evenly and perhaps even adding a separate allocation for necessary spending vs an emergency funds so that we don’t get backed into a corner and are forced to liquidate something intended be held as an asset for the long haul. Perhaps we also hold those emergency funds in BTC to satisfy some other bears suggestions to simply hold BTC with a tiny portion as a hedge again a drastic change in ETH network.

Im all for KISS but I’m just trying to understand where normal operating expenses will come out of in the future, like 10-20 years from now where the domain and server fees for the site come from in, perhaps this is something already figured out by the core team but just want to make sure it’s considered in the overall plan for the DAO funds.

Overall, I think this is heading in the right direction and would not be upset if this passed. I think it’s great that this will help people in the community gain access to some assets that have been priced out of the average bear’s budget, but I think it should be done in a way that does not stretch the DAO funds too thin and incidentally puts us in a bad place if the market cools down or something unexpected happens.

Appreciate all the effort and thoughtfulness being put into this proposal and ultimately I have faith everyone’s feedback will be captured and we’ll be able to move forward with an agreeable budget soon.

This is is such a rockstar community and I’m excited to be a part of it.

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Top work again Ser!

I know I was in early suggesting we simplify to fewer pots but…

I feel losing the partnerships allocation is not the way to go, there is so much potential upside to working with the wider crypto/NFT community.

I think we could use 2.5 - 5% from 2 or 3 allocations to give partnerships a 10% allocation.

That being said your proposal is close enough to get my vote and things moving along.

Again, thanks for your time and effort put into this. Respect.

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I agree with simpler strategy, but disagree with allocation. Metaverse is YEARS away from generating any significant revenue, and its dependence on processing power (at a time when chips are scarce) makes it non viable for most of the worlds population at the present - and for years to come. Metaverse investment should be no more that 5%, while NFTs should make up the bulk of our efforts - as they are essentially eth accelerators. Investing in blue chip NFT’s with 50% of the portfolio will be a huge benefit.

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If this is indeed how it does work, than I would agree that not as much is needed in the Spending Reserve. I would still recommend that the Spending Reserve holds at a small allocation, maybe 10%. I still like the idea of using the Spending Reserve for new areas of allocation that Bears propose, such as collaboration ideas, NFTX Index, Floor Sweeping, etc.

Hey adam. Thanks for the well thought out feedback.

We can certainly dial back the allocation amount to Metaverse Content. Again, my reasoning steams from the potential I see in the space. I understand though if others are not as bullish and wish to allocate less. I certainly understand your concerns.

Please keep a couple things in mind:

  1. The Honeypot will generate profits for us, once we put it to work. DeFi Content should give us a steady return of ETH if we choose to stake (which I would recommend). In addition, rebalancing will be needed from time to time to keep the pots at their proposed allocation percentages. This is another part of the strategy that needs to be considered. Rebalancing of those pots could be used to fund a operating expenses account. For that matter, it can be used to fund whatever type of account we as a community vote for.

  2. Worrying about 10-20 years from now is great but this strategy is for the present. I am proposing this Honeypot Strategy to simply get us started. Also, the Honeypot Strategy today will look much different in a year from now, let alone 10 to 20 years from now. We will adapt to the ever changing crypto space to ensure we capture exposure to whatever we vote on as a community. Honeypot Strategy alterations will be proposed and voted on.

I am glad you can get behind this enough to be happy if this were to pass. Depending on others voiced opinions here, I could decrease the Metaverse Content. Maybe I will throw a poll up on this shortly.

Thanks again for the feedback. We do have an excellent community here :grinning:

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Thank you fellow Bear!

Another part of this strategy that has not been considered is what to do when the pot allocation percentages grow beyond what is proposed. Rebalancing of those pots could be used to fund a collaborations account. It could also be used to fund an operations account, such as what I suggested to @adam.

I see value in collaborations and agree that the Honeypot needs some allocation there. I thought once we put the Honeypot to work for a few months, we can rebalance and talk about what funding is needed next. I also wouldn’t disagree with shifting 10% from Metaverse Content to a Collaborations pot.

Glad to hear you can get behind this. Thanks for being active and providing the valuable feedback.

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I would have to respectfully disagree with this. I don’t think the Metaverse is years away from generating significant revenue. People are already making money in the Metaverse by simply buying, holding, and flipping land, playing games that generate revenue, and simply holding Metaverse coins. Games like Axie Infinity, in my opinion, are going to flood the market. If anything, the Metaverse is going to be magnitudes larger years from now than it is today.

Having 50% of our Honeypot in anything is a bad idea. You are proposing blue chip NFTs. Our portfolio than would heavily track the NFT market. In the event of a NFT market downturn, our Honeypot would fall with it. I wouldn’t put any more than 30% into any one pot to help mitigate risk.

Appreciate the feedback all the same!

This is all great, big respect for all the opinions and analysis here bears.

There seems to be general agreement on a few basic principles of the honeypot, and some possible merging of @OverAnalyser’s initial proposal, and @aBinaryMind’s one here.

Just to link the other proposal, here are some of the early suggestions in OA’s breakdown:

So if we simplify and group allocations up to four main areas, I think they could almost line up with the proposal above, give or take…

To OVER simplify - I’m seeing a basic quartering the pot… to each area →

  1. Income Generating ETH / StETH / General Spending Reserve
  2. Other DeFi tokens / Partner Projects / ?
  3. NFT stuff
  4. Metaverse stuff

On the assumptions that we can actually use the stETH for DAO activities and new proposals as the spending reserve, and just pull it out as we need it (perhaps keep a small % of that allocation kept in cold ETH anyway). And that we might adjust these percentages a touch according to our ongoing priorities… (i.e. I’d personally probably bump the ETH allocation up to 30%, and the Metaverse or alt DeFi tokens down 2.5% each, or 5%). This would give us more liquid ETH to spend on future initiatives as they come up…

Are there any other main areas / allocations we need to include? Are these four divisions too simplistic, or do we need to be more explicit?

This is just my buzzed over simplification. So no need to hang on to these suggestions, just trying to see an overall picture, give or take a few %

PS. While I’m at it… I think we should vote these committees into existence one at a time by BB wide vote. I think there is agreement that at least 20% of the Honeypot should go into DeFi activities… We can probably get that vote going on soon and start allocating some DeFi strategies… My opinion would be a committee of 10 bears get elected to manange the DeFi positions… Then we can set-up and vote in the remaining committees as and when there is consensus…

Let me know bears!
Peace!

:mushroom: :earth_africa:

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Also I think $ETH will increase in value just by holding it! I don’t think we need to risk a great amount t if capital in possible risky projects. We are in a bull market after all. Staking $ETH is also a great idea. However, I do like both of your proposals and I think diversification us key. Thank you for all of the effort you put into it!

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This has been a very interesting strategy to see develop from start to finish. I really appreciate how the strategy has matured through community engagement and dialogue.

There is a time for simplicity; initial action, ability to find common ground in broad principals, etc. There is also a time for complexity; more nuanced structure, implementing checks and balances, focusing into more specific strategies, etc. I believe recognizing how to balance the two will be very important moving forward and I applaud that we as a community had the self awareness to tailor this proposal accordingly.

I will vote to support this and personally thank aBinaryMind and everyone for everyone who contributed to the dialogue that brought us here.

Hi Hardly,

I think you are pretty spot on with the pots the Bears want the Treasury to allocate to. We collectively want exposure to DeFi, NFTs, Metaverse, and reserve some for when new initiatives come to mind. This actually makes a lot of sense as Defi, NFTs, and the Metaverse are the three main pillars in crypto today. To have exposure in each is a no brainer.

Yes, we certainly can put the Honeypot into other initiatives outside of the crypto space, such as marketing, merch, and whatever else we can think of. Keep in mind, this Honeypot Strategy is just to get us started. It will be restructured at some point (3 to 6 months from now or maybe sooner) to capitalize on the trends within the space.

I have been adamant on the committees and the need for them. I am currently working with a group to help structure what this might look like.

As always, the involvement and feedback is much appreciated :pray:.

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Thank you for your feedback :grinning:

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