[BIP-001] Investment Committee

Status: Proposed

Author(s): defijesus.eth

Discussions-to: [BIP-001] Investment Committee

Created: 17/08/2021

Implementation (optional): [Added if BIP passes] ‌

Buzzed Summary

We elect GFunk and TropoFarmer to use 50 ETH from the Honeypot to buy and sell NFTs. These two curators will be paid via a performance fee - every time they sell a JPEG and generate profit to the Honeypot, they collect 10% of that profit each. We will reinvest all the profits back into this program.

Abstract

We put our capital to work using an elected committee and share a % of the profits with that committee.

Unfair advantage #1: Our huge Honeypot, with 245+ ETH in our balance sheets, we immediately start to think of ways we could put that money to work.

Unfair advantage #2: GFunk and Tropofarmer - we couldn’t ask for a better duo. OG NTF people that know how hard it is to launch a great project and can easily spot one in the wild.
GFunk - Wearer of many hats, Founder @pixelvault_ @punkscomic & @MetaHero_
TropoFarmer - Illustrious NFT shitposter and flipper extraordinaire, who turned $500 into an estimated $200k in jpegs

Unfair advantage #3: The investment committee will be armed with MEV (Miner Extractable Value) technology developed by the Buzzed Bears. This will allow the committee to make moves that might be impossible otherwise.

Motivation ‌

~250 ETH is sitting idle in our wallet, let’s put it to work.

Specification Overview ‌

We fund a gnosis 3 safe with 50 ETH (~20% of our Honeypot) where both the curators will be able to make purchases from using a 2 out of 3 multisig setup including both curators and defijesus.eth (I’m included just to facilitate some technical hurdles, I won’t be interfering with the investment decisions in any way). Buying via gnosis safe might not be feasible for projects we use MEV stuff due to technical limitations.

1 JPEG = 1 Trade. We calculate profit per trade. The Buzzed Bears reserve the right to change/terminate the project to accommodate new circumstances at any time. If the curators leave and we sell the JPEG later at a profit they are still entitled to the performance fee.

Rationale ‌

We decided to bring on curators because if we, as an organisation, vote on every purchase we make we will be open to attackers frontrunning our moves. Also, some moves might have to be time sensitive, making it very cumbersome to vote on every NFT investment we make.

In order to align the incentives of the curators and the community, the curators will be paid via performance fee. They only make a profit if we make a profit. 10% for each curator is more than fair and leaves the Honeypot to get 80% of the revenue generated by this initiative.

We are only deploying 50 ETH and we can decide to end this program at any time. After showing results, we can commit to use more funds.

Copyright ‌

Copyright and related rights waived via CC0 1.

18 Likes

To be clear, is the proposal that they will receive 10% of the profits on each individual trade (assuming profitable) or at the end of the 6 week period?

I would be opposed to the first, as that could result in a situation where after 6 weeks the fund has less than 50 eth but the curators have also been able to collect performance fees.

Supportive of doing it on aggregate realized value increase at the end of 6 weeks. Depending on what they are investing in and market conditions at the end of 6 weeks may also be prudent to define the mechanism for monetizing and paying performance fees on any open positions held at the end of 6 weeks to avoid both a force sale and paying a performance fee on unrealized gains

18 Likes

100% pro what this bear said. Other than that, I am fine with the rest, GFunk is definitely top notch, doubts about Tropofarmer can be wiped easily with some good perfomance

6 Likes

I’m good with this as long as they are paid out of the portion of profit at the end . . . also, i’d like to have them look at some longer term opportunities instead of short term flips, so maybe there is a way to make this a longer term objective.

4 Likes

We should consider profit sharing based on total return. You could have multiple winning trades and still be at a loss with illiquid assets.

1 Like

Will the investments made by the curators be published so we can follow, jump in and also learn?

2 Likes

Yes the plan is to have the curators share their investment thesis after they are done buying a new asset/

6 Likes

I’m behind this, harvesting that honey though art curation, hope I can be a Curator one day.
Are we also starting to form the ideas behind how bear holders will share the revenue?

2 Likes

I agree with the others. Great idea. Support it but make it profit share at the end of the 6 week period. If they are uncomfortable with that over 6 weeks then suggest drop to 4 as the test. Trust your judgement on the curators ad I’m new to nft.

3 Likes

Have you considered buying back bears?

Got voted down, could propose again

2 Likes

I support this proposal and would vote for it

4 Likes

I like the idea, but would like to add one thing that could be a nice longterm play.

Lets say the two buy 10 NFTs (probably doesnt really matter if floor or mint). Shall we limit the amount they could sell to 8 or 9 so that the treasury keeps 1 or 2 of that NFT as a longterm play? We would have to figure out how to value these → profit calculation. But generally speaking I would like them to not only flip, but also have a longterm investment thesis, also because we are seeing that there are projects with floor that is continuously rising. Would be great to have 1 or 2 of the new BAYC, Pengus, etc.

3 Likes

I support this proposal. Only concern which has already been mentioned is the 10% profits from the trades on an individual basis, I believe it would be more beneficial for the 10% for both curators to be taken at the end of the 6 week period.

2 Likes

Could there be two strategies for this, long term holds and short term flips? Or will the curators be focused on one strategy?

But yes I fully support this proposal!

1 Like

What about having a gallery for what’s been in their wallets after a few hours of a sale?

Also, if they flip bears it might be seen as if they are taking advantage of the community.

1 Like

I think similar to most replies here I support this proposal, both the general idea and the two mentioned curators.

Curator fees without doubt should be calculated at the end each 6 week timebox.

As others have suggested I too would like to see a long term NFT investment pool, however that is not what this proposal is for and would probably be best as a seperate investment pool. I would like to hear the opinion of the curators on long term versus short term NFT investments but appreciate we need to keep this proposal focused on yay or nay to short term flipping.

Lastly, and maybe it’s just my upbringing, where I’m from all deals are haggled on, giving up 20% feels like a lot when it is the DAO taking all the financial risk :thinking: Perhaps the curators would consider 7.5% each and the DAO can vote to up this in the future when results have been shown?

2 Likes

I want to personally thank every one of you for the amazing insights shared here.

The biggest discussed topic is on how we should distribute the % of the profits. This is very nuanced topic, and I hope I can shed some light on the considerations we need to have.

Is each NFT a single trade?
If the curators buy 200 cryptopunks. Is each punk a separate trade or are they considered a single trade?
If we only pay after they have > 50 ETH at the end of the 6 weeks we are ultimately incentivizing worse, shorter-term, trades just to fit some arbitrary time-frame.
Being Non-Fungible Tokens, each individual punk should be considered a separate trade for profit calculation purposes.
This also has the benefit of allowing the curators to sell most of the 200 punks and collect the profits while keeping some long term punks to sell and collect profits later.

Do we pay after each profitable trade?
I think here we should either pick a relatively small time-frame (1 month max) or pay after each successful trade.

With this in mind I propose the following changes to the proposal.

  1. Remove the 6 week term and add a clause that we can vote to change the program at any time for any reason.
  2. 1 NFT buy/sell = 1 Trade.
  3. We pay the performance fees everytime we reach some payout threshold to reduce gas costs and overhead.
  4. The curators have to sign a message using their main wallets with a promise to never inside trade themselves or any of their peers. As we all know, this is trust based relationship, but having this signed message for transparency sake goes a long way.

I feel these changes give us (1) the best flexibility to allow curators to make the right long/short term calls, (2) more transparency to the whole process.

Stay blessed

11 Likes

Crazy idea, but hear me out.

1 Bear = 1 Vote = .0001 fractional ownership of profit share.

Profit share is accumulated as a reward for holding your bear. If you want to claim your profit share, you burn a bear to receive the ETH. The DAO can buy a % of floor priced bears to ensure it has enough ownership to prevent coordinated attacks on governance. The bears that are controlled by the DAO can also be given to “Fund Managers” like Tropo & GMoney. In my opinion, I don’t think we should be delegating performance to anyone. I believe the DAO should vote on what to purchase, and it may cut down on buying “junk” for profitability reasons. An example in my mind would be the DAO purchasing an entire Artblocks Set or Land in Axie Infinity - as these both would be long-term growth assets (AB sets like Fidenzas are solid and Axie Infinity Land will be income-generating).

Holding bears for the profit share would encourage long-term ownership and investment in the community/project. If we do use fund managers, they should rewarded with DAO-owned bears, instead of paid direct commissions - as it would be in their best interest to create the right performance for the long term health of the community.

Burning bears, while sounding radical, would continue to gamify and increase the overall value of the project. Bears become their own long-term growth assets, and a very strong secondary market would form that would further fund the DAO, strengthening the cycle.

Just spitballing.

4 Likes

I’m 100% behind the Art Blocks set idea (believe you’ve seen it but for anyone else, link to a thread https://twitter.com/Vince_Van_Dough/status/1426565982332534788) if the DAO could get a TBOA membership we would be set.
I haven’t ever thought about much gamification concepts so no comment in that department. Definitely something to consider, normally games that can create a efficient/productive economy = hugely successful.

3 Likes