[BIP-003] Our Honeypot Strategy - A Simplistic Foundation

Status: Proposed
Author: aBinaryMind
Discussions-to: Alternative Honeypot Strategy - A Simplified Approach
Created: September 7, 2021

Buzzed Summary
This BIP Proposal is suggesting an 80% Honeypot allocation into the three pillars of the crypto space: NFTs, DeFi, and the Metaverse. The remaining 20% of the Honeypot is kept as cold ETH in our Spending Reserve. Our Honeypot Strategy is subject to quarterly reviews, with the first review being held in Q1 2022. The specific details of this strategy, in addition to allocation percentages, are provided herein.

Abstract
Upon community approval, the following Honeypot allocations will take effect:

At the start of Q1 2022, a review for on our Honeypot Strategy will be held. The exact details of what this review entails is beyond the scope of this BIP Proposal. More than likely, a Treasury Committee will be responsible for this review. The point being is that this Honeypot Strategy will be reviewed and adapted, if need be, to be sure it is capitalizing on market trends within the crypto space and reflecting community sentiment.

Motivation
Currently, our Honeypot lacks a calculated investment strategy. With no strategy in place, our Honeypot portfolio could fall victim to capital losses, suffer from poor performance, miss out on maximizing upside, and/or lack any kind of hedge against market downturns. Reasons for this: over allocation into any one area, under allocation into any one area, and lack of diversification. Furthermore, a lack of strategy is a lack of focus for the community.

Specification Overview
By limiting allocation amounts into the three pinnacles of the crypto space - NFTs, DeFi, and the Metaverse - we prevent ourselves from falling into the trap of over and under allocation. Likewise, by investing the Honeypot into these three areas, we are practicing a form of diversification. The performance of our Honeypot portfolio, as a result of having exposure in these three pillars collectively, will outperform any single one of these pillars separately. The reason being is simple: the sentiment in these areas shifts among the crypto community. Each one of these areas takes turns getting hot and thus should maximize our upside. Keeping 20% of our Honeypot in a Spending Reserve gives us ample opportunity to buy dips, help stabilize against NFT, DeFi, or Metaverse volatility, and allow us to fund future initiatives.

Rationale
This BIP Proposal is a culmination of sentiment among members in the form of feedback, in addition to my own opinion backed by my own investing experience and knowledge. A Honeypot Strategy is not a luxury we can afford to go without. It is a necessity. A well calculated Honeypot Strategy should maximize upside, limit risk via diversification, and provide the community some focus by setting allocation limits. The community voiced their opinion for a need of such a strategy while remaining simple. I present [BIP-003] Our Honeypot Strategy - A Simplistic Foundation.

Copyright
Copyright and related rights waived via CC0.

9 Likes

Great work! Really impressed with how this has developed.

2 Likes

This is a well-thought plan. Great job!

3 Likes

All assets that decrease risk vs the crypto market have been left out. This is a play on the market, not a way to preserve and grow the brunt of the treasury as safely as possible. Isn’t there 20% allocated for more risky endeavors already?

I believe the goal is to beat eth (baseline) hence that being the reserve. what exactly are you asking? what reserves would you prefer?

Beating ETH should include hedging against downturns. I was hoping to see stablecoins put to productive use.

2 Likes

This could still be put in place. Stablecoins being put to productive use could fall under DeFi Content. You could propose allocating a percentage of the 20% DeFi Content pie slice into something like this. Doesn’t fall under DeFi? You could also propose hedging against market downturns using stablecoins by requesting funds from the Spending Reserve. Between the two pie slices, you have 40% of the Honeypot pie to work with.

Keep in mind, this is just a starting strategy for our Honeypot. It will adapt over time. We also will continue to receive ETH in the form of royalty payouts from OS that will drip down into the Spending Reserve. Likewise, each pie slice will need rebalanced as the gains will drive each slice above its defined percentage allocation. This rebalancing could take the excess and dump it into a stablecoin pot.

There are options here. Thanks for the feedback.

4 Likes

Good points, thanks for clarifying. I thought you were buying defi tokens to hold… I can’t promise that I’ll throw something together though.

You’re welcome. I suppose I could of been a little more clear in that. Essentially this Honeypot Strategy is just generic allocations into the three pillars of the space. How we fill those pie slices is left up to the community via proposal and vote.

Hopefully that makes more sense.

2 Likes

I’m a huge fan of this strategy and the diversification and flexibility it allows. Thanks for all your hard work in pitching proposals and taking on board the communities feedback aBinaryMind!

1 Like

Glad to hear you are fan of this strategy. Happy to help :slight_smile:

This looks like a great starting point for the BB Dao with enough flexibilty to adapt with the market. Well done to everyone involved, LFG bears!

3 Likes

Now that this has passed. lets drill it down a bit section by section. i know we have already moved on some areas. but we should still do this IMO. I will spend some time shortly.