BAG DAO Adopts Michael Saylor's Strategy

Background

Michael Saylor, CEO of MicroStrategy, introduced a financial strategy in 2020 where the company allocated all of their income to regularly buy Bitcoin. Not only did they allocate their income, but they also leveraged their assets by borrowing against their holdings using various mechanisms. The goal was to increase the amount of Bitcoin per share, with a vision that fiat currencies will eventually suffer from a significant loss of purchasing power. This strategy has been highly successful for MicroStrategy, shifting their business core to the point where they have effectively become a Bitcoin company. MicroStrategy has outperformed the entire stock market and Bitcoin itself. The only other company to adopt this strategy, Metaplanet, a Japanese company, has seen a substantial increase in its valuation since doing so.

As of today, US interest rates remain high, and inflation is persistent, preventing the Federal Reserve from lowering rates. Lowering rates would flood the markets with money, worsening inflation. Eventually, rates must decrease to prevent other markets, such as real estate, from breaking. At that point, those holding non-fixed fiat assets will see an appreciation in their assets, although it is essentially a devaluation of the underlying currency.

Proposal

We propose that BAG adopts Michael Saylor's strategy. To implement this, we will use 100% of the weekly profits from project operations to buy WBTC. This acquired WBTC will be placed as collateral on AAVE (or another lending platform at the team's discretion), and 30% of that value will be borrowed in the form of USDT to acquire BAG tokens on the open market.

Additionally, we will place 30% of our current staked ETH tokens (stETH) as collateral on the lending platform to maintain a very healthy risk factor. Even without this, we would have a good health factor with a ratio of 1 to 3 every week (for every 100 supplied, 30 is borrowed), providing significant margin. To further enhance safety, we will place 30% of our current staked ETH tokens as collateral.

Furthermore, we will borrow an initial amount of 100k USDT from AAVE and use it to acquire BAG on the open market, intending to increase the amount of ETH/BTC in the treasury per BAG token in circulation. This will occur over 15 days after this proposal passes.

The team will have discretion over when to perform the weekly purchases of BAG, which can be done on any day of the week but must be completed before the week ends. This flexibility helps prevent front-running of the purchases.

Finally, the treasury assets are now mostly on ETH & BTC, at this point, these should be sold to continue paying for the team operations. Instead of selling these assets, these should be placed as collateral on aave and the required funds in the form of USDT should be borrowed to pay for operating expenses. Include a disclosure of this borrowings on the weekly announcements. Give discretion to the team to increase the amount of collateral on aave upon these borrowings to always keep a healthy risk factor.

Rationale

Long-Term Value Appreciation: By adopting Michael Saylor's strategy, BAG DAO can potentially benefit from the long-term appreciation of Bitcoin. Historically, Bitcoin has shown significant growth and resilience, making it an attractive store of value. By converting our weekly profits into WBTC, we align with a proven strategy that has outperformed traditional investment avenues.

Hedge Against Inflation: With current economic conditions characterized by high inflation and uncertain monetary policies, holding assets like Bitcoin provides a hedge against the devaluation of fiat currencies. This strategy ensures that our DAO's treasury retains its purchasing power over time, safeguarding the value of our members' investments.

Increased Asset Base: Leveraging our WBTC holdings to borrow USDT and acquire BAG tokens allows us to grow our asset base without diluting our existing token supply. This approach increases the amount of ETH and BTC in our treasury per BAG token, enhancing the overall value and stability of the DAO.

Strategic Flexibility: By placing a portion of our staked ETH (stETH) as collateral, we maintain a healthy risk factor while ensuring liquidity for operational needs. This strategic flexibility allows us to adapt to market conditions and manage risks effectively, ensuring the long-term sustainability of our DAO.

Alignment with Successful Models: Following the footsteps of successful companies like MicroStrategy and Metaplanet provides a tested blueprint for financial growth and stability. By leveraging their proven strategies, BAG DAO can replicate their success, ensuring that we remain competitive and innovative in the rapidly evolving blockchain space.