Prologue

You wake up to a new notification on your Discord app. It's from Miles. The message reads: “Hello everyone, today I don’t have good news. Unfortunately, due to challenging market conditions (even though crypto is near its all-time high), we've run out of funds and can't continue development. It's been a wild ride, and we've built lasting relationships. I appreciate everyone's efforts and trust. This will be our last announcement. Hope to see you around.” You read the message, unsure of what to do, realizing it's already too late. The money is gone.

Background

Cashflow history record

Initial Spending

When DG launched almost five years ago, it was a small team of dreamers who raised $100k by selling 10% of the token supply. With this modest amount, they pursued the vision of creating the first on-chain metaverse casino.

Post-Fundraising Era

In 2021, DG raised over $15M from various venture capitals who purchased tokens. These tokens came from the "ecosystem allocation" outlined in the initial white paper. Though the white paper specified that these tokens should have been vested linearly into the treasury, the DAO did not have a say in how these funds were managed.
The funds quickly ran out, and the team began relying on the money in the treasury, primarily from sales of play-to-earn items. This is the funding still used to support the team each month, as reflected in the reports on Discord.

Current Spending

Today, the DAO is funding the team with over $210k per month. This amount covers salaries only, totaling $2,520,000 per year.
The current financial situation of the DAO is as follows:

Asset type	Amount held	Current price	Total
WBTC	22.43	103,444	2,320,248
stETH	606.7	3,320	2,014,244
Total			4,334,492
Liabilities	-1,882,000
Net result			2,452,492
Current monthly expenses	210,000
Months left of runway	11.67

The DAO's liabilities come from adopting Michael Saylor's BTC strategy, using assets as collateral to avoid selling crypto holdings. This has provided a strong return, extending the runway by four months and adding nearly $800,000. It’s crucial to maintain healthy leverage to navigate crypto volatility and prevent a margin call from a 30% price swing that could lead to liquidation.

The DAO can only fund 11 more months of expenses at the current rate. The leverage ratio is 43%, and while not yet risky, two more months at this pace will put the DAO in a precarious position.

Product Narratives Over Time

Over the past five years, the project has undergone several pivots and shifts in its narrative. It started as an on-chain metaverse casino within Decentraland.
After it was revealed that the Costa Rica license wasn't sufficient to operate these games, the team proposed shutting down the casino to focus on the next phase: the play-to-earn narrative.

During the play-to-earn era, the team developed an engaging product, but the tokenomics were unsustainable. Users engaged for payment, not the experience, leading to the collapse of the ICE token and the shift to the arcade era.

During the arcade era, the team sought ways to offer a product to the U.S. audience that didn't require a gambling license. While the product looked promising, it faced significant challenges in terms of market accessibility. From the player's perspective, they had to navigate a complex series of steps to join a game and collect a prize. New users were introduced to unfamiliar concepts in the poker community, such as "wearables," "shine," and "badges." This led to the transition to the current era: the BAG Win era.

BAG Win now targets a global audience with a beautiful product that works on both desktop and mobile (including Telegram). It is multilingual, doesn't require crypto knowledge to sign up, and offers multiple payment gateways for deposits—addressing key shortcomings of previous products.
This is a major accomplishment. If executed well, the DAO can generate substantial revenue, as seen with other casinos like Roobet and Stake. BAG needed a unique product to differentiate itself, so the focus shifted to the innovative metaverse concept: BAG City.
Based on what we've seen so far, BAG City shows great potential. Although acquiring users in the metaverse is more expensive than attracting players to a 2D casino, it has the potential to become a new way for people to gamble in a social, immersive environment—something that will be discussed and evolve over time.

In this era, we can confidently say that the DAO now has a product ready to onboard the masses. It competes with the best casinos out there and offers a speculative, innovative vision of what the future of gambling could look like.

The BAG Token

The DAO token has undergone two rebrandings, from DG to "Old DG" with a 1:1000 split, and then merged with ICE tokens to become the current BAG token. Despite the bull market and BTC’s all-time high, the BAG token has been on a downtrend for over three years.
It is crucial for the DAO to identify the causes of this decline to restore investor confidence. The token is central to the project, being the first decentralized, community-owned casino and a funding method for operations. With the token price at an all-time low, the DAO must rely on casino revenue for financing.
Many projects with weak products see their tokens skyrocket due to strong narratives and speculation. The team has tried to generate similar momentum for BAG through the metaverse angle, but results have been limited.
A key challenge for BAG is its classification as a gambling-related token, which causes centralized exchanges like Binance and Coinbase to reject it. Most tokens with significant price increases are listed on these exchanges, where liquidity is highest. Decentralized exchanges only account for a small portion of liquidity.
While a token’s price may rise, liquidity is just as important. If a token with a $40B market cap has only $10M in liquidity, it’s prone to collapse. Therefore, BAG will likely never be listed on centralized exchanges. The only path forward is for the DAO to generate real profits, buy back the token, and create scarcity. This strategy can lead to a profitable business and attract new investors, enabling the DAO to raise funds again.

Current KPIs

We can define the following KPIs to measure the company's success: daily gambling users, revenue, token price, and social engagement.
All of these KPIs have been trending downward for months. There was a brief spike in activity during the initial Blast Gold launch, but it quickly declined. As for the token price, we've already discussed its performance. In terms of social engagement, both Twitter and Discord show decreasing interaction daily.

Product Status

As previously discussed, the team has finally developed a fully functioning product that can onboard the masses. It’s performing strongly in this regard, and if growth is executed correctly, it could generate substantial profits for the DAO.

Ways of Funding

As mentioned earlier, the DAO cannot sell any BAG tokens due to the low price, so the only source of funding is through the revenue generated by its operations.

Ads Investment and ROI

Assuming a 2x return on investment (ROI) based on profits (not revenue), which would be a strong outcome for BAG, we can conclude that a $100k investment should generate a $200k return.
However, this additional expense could place significant pressure on the current budget and potentially accelerate the risk associated with the DAO's leverage.

Entering Growth Stage & Redistribution of Budget Allocation Between Development and Growth

We believe the product has entered a maturation stage and is now ready to grow. With limited financial resources, it is crucial to find a balance in executing a growth plan that expands our audience while minimizing risks. Given all the previous statements, we propose:

Proposal

Reduce overall monthly expenses to $100k. No more than $100k can be drawn from the DAO treasury each month, except for gameplay operations. This means fixed costs should not exceed $100k, and the only exception would be if the casino experiences a negative month due to player wins.
This reduction should be fully implemented by February 28, 2025.
Once BAG City is live, another proposal should be submitted to allocate $100k per month towards growth campaigns. This would bring our total monthly expenses to $200k, with $100k for fixed costs and $100k for growth initiatives.

Rationale

The background of the proposal outlines the reasons leading to this decision, but in summary: we are working with limited financial resources. We’ve finally developed a product that is accessible and enjoyable for the general public. Now, we need to grow that product. To do so, we require funds to run user acquisition campaigns.
Given our financial constraints, we must reallocate resources to free up capital for these campaigns. The goal is that the average return on investment from these campaigns will help cover our monthly fixed costs and drive growth.