Locus.finance Fundraising Proposal

[Intro]

This document provides information about the funding of the Locus DAO protocol and decisions related to project financing. The presented proposal is built based on the recently published Locus Litepaper, you can read additional details on fundraising, Locus plans and the roadmap at the link: https://drive.google.com/file/d/1A8FLWmr6ipZg0mPCe-tKfxhyvWuga2gw/view

We also suggest a Google Doc version of the submitted fundraising proposal for convenient reading https://docs.google.com/document/d/1dVjE6v7w8ZvSt8h1nECW59taNOEz1BZLRkvbmjqoxRc/edit?usp=sharing

[Current Locus budget]

Locus DAO currently has about $900,000 of assets in the disposition on three active addresses:

• Locus treasury - $700k, address: 0xf793859ec763477ee2f282186ebb2fb2e6a71bba. These are the funds that were withdrawn from the Midas liquidity pool.
• Unwithdrawn BUSD funds left on the Midas platform - $207k, address: 0xf41924c143124D12b040C0439D1bf41b1C9F55bb.
• Fees collected from Locus Vaults - $9k, address: 0xf4bec3e032590347fc36ad40152c7155f8361d39.

So the total value of the Locus treasury is approximately $900k. These funds belong to the DAO i.e. the current holders of the Midas token and subsequently the holders of the Locus token.

• 400.000$ of these funds will be utilized to provide initial trading liquidity to the Locus token so that the token can be traded.
• 250.000$ of these funds will be reserved for the Insurance fund. These funds will be held in reserve to guarantee protection from DeFi hacks and will increase the overall survivability of the protocol.

Thus out of a total fund of 900,000$ Locus DAO currently possesses $250k of liquid funds not reserved for the liquidity pools of the Locus token and Insurance.

[Development Costs]

The current burn rate for developing the Locus protocol is $60k monthly, the costs are split as follows:

• Three Smart contract developers: $23k;
• One Front-end and two Back-end developers: $14k;
• Product manager, Product Designer, Management: $12k;
• Marketing Manager, Content and Support Team: $6k (not including marketing budget);
• DeFi analyst and Operations: $5k.

The team is assembled to achieve Locus' long-term goals described in detail in the roadmap and Locus litepaper v1.

The burn rate is a variable based on the phase of the project. The Locus team will manage the costs in the optimal way to reach the goals of the protocol based on the market and product phase. The additional recurrent costs are Audits - $15-30k per release of the new code and Marketing budgets (influencers, partnerships, campaigns, PR).

Based on the amount of liquid funds left in the treasury and the current burn rate Locus DAO can finance development for four months until the end of February 2024.

Reducing the team's staff at this stage will affect the speed of project development, which may result in not meeting the project's long-term goals, however, this may be revised when the active phase of project development is completed.

[Protocol Financial Streams]

The main revenue streams of the protocol are:

• Locus Vault Fees. 50% of the Fees earned from Locus Vaults is collected in Locu Treasury. The remaining 50% is paid to the holders of the Locus token. Based on the fee model, Locus DAO earns 1.5%-2.2% of the Locus TVL annually. It means that $ 50,000,000 in Locus TVL will generate $ 45,833 for the Locus Treasury.
• Revenue earned from the Locus Discount programme. The Locus Discount programme is a Limited offering of purchasing Locus tokens from the treasury with a discount. This is the efficient way to capture USD value from the inflow of new users and growth of TVL since the demand for Locus tokens is increased in those phases. Target discount can vary from 33% to 25%, meaning that treasury receives $0.66-$0.77 from the selling of $1 worth of Locus tokens. DAO decides the period and amount of tokens to be sold to make sure this process serves DAO.

[Locus Long term goals]

The goal of the Locus team is to acquire $75 million in Total Value Locked, which will cover the recurrent development costs. Achieving this goal will allow the Locus team to operate and for Locus token holders, i.e. former Midas holders, to get Locus vault fees for many years to come.

Our market estimation is that this moment should come in 12-24 months, during which Locus needs to launch new yield products, update current vaults, and build marketing networks. To build and market the product in 12 months, while keeping liquidity and insurance levels, Locus protocol requires resources.

[Resources needed to achieve Locus DAO long-term goals]

The Locus DAO needs to fund development for at least an extra 12 months to achieve its long-term goals. The Locus Treasury currently has funds to finance 4 months of development, so the funds required to cover an additional 8 months based on current expenses is $480,000. Additionally, those funds will allow for the launch of marketing campaigns, which will scale the product to retail who seek crypto yield.

The only time to launch the fundraising process is before the launch of Locus token trading. In the currently offered tokenomics, 450,000 Locus tokens are dedicated to fundraising, which is 10% of the starting Locus supply. It is enough to reach the goal.

[Fundraising options]

The last price at which the Midas token has been trading is $1.3 so the price of the Locus token at the start will be equal to the last Midas price. The presale price for fundraising will be lower than the starting price and can be reduced up to $1.1. Fundraising should be done through stLocus to apply the same rules to everyone.

Three types of fundraising are available for us:

• Community presale, restricted to Midas holders at a fixed price. In this case, DAO whitelists only users with the Midas token on the balance and allows them to purchase Locus with a discount. It concentrates the power further through Midas holders, making them the only group that holds the token.
• Community sale, not restricted to anyone. Anyone can participate in community presale, which increases the chances of raising funds. It can be used as a marketing event, leveraged by influencers and DeFi communities. Generally, easier to execute.
• Community sale on Arbitrum Launchpad, such as Camelot.exchange. It's a great way to leverage the audience of the Arbitrum to set up a launchpad so it acts like a marketing tool. DAO can set up a liquidity pool on Camelot.exchange right away and funnel raised funds there, reducing the costs for liquidity provision. Also, Camelot.exchange allows for the incentivisation of liquidity pairs with Locus, which can be useful to grow liquidity for the token. But Launchpad will take its fee, which can be up to 10% of raised funds.

In case of deciding not to conduct a community presale, the development team will continue to build products and will find ways to reduce costs. The lack of funds problem will be postponed until the start of the next year and can be solved through:

• Locus token Discount programme;
• Reducing revenue share percentage;
• Adjusting roadmap, development costs and marketing resources;
• Reducing insurance funds;
• Reducing protocol-owned liquidity of Locus token and launching a campaign for incentivisation of liquidity by market players.

Based on the suggested fund allocation to liquidity and insurance, DAO has funds for four months of development starting in November. The Locus team is suggesting conducting a community presale to raise $ 480,000 which is enough to cover 12 months of development and launch marketing campaigns. In case of not making community presale, DAO has various ways to fund further development at the expense of reducing liquidity, and the development team can reduce costs upon finalizing the suggested roadmap and building the fundament for Locus growth.

[Summary]

Locus DAO currently has about $900,000 of assets in the disposition. These funds belong to the DAO i.e. the current holders of the Midas token and subsequently the holders of the Locus token. Out of a total fund of 900,000$ Locus DAO currently possesses $250k of liquid funds that are not reserved for the liquidity pools of the Locus token and Insurance.

The current burn rate for developing the Locus protocol is $60k monthly without regard to the additional recurrent costs like Audits and Marketing budgets (influencers, partnerships, campaigns, PR). Based on the amount of liquid funds left in the treasury and the current burn rate Locus DAO can finance development for four months until the end of February 2024.

The main revenue streams of the protocol are Locus Vault Fees and Revenue earned from the Locus Discount programme.

The goal of the Locus team is to acquire $75 million in Total Value Locked, which will cover the recurrent development costs. Achieving this goal will allow the Locus team to operate and for Locus token holders, i.e. former Midas holders, to get Locus vault fees for many years to come.

The Locus DAO needs to fund development for at least an extra 12 months to achieve its long-term goals. The Locus Treasury currently has funds to finance 4 months of development at current development costs, so the funds required to cover an additional 8 months based on current expenses is $480,000. The team is assembled to achieve Locus' long-term goals described in detail in the roadmap and Locus litepaper v1.

In case of rejection of the proposal for community presale, the development team will continue to build products and will find ways to reduce costs. The lack of funds problem will be postponed until the start of the next year and can be solved through:

• Increasing the number of tokens sold at the Locus token Discount programme;
• Reducing revenue share percentage that Locus token holders will be receiving;
• Adjusting roadmap, development costs and marketing resources;
• Reducing insurance funds;
• Reducing DAO-owned liquidity of Locus token and launching a campaign for incentivisation of liquidity by market players.

[Voting Question]

The question of this vote is to determine whether the Locus team should conduct fundraising in the community or should continue to operate with the funds that are left in the treasury.

Options for voting:

• Vote for presale. Initiate the execution of community presale to increase the runaway of Locus development. In this case, the locus team will have enough funds to operate for a further 12 months, to develop new vaults and functionality according to the roadmap and Locus litepaper v1.

• Vote against presale. Decline the community presale, and finance development from funds left in Locus DAO treasury. The development team will continue to build products and will find ways to reduce costs. The lack of funds problem will be postponed until the start of the next year and can be solved through: the Locus token Discount programme; Reducing revenue share percentage; Adjusting roadmap development costs and marketing resources; Reducing insurance funds; Reducing protocol-owned liquidity of Locus token and launch a campaign for incentivisation of liquidity by market players.

• Abstain.