Authors

ChopChop

Glossary

Floor priced NFT Vaults

Summary

This proposal is intended to sell off all non-floor NFT assets held by NFTX v1 vaults for ETH and/or stable coins. This will act as a buyout mechanism for v1 vault token holders. As a secondary effect, this helps rebalance the DAO treasury to be (a bit) less exposed to the NFT markets, as the NFTX DAO holds a majority of these v1 vault tokens on its balance sheet.

Rationale

With NFTX v2 being introduced in June, the DAO is currently migrating DAO-owned liquidity from v1 vaults towards v2 vaults, while collapsing some close-to-equal v1 vaults such as PUNK-BASIC, PUNK-FEMALE and PUNK-ATTR-4 into one v2 vault, namely $PUNK. This is done to further optimize the use of v2 vaults, both bringing deeper liquidity to AMM pools causing less slippage, as well as offering a broader inventory for retail users that want to buy a specific NFT from a vault.

With this said, there are a couple v1 genesis vaults that hold non-floor priced NFT assets as collateral (NFTs which are considered of higher value and/or rarity). As NFTX isn’t optimized for fractionalizing higher-value assets due to not having a protocol vault buyout mechanism, selling off collateral and distributing rewards to token holders looks like a valid alternative to unwind these vaults.

Many of the vault tokens are still 100% owned by the DAO (i.e. Axie Mystics) due to never being listed on an AMM, while some have been distributed more widely (i.e. PUNK-ZOMBIE). Thus in many of the proposed selling/auctioning of NFTs, this means that the DAO would be liquidating non-floor assets on its’ balance sheet in return for either ETH and DAI/USDC. In other scenarios, such as the PUNK-ZOMBIE vault, it’d act as both a buyout mechanism for retail token holders, as well as diversification for DAO treasury.

The full list of vaults applying to this draft proposal are:

• PUNK-ATTR-5
• PUNK-ZOMBIE
• AXIE-ORIGIN
• AXIE-MYSTIC-1
• AXIE-MYSTIC-2
• AVASTR-RANK-60
• KITTY-FOUNDER
• JOY

If this proposal passes, we will redeem collateral from the above listed v1 genesis vaults through an Aragon NFTX DAO vote, and offer them on their respective marketplaces at predefined rates (Average going rate of rarity, reweight & drop by 5% if not sold in a month).

Example 1 (Tokens distributed over multiple holders): A vault that holds 2 high-value NFTs has its tokens distributed to 20 owners, all owning 5% of the supply. The 2 NFTs collectively generate 400 ETH worth of sales. After both NFTs are sold, the 400 ETH gets deposited in a claim contract. Owning 5% of the vault tokens allows you to claim 20 ETH from the contract (5% of 400 ETH), burning your vault tokens in the process. This contract remains in claim mode forever, causing the vault tokens to never be unbacked by sales generated.

Example 2 (Tokens held by one owner, i.e. the DAO): A vault that holds 2 high-value NFTs has its tokens distributed to 1 owner. The owner redeems all NFTs from the vault and lists them for sale. Generated sales are collected by the owner and diversified into other currencies (i.e. USDC or DAI) after.

Effect

Opportunity

• Offers the most true-to-value buyout mechanism for current affected v1 vault token holders.
• Offers a way to diversify the NFTX DAO balance sheet to be a bit less NFT heavy, while bringing other currencies such as ETH and stable coins for extending DAO runway (Note: we would still hold a sizeable position due to floor v2 vaults as suggested here)
• May strengthen our positioning as the primary liquidity hub for floor-priced NFT assets by not holding higher valued NFTs captive in (deprecated) v1 vaults.

Risk

• Listing of assets must be spread out according to the activity of the asset listed. I.e. we cannot simultaneously list 15 Joyworld JOYS, as it will temporarily kill their market.
• In addition to the point above and suggested rates (avg going rate) may cause a potential for floor undercutting, causing the asset to not sell in a reasonable time frame.

Specifications

If this proposal would pass, this would mean that:

• PUNK-ATTR-5, PUNK-ZOMBIE, AXIE-ORIGIN, AXIE-MYSTIC-1, AXIE-MYSTIC-2, AVASTR-RANK-60, KITTY-FOUNDER and JOY vault contracts would be overridden through an Aragon vote, unlocking collateral to be listed at the average going rate, on secondary markets (such as OpenSea or LarvaLabs Marketplace).
• ETH collected in buyout sales would be distributed to associated v1 vault token holders through a migration contract that burns v1 vault tokens upon redemption of collateral, after all the assets are sold successfully.
• ETH claimed by DAO-owned v1 vault tokens would be exchanged for stable coins at a 50/50% rate.

Funding request - Yes - Implementation Requires Funding

In order to execute this proposal, all NFT collateral in the vaults listed under specifications would be required to be withdrawn through an on-chain governance vote (Aragon), with the purpose of listing on secondary markets.

Communication

• Discord: https://discord.gg/xcJkxMXSR8
• Forums: https://forum.nftx.org/t/draft-proposal-xip-10-sell-off-non-floor-nfts-from-nftx-v1-vaults/235

Quorum

• Minimum Quorum: More than 10% of circulating, non-treasury NFTX must participate for a proposal to Pass.
• Passing Threshold: More than 50% of voting tokens must vote FOR for the XIP to Pass. For changes to the NFTX contract, more than 70% of voting tokens must vote FOR for the XIP to pass.