SDGP-004: Treasury Management 2024

As per SDIP-40, this is a Governance Proposal and has a Quorum to Pass of 250 SquiggleDAO NFTs and a Minimum Participation of 10 voters.

Abstract

“SDIP-41 Treasury Management 2023” authorized the Treasury multi-sig holders up to $1M equivalent for treasury management activities until December 31st, 2023. This included swapping from USDC to other Treasury Assets (including our own token, be it the ERC-20 or the ERC-721) and vice versa, swapping from other assets to USDC, in order to maintain the health of our treasury during changing market conditions.

This proposal has 3 objectives: 1) to report on the use of funds under SDIP-41, 2) to reset the authorization of $1M equivalent for treasury management activities (including yield generating activities such as staking ETH) until December 31st, 2024 and 3) to authorize Treasury multi-sig holders to obtain financing up to a debt-to-equity ratio of 10% (at inception) and swap those funds into Treasury Assets.

The Treasury multi-sig holders will have discretion over the terms at which to swap any assets and over the terms at which to obtain financing. Any transactions executed will be reported to the DAO.

Treasury Assets across the different DAO-owned wallets (as at November 20th, 2023): 335 Squiggles (est. 5,113 ETH or 10.4M USDC) 2.1M USDC 536 ETH (1.1M USDC equivalent) 6,732 SquiggleDAO NFTs (6.7M SQUIG token equivalent)

Use of funds under SDIP-41

We swapped a total of 100k USDC for 53.9 ETH (average price of 1,855 $/ETH).

We acquired 3 Squiggles for 31.2 ETH: Normal #7866 for 8.5 ETH, Slinky #7599 for 8.5 ETH and Bold #8035 for 14.2 ETH.

We repurchased 455 SquiggleDAO NFTs (equivalent) for 218 ETH (average price of 0.48 ETH per SquiggleDAO NFT). 95% of these buybacks were done OTC in SQUIG tokens and 5% in the Open Market (SquiggleDAO NFTs).

We deployed a total of $485k into Treasury Assets. The current estimated value -applying our Treasury Valuation Metrics for Squiggles and NAV for the SquiggleDAO NFTs- is $2.1M.

Additionally, it’s important to highlight that the DAO has generated an 18% Internal Rate of Return with its NFT DeFi activities.

Motivation

Having the funds available is key to react quickly when an opportunity presents itself. This might be buying Squiggles at attractive prices, hedging some future uses of ETH (e.g. buying Squiggles), buying back our token at a significant discount to NAV, swapping ETH back to USDC, using ETH or USDC for yield generating activities (e.g. staking ETH), etc.

Similarly, being agile to obtain financing when an opportunity presents at favorable terms can strengthen the DAO not only to survive, but also to achieve its mission of collecting and promoting the Chromie Squiggle.

Worth noting that having these funds pre-approved does not imply blindly using them. We will just act if we see an attractive opportunity that helps the DAO achieve its mission, while keeping long-term survival as a primary goal.

Success Conditions

• We are able to swap Treasury Assets (USDC, ETH, Squiggles, SquiggleDAO NFT, SQUIG token) without Snapshot approval up to $1M equivalent until Dec 31st, 2024
• We are able to use Treasury Assets for yield generating activities
• We are able to obtain financing up to a debt-to-equity ratio of 10% (at inception) and swap those funds into Treasury Assets (these additional funds do not compute towards the $1M limit)
• We are able to post Vaulted Squiggles as collateral, if applicable

Specification

• Funds are pre-approved and stay in the SquiggleDAO.eth multi-sig wallet until requested
• The Treasury multi-sig holders can instruct either the Acquisitions or the Treasury Squads to transact
• The Treasury multi-sig holders will have discretion over the most effective ways to use the funds
• If any funds are used under this SDGP or any financing is obtained, we will report back to the DAO (how much was used, what was purchased, at which prices, how much remains, financing terms, collateral posted)
• Total: $1M equivalent. If ETH is used, the USD value will be taken from the transaction (etherscan)
• The Treasury multi-sig holders will have discretion over the financing terms and over which Squiggles to post as collateral
• Once this authorization expires (date specified in the “Abstract”), all funds (and tokens / Squiggles if any) will be sent back to the main vault (SquiggleDAO.eth)

Launch Details

Project will be launched according to the specifications above, at the timing and discretion of the operators.

Costs

$1M equivalent (though some or all of these funds could return back to the treasury depending on the Acquisitions activity, if any).

Additionally, another cost will be any interest paid on the financing, if applicable.

Rewards

N/A