Hey Tribe,
I’m William X, working on Debt DAO, a dao working on providing debt to DAOs.
Context:
DAO debt is extremely underutilized in this space. There are very few options for DAOs to take on debt, and as a result, many simply resort to selling tokens. For DAOs that are essentially selling tokens for liquidity, this is an issue solved by Fei’s recent partnership with Ondo.
Protocols however, have many more expenses outside of Liquidity Mining, and as a result, still need to resort to dilution in order to finance these expenses.
Proposed Solution:
To this end, we’re using revenue based and backed financing to extend lines of credit to DAOs.
Initially, we will be looking for DAOs to overcollateralize these lines of credit with an abundance of project tokens, and treasury assets. However, as we prove out our model and begin to build credit histories for these DAOs, we can move undercollateralized lending as we move toward future cashflows.
We’ve applied for the Olympus Incubation program, and have also been verified as pool creators by Rari Governance. Given Fei’s extensive focus toward supporting DAOs, we believe it is important that we make this partnership early.
We hope to provide access to discounted token swaps with debt DAO in the future (pending approval and discussion by debt DAO governance) to help solidify this partnership.
What we’re proposing:
We’re seeking to use OA to mint and deposit FEI into an Optimistic Approval process as outlined by FIP-39. https://forums.rari.capital/d/157-whitelist-debtdao-as-pool-creator
- Providing 2.5 million Fei to a Fuse Pool 122 for the purpose of extending lines of credit to whitelisted DAOs that meet debt DAO’s stringent requirements, receiving DP1 (Debt Pool 1) in exchange.
- initially, we’re looking towards Index Coop as the primary recipient of this line of credit, however, debt DAO will provide a report detailing the financials and an analysis of whichever DAOs are whitelisted.
- DP1 tokens as PCV asset, with an eye toward creating a process for which the senior tranches of future Debt Pools can enter through a streamlined governance process as PCV.
- DP1 will be an fToken, received when depositing into the Fuse Pool
Pros:
- encourage the utilization of Fei among DAOs and across web3
- diversify the backing of Fei with less correlated assets
- provide DAOs with financing to allow them to invest in growth
- fees earned for the protocol
Cons/Risks
- the DAO defaults on a loan (highly unlikely, but loan will be overcollateralized)
If you’d like to learn more about debt DAO, feel free to join our discord server, https://discord.gg/jmkS7a2h and read the docs https://williamx.notion.site/debt-DAO-docs-92bca987c1d341cfb443cb415c86ae70