Minting ETHLizards EGGS

Rational:

As we are starting our journey into the realm of VC funds, we are facing a challenge: working with a relatively small treasury compared to a traditional investment fund.
Hence, it is highly possible that the council choose to take smaller positions than what is available/offered by projects in their pre-seed/seed rounds for legitimate risk management or strategic reasons.
This proposal aims at giving the council more firepower to fill larger investments positions while also doing the following:

  • Increase the DAO Vault
  • Give holders new utility
  • Zero dilution for the RevDis of existing holders
  • Creating a marketing campaign to increase awareness about ETHLizards (and pump secondary sales)

Timeline:
Could be done anytime

Cost:
No money is needed, only time and work

Proposal:

ETHLizards Eggs would be a new collection of NFTs. We can reuse the beautiful pre reveal lizard egg gif for this purpose.

Eggs Utility:
They each represent a % of a vault, managed by the council, used to fully fill pre-seed/seed allocations when possible, at their discretion.
Every egg can be traded (yes, tradeable pre-seed positions!), or burned at anytime from the moment the first investment is even partially liquidated (not redeemable against the non invested capital).
Along the lifecycle of investments, the profits realized and ultimately the original capital, will flow into what will call here The Redeem Chest.
At anytime where the Redeem Chest value > 0 eggs can be burned in exchange of the % of the the chest corresponding to 1/(Total circulating supply of eggs)

Parameters:
ETHLizards Eggs collection of size S is created.
Every lizard would be automatically whitelisted to mint N=S/5250 eggs at a P price.
The unsold eggs can be then sold through a public mint at a P’ price.
A mint commission percentage C of the total amount raised from the mint will directly flow to the main DAO Vault.
A redeem commission C’ will be applied anytime an egg is burned on the value it represent, following the same rules as main investments profits (Team%, Concil%, RevDis%, Treasory%)
A commission C” on secondary sale of eggs, following the same rules as ETHLizards secondary sales

Example based on arbitrary parameters:
Collection Size: S=21800 ( N=4 per V2 lizard, 8 per Genesis)
Mint Price: P=P’=0.1 Ξ
Mint Commission: C=20%
Redeem Commission: C’=20%
Secondary Sales Commission C”=7.5%

Simplified model based on 20 investments to fully deplete the amount raised through the mint:

Total DAO Vault increase from the operation*: 436 + 9746 = 10182 Ξ
*Not including secondary sales of lizard eggs

Allocation reserved to eggs:
There are 2 cases:

  1. the total seed investment opportunity is larger than the position the Council wants to take for the main DAO. In that case, fill the allocation with funds from eggs
  2. The investment opportunity can be entirely filled by the position from the main DAO. Then, either we leave it to the discretion of the council, where they would be free to allocate 0 eth to the eggs, or we can include a hard baseline as long as their is money from the eggs to invest. For example 5 to 10%.
    → Please provide your opinion in the replies

LEGAL:
Although in this form it is very similar to what the main DAO is doing, the legal aspects and consequences need to be thoroughly considered for this proposal to be actionable.

  1. User buys Ethlizards NFT. Investments allotments are provided from the DAO treasury. Profit distributions are provided by the DAO through revenue distribution.
  2. User buys Egglizards NFT. Investments allotments are provided from the second DAO treasury. Profit distributions are provided by the DAO through a burning/redeeming mechanism

So both collection should fold under the same legal regulations.

Marketing
Can initiate a real hype around ETHLizards if marketed properly, further boosting secondary sales and ETHLizards floor. Can be done in conjunction of a future investment announcement or separately.

3 Likes

Great idea that is capitalizing on our community strength, numbers and connections, to fulfil the pre-seed/seed-capital, wherein the treasury cannot or will not (if given a larger size) fulfil.

My only issue and question is: What takes precedence? I believe Ethlizard vault takes first dibs on any and all capital fulfilment & then the baby lizards can take what is left over. If it is the opposite, than I’m strongly against this proposal.

Thanks Seagolem!

2 Likes

Thanks for your answer.
I treat those funds as separate from the main vault, creating a new source of income for it.
The DAO take commissions on the mint , the burn mechanism and the secondary market of eggs.
As a ETHLizards holder you benefit indirectly from those as it increase the vault size and thus our investments and future revdis.
It is also possible to treat the commissions on the burning mechanism as if it was the same as profits from the main DAO Investments fund (5% team, 15% council, the rest split between revdis and investments)
As an egg holder, your egg represent a position in a basket of pre-seed investments. You can redeem it at any time for its current value.
Does that clarify your question?

2 Likes

Thanks for your reply but no it wasn’t, but I believe my question wasn’t clarified properly.

My question is in regards to seed fulfilment. So if an investment opportunity comes and allocates 50ETH for our DAO, how will it work from there?

  1. If Ethlizard is able to and the council agrees that Ethlizards grab the entire seed allotment and allocate 50ETH from the vault and take the entire seed amount proposal, will babylizards miss out entirely as Ethlizards investment takes precedence?

  2. Will the Ethlizards council decide on a certain split of investment allotment? I.E - Ethlizards takes 80% and Babylizards 20% (just an example).

My personal opinion is that 1) Ethlizards should take precedence on any and all total capital allotment - if there is more allotment tended to us than we have in the DAO-Vault, than that can be shared with Babylizards OR 2) If there is more capital allotment than the council is willing to invest in due to risk or sheer size of the capital allotment, than that remaining allotment can be given to the babylizards.

Thanks

2 Likes

Ah ok, got you.
I left that answer to the Council discretion.
I also believe that Ethlizards would always take precedence. But the % can vary projects to projects with some projects having 0 allocation to eggs. Establishing a low baseline for eggs allocation can also be a way to do it (like 10%) and increase at the council choice depending on investments.

Please use the term EGGS instead of baby lizards as I feel babies are already charged with another meaning in the community.
We’ll keep baby lizards for something else

2 Likes

Thanks - the idea is great in itself and I would be supporting it based entirely on that judgement of allocation - because I believe that is the biggest factor for me and possibly the entire community when deciding on weather we should pass or object to this proposition.

I would personally be ok with an agreed upon “guaranteed-baseline” of 5% or MAX 10% on any allotment allocated to us, to be given to the eggs. I think the council need to definitely ask and weigh the community’s sentiment on how they feel regarding baseline allocation and/or guaranteed-allotment, because that will, in my opinion, make or break this proposal.

Cheers

3 Likes

Thanks, you might be right. That’s is definitely a point we can address if needed, based on this discussion, if we move to a prelim proposal!
I mentioned it in the proposal now

2 Likes

Wow, thanks for that iniciative SeaGolem. It is really cool to see lizards moving things.
The issue here, for me at least, is the lack of precedents. With no VC experience, I don´t really know if our Vault will be enough to fill all the seed rounds accepted by the Council or if it will not. Still too early for this proposal imo, only 1 small investment, 2 or 3 to go but no info yet about the allocation. People tend to say that seed rounds usually require “small to medium” investments, so unless we start investing in every opportunity, I don´t see a problem in the short term.

Anyway, if we are short of funds in a future, I do agree with your idea. Specially for the first option, when the allocation is too high for the DAO and the rest want to be filled with eggs. For other cases, I´m scared of adding too much complexity to the circuit, with babylizards on the table and the shadow of a token sometimes mentionned too.
Also, trading the eggs NFT as a % of seed allocations wouldn´t decrease the interest in trading the ethlizards main NFT and their potential price? Yeah the commission for them would be the same, but dunno about volume/ base prices and the impact

2 Likes

It’s an interesting idea to be sure but I also believe we have enough $$$ currently to fully cover whatever opportunities arise and that it’s too early to discuss baby lizards / eggs :slightly_smiling_face:

1 Like

I am not in the known to be sure of this. But 500k$ is objectively a tiny fund. It scares me a bit that we find it to be a very confortable amount to run an entire VC fund operation over the next year, while leaving enough fund left to invest for the next epoch.
That just mean our deal flow is small

1 Like

I agree about the precedence.
Before implementing this we need 3 things imo:

  • prove we can successfully get into GameFi deals
  • prove we can generate revenue from them
  • prove there is a high demand from new GameFi projects to get out investments, creating enough deal flow

As long as we have the above, I think we can pull the trigger on the eggs think. Doing so without them would not be a good strategic move imo.
Note that we can prove the 3 points about in the next 6 to 9 month easily (maybe even sooner if only based on civitas revenues + other seed deals entered) if the council does a good job.

2 Likes

Hello the proposition is nice and clear, but for me it is not the right moment to do that, it could sound like ok let’s make money with another collection before make money with the main purpose of the project.

When Ethlizard investments will give outcome and when we will be really famous (it will happen) then launch ideas like that will be good. In fact we don’t need a huge treasury at the beginning, we need to make the actual treasury grow with the work of the council and the community.

A new collection now (if we except the baby liz to divide a liz in few pieces) could be a bad signal, more like ok they just want to sell nft again and again.

1 Like

Interesting discussion, interesting points on both side.

I however agree with that it is way too soon to discuss/implement this.
For starters it would make us look greedy because indeed the sentiment would be oh, ETHlizards are trying to squeeze the community and devaluating the lizards already.

Second we need to discuss at lenght how this would work, how to divide the spoils so to speak as to not dilute the return for the lizards themselves and of course we always want to maintain a proper return ratio.

@SeaGolem you mentioned you were not aware of how much 500k is from a VC pov.
It is indeed not a lot, but you also have to realize that we are not competing with Animoca or Delphi. 500K is a sizeable amount of money because we are not investing in everything that is thrown our way, but also because realistically we are too small to get huge allocations to start with. This will grow as our name and credibility grows.

I think it would be good to park this idea,discuss what a good implementation would be and keep it as a future idea. In the meantime, should we have ANY need for funds, we can always discuss other options.

3 Likes

That was also my take on why I think its important to establish guidelines on the allocation of VC proposals:

  1. Either the EGGS take what is left over if the DAO cannot fully fund the proposal. I.E if Shrapnel says “we want you to invest $200k”, but the DAO is only willing to invest $150k from their $500k vault, the council could agree to allocate $50k of that proposal to the EGGS.

OR

  1. We create a “guaranteed-baseline” where 5% or 10% of the proposal gets funded by the EGGS regardless.

I also agree that implementing this idea is too early, but having the communities input on the idea itself and the logic we are trying to follow regarding points 1) + 2) are super important. If we ever circle back to it, we can have a good idea of how to do it and appease the communities concerns.

Thanks Seagolem and Necro.

1 Like

I think its a great idea at its core. Not sure about the guaranteed baseline allocation some of us are talking about. If funds are really small for the entire operation over a year, eggs are gonna have plenty oportunities. but when main vault grows, are we gonna still let eggs in the seeds?what happens then?

That’s exactly why I think of it as a ramp up more than a forever thing. It’s true purpose is fast vault growth + a direct ticket to a basket of pre seed investments. Although it could fit somewhere if the LizCoin thing passes as well…

1 Like