PROPOSAL NAME:
Protect Treasury - Lock Up 20 % as BTC for 3 years
TEAM DESCRIPTION:
ApeCoin Foundation will be implementing this proposal, but since this field is required: I’ve been an ape from Aug ' 21 to summer ' 23 , @nftsasha on Twitter, attended all three ApeFests, and ran in a few DAO elections. Now working on Unchained game with a few folks, which we hope to bring to ApeChain :slight_smile: (self-promo, let’s gooo).
PROPOSAL DESCRIPTION:
To future-proof part of treasury against accidental or organized drainage and as a step to diversify treasury, ApeCoin DAO Foundation will create a BTC wallet and convert 20 % of treasury reserves into BTC. Not only is this probably a smart move financially (historically, BTC has far, far outperformed APE), and thus potentially one of the easiest yields for the DAO, it’s also an insurance policy. Having less available treasury for 3 years (though still very substantial) will help us think more carefully about spending on a per-AIP basis.
For simplicity of calculation, 20 % means 20 % of USD value of all DAO reserves on the day of this proposal going up for a vote (maximum 60 , 000 , 000 APE) minus any amount already approved/earmarked for previously-passed proposals.
Example: the reserves on hand on the day this AIP goes up for a vote are 1 M when converted to USD (using that day’s market price). The DAO approves proposals with total cost of 100 K during the same voting period. We then calculate the 20 % as 20 % of 1 M, not 20 % of 900 thousand.
The Foundation is prohibited from swapping the BTC for any other tokens or spending any of the BTC during this 3 -year term. The BTC could be held in any wallet(s) the Foundation deems appropriate for the 3 years, provided that the Foundation or its assigned representatives maintain control. These restrictions could be overridden by a future AIP.
BENEFIT TO APECOIN ECOSYSTEM:
Save 20 % of Treasury from potential drainage and, possibly, grow the treasury by selling BTC at a higher price 3 + years down the road. The underlying assumption is that if BTC fails, everything fails; is there really a world where APE thrives but BTC is in the gutter?
DEFINITIONS:
OTC - OTC Trading, is a framework of financial technology that enables trading markets outside a regular exchange. Specifically, within the crypto and bitcoin market, it is a private trading market for buying or selling crypto.
DEX - A decentralized exchange (or DEX) is a peer-to-peer marketplace where transactions occur directly between crypto traders. DEXs fulfill one of crypto’s core possibilities: fostering financial transactions that aren’t officiated by banks, brokers, or any other intermediary.
CEX - A centralized exchange (CEX) is a type of cryptocurrency exchange platform. CEX platforms maintain an order book for buy and sell orders between traders. All orders are trade requests for a certain amount of a cryptocurrency set at a specified price.
STEPS TO IMPLEMENT:
ApeCoin Foundation buys BTC with 20 % of Treasury funds upon proposal approval via either:
OTC, to avoid market price impact on $APE (preferred method)
or
weekly purchases spread over 3 months to minimize $APE price impact ( 19 to 20 total transactions); the daily volume for $APE is ~ 50 M USD, or 350 M / week, so this weekly operation would account for ~ 1 . 5 % of avg daily volume.
I estimate OTC fee (or dex/cex fees) to convert APE to BTC to be below <$ 5 , 000 , or 1 / 20 , 000 th of the amount of APE to be converted by this proposal, i.e. less than 0 . 005 %.
Regardless of implementation method, the 20 % (maximum 60 , 000 , 000 APE) is calculated as indicated above and earmarked at the time of proposal approval.
The 3 -year lock-up period begins on the day of the last transaction, i.e. when the full 20 % are converted.
REPORTING EXPECTATIONS:
Report total cost of implementation and date of completion of implementation once the proposal is fully implemented as a reply to this thread or a central reporting thread on these forums. If the proposal is not fully implemented 4 months after this AIP is passed, report why, % completion, and steps being taken to mitigate.
RISKS:
It’s possible that ApeCoin price will increase faster than BTC price. This risk if for you, the DAO, to decide on. Historically, quite the opposite has been the case. Please keep in mind that ~ 80 % of Treasury will remain unlocked, so the real question is - should we risk everything we have on $APE price fluctuations, or hedge our bets by locking up some of it in BTC?
OVERALL COST:
Total amount requested from the ApeCoin Ecosystem Fund = Up to 60 , 000 , 000 ApeCoin + $ 5 , 000 USD.
20 % of treasury estimated to be 60 , 000 , 000 APE
OTC/DEX/CEX fees estimated to be $ 5 , 000
