Frax <> BanklessDAO Partnership

Governance Proposals Token Swap / Seed funding
1

Hey everyone,

I’m Icedcool from BanklessDAO, and I am reaching out to propose a partnership between Frax.Finance and BanklessDAO!

TL;DR

  • BanklessDAO would like to create a partnership with FRAX and initiate a token swap with FRAX.Finance for FRAX.
  • Proposed value of the swap is for one of three options:
    • 30M BANK for 3M USD equivalents at average price in Q4 2021 ($0.10 BANK).
    • 20M BANK for 2M USD equivalents at average price in Q4 2021 ($0.10 BANK).
    • 10M BANK for 1M USD equivalents at average price in Q4 2021 ($0.10 BANK).
  • Frax would benefit from this through increased marketing in our media channels, adoption of FRAX in the Bankless community, and additional usage as a defi primitive.
  • BanklessDAO will be using the funds to fund operational support for the DAO and investing in its growth.

Background

BanklessDAO (referred to as “bDAO”) is a decentralized community dedicated to stewarding the Bankless movement through media, culture, and education.

Launched in May 2021 in a medium post, bDAO was formed to execute this vision and encompasses Bankless LLC as one of its many media nodes. The native token (BANK) was created, which remains the primary means of governance and compensation in the DAO.

Since the launch, bDAO has become a flourishing community with 15,000 Discord members and 4,525 token holders, catalyzing a number of promising initiatives ranging from content generation (the Rug, Decentralized Law, State of the DAOs, and more), education (Bankless Academy), consulting (Bankless Consulting), engineering and development work (Degen, Bounty Board), community NFT and merch sales, and new financial products (BED and GMI with IndexCoop).

Projects are staffed through 13 guilds, which are specialized labor pools (e.g. developers, content creators, treasury managers) that provide the talent for projects and education that benefit the entire DAO. Guilds have their own governance, and give the community direct access to cross-domain expertise.

BanklessDAO is one of the most active, recognizable DAOs built on a social token and is a first-mover in the space. We would like to partner with FraxFinance to create a stronger relationship between our DAOs; to help FRAX with marketing, network effects, and treasury diversification, and to help BanklessDAO mitigate risks for long term operational viability and improve BANK token utility.

This token swap would be used by BanklessDAO to support operations (used to facilitate payments to contributors) as well as be the seed liquidity for a BANK Rari Fuse pool. Through this liquidity pool, FRAX adoption would increase through use at BanklessDAO and the larger Defi ecosystem.

Key BanklessDAO Achievements

  • BANK is one of the most widely held social tokens according to the Forefront market landscape. This is despite the fact that BanklessDAO never raised capital from outside investors and has grown entirely organically to date.
  • bDAO is one of only a few DAOs that is strongly focused on media production and is certainly the largest one by membership and reach. Others such as Decrypt are starting to enter the space but have yet to receive widespread community traction.
  • A DAO’s defensibility comes from the strength and output of its community, which takes time to develop. bDAO benefits from being one of the first DAOs to establish a community dedicated to education and content production, and therefore has had a head start to refine its governance / internal processes. This includes 26 Snapshot proposals passed and 350 forum threads since inception.

For more background on BanklessDAO, please access our Investment Report here, and our Q4 Financial Report here.

Specifications

  • Depending on Frax.Finance vote, this would be a swap for one of three options:
    • 30M BANK for 3M FRAX
    • 20M BANK for 2M FRAX
    • 10M BANK for 1M FRAX

This proposal is to create a swap between Frax Finance and BanklessDAO, for the equivalent of the governance approved value of BANK for FRAX. We would like to swap BANK at a value of $0.10, which was the average price for last quarter’s operations(Q4 2021). .

This swap would enable FRAX to positively benefit from increased marketing exposure through Bankless DAO, increased adoption by a large community positioned to teach and onboard recent crypto adopters, and increased the utility for FRAX as a DeFi stablecoin.

This swap would enable BanklessDAO to positively benefit, because it supports our long term operational runway, increases our treasury capabilities, and will be used as a utility pair to BANK for lending markets and more.

Stipulations

  • Bank will be held by FRAX for 1 year
  • Following this year BanklessDAO has the right of Preemption/right of first refusal.
    • If FRAX are interested in selling all or part of their BANK holding, they would approach us first to give the opportunity to make an offer. BanklessDAO can then accept this offer in full or in part. This right of first refusal is linked to the swapped BANK and expires only when the entire holding of BANK has been divested by FRAX, be it in full or in parts as part of a gradual divesting by FRAX.
    • Price of the asset would be determined by a 100 day moving average.

Poll

  • 30M BANK for 3M FRAX
  • 20M BANK for 2M FRAX
  • 10M BANK for 1M FRAX
  • Deny
2

We dont do swaps in this way.

For a swap we would use the TWAP over the 30 days before the day the swap took place.

Your asking us to pay almost 3.5x the market price (currently $0.029) which seems more like an insult then a proposal.

I dont really understand what value FRAX brings to BANK (other then the $) , maybe you could expand a bit more on why you want to have a partnership with FRAX over other protocols?

Why would you choose to swap for FRAX rather then FXS? why would you want to hold an asset that will get inflated away over an asset that gets a share of the protocol profits?

5 Likes
3

Yeah agree with @sparkes25 .
Why is the price so high? “Please buy our token. At above market price”
What does the token even do?

I’m normally against swaps in the first place too. Protocols can collaborate together without having to swap.

1 Like
4

I don’t see any reason for Frax to do this. We are a thriving protocol and this swap would instantly make us the largest position in the Bankless DAO; even bigger than Ethereum, which Ryan and David speak about constantly.

Would definitely vote against this in any form akin to what is being proposed.

5

Understood, and 100% not meant as an insult.
We consider that 30M bank is a significant amount of BANK supply, and are measuring it in regards to circulating supply

Additionally the BANK price for last quarter went up to 0.20, but was stable at $0.10.

We currently only have around 2Million worth of liquidity, and due to the market downturn we were heavily impacted.

The price is certainly low, and we see this as an opportunity to get in at the bottom.

In examining the other Algo stables, we see Frax as being one of, if not the most stable, and a very successful stable coin with lots of opportunities for use in the DEFI ecosystem.

How this swap would support BanklessDAO and BANK is it would support long term operations (compensation options, BANK utility, Liquidity depth, yield opportunities for the treasury, etc).

Really what we need as a DAO is operational liquidity, and we see FRAX as supporting that, which is why we chose that as the asset.

Thoughts on all of that?

6

The token currently is used as governance and social token. We are driving towards additional utility, and have recently spun up a rari pool for BANK.

Hoping to use some of this swap to seed that rari pool.

Please see above in terms of the pricing.

Does that help?

7

While $BANK believes $FRAX is a $USDC wrapper, why can’t you just swap some $USDC from $UNI?

8

I’m not sure what you are referring to.

9

I think it might be a good idea to consider a proposal for us to deposit FRAX into your Fuse pool directly, maybe starting small like $50-$100K and moving up from there - your POL depth on ETH-BANK Uniswap probably needs to be a bit deeper than the $700K it is currently though

3 Likes
10

Ya I mean this isn’t a token swap, this is you basically asking us to pay you for marketing.

It’s irrelevant that in the past your token traded for $0.20, we can literally go on 1inch right now and buy 10M BANK for around $550k. This is you asking us to pay $450k for media coverage on your platform.

I don’t follow Bankless so can’t say for sure how much value your media would bring but tbh I find the whole thing pretty distasteful.

I don’t know if you disclose or not that any piece you put out on these terms is basically paid media, and if you do it’s obviously significantly less bad, but personally I think crytpo media should publish stories based on the merits of the story itself and not because the publisher basically received payment from the subject to do so.

1 Like
11

my thoughts are.

1, i dont see any way this proposal passes in its current state.
2, even if you changed the proposal i feel it has already left a bad taste.
3, its a shame you didnt put up a genuine partnership idea.
4, now we know how you operate its far less likely we would put any value in what you promote going forward or what you have promotes in the past.

1 Like
12

If this was the proposal then i would see it passing without dispute. this is something that helps both protocols grow.

3 Likes
13

This deal seems heavily one-sided. Doesn’t bring much value to Frax.

Frax has to hold Bank for 1 year while bDao gets to use Frax to deepen liquidity, support “compensation options”, and earn yield for the bDao treasury…

14

Hey @C2tP-C2tP - would love your feedback on this:

15

I may be misunderstanding your statement, but paying significantly more than current market value for a token does not mean Frax would be ‘getting in at the bottom’. We would be buying a potentially ‘bottomed’ token for a premium.

Besides this, I think the proposal may have some merit if there are clearer incentives for Frax. The proposal as it stands currently seems very one sided, and more of an opportunity for bDAO to acquire some stable operational liquidity whilst avoiding sell pressure on the BANK token.

Some potential ideas for collaborations that could be of value:

  1. Frax should be seeding FRAX liquidity into bDAO’s GMI pool once it is an official Fuse Pool. Could this partnership include a provision that the Frax swapped into bDAO would be kept in the GMI pool when not being used for transactional purposes.
  2. Bankless has a strong media channel. Maybe the partnership could include some promotional/educational material to help crypto users utilize Frax. eg. What is Frax, and a comparison to other Algo Stables. How to take a low interest loan on your GMI with Frax and the GMI pool.
  3. Frax’s upcoming releases of the FPI and FraxSwap would likely benefit from some promotion to Bankless’ audience. Particularly in the case of FPI, the goal is to provide the everyday user with a new unit of account that is inflation resistant. It could be very beneficial to Frax if bDAO aligned themselves with FPI. FPI could be the defacto stable of the Bankless community.

I am strongly against the proposal as it currently stands. However, I think Frax could benefit from a partnership with Bankless, if the right terms can be agreed.
-Hayek

2 Likes
16

Thanks for the input everyone.

A learning we took from this is we made some assumptions in terms of the value prop that weren’t accurate.

All these sound like very cool and interesting options.

Similar to the above post, this sounds interesting as well.
And yea that is also one of our challenges (developing liquidity depth).

Would the interest generated in one of the Rari pools be a quality incentive?

For clarity, I would like to provide a proposal that feels good and is a quality value add for all parties.

17

Is there anything you would like me to do to withdraw this proposal?

18

no action is needed to withdraw a proposal.

look forward to seeing your updated proposal at a later date.

1 Like