The goal of Foundry is to build financial liberty systems. Things like DAIHard, which allows people to interact with others to allow trust-less trade to happen, trade that cannot be stopped by anyone except the parties in the transaction.
To this end Foundry needs to be an autonomous being (a true DAO) but it also needs a war chest with which it can fund these projects. Currently it is 304 buckets into a long term auction of 2000 buckets, to distribute 60 million FRY and raise funds in the process. To accomplish this in turn, it needs visibility. To accomplish visibility is tricky. It involves both traditional marketing (SEO, ad buying, etc), but in the current environment it has become apparent that it also requires liquidity and the co-operation of yield farmers, since the majority of capital is currently tied up in these programs.
So to accomplish the goal of filling up the treasury I propose to Foundry the following 2 part plan to raise liquidity, lock much of it away permanently, and raise awareness of Foundry.
Part A - Permafrost
The first part of the plan involves aims to generate liquidity that is permanently locked away. The goal with this is to support any other participants in knowing that they can never be “rug pulled”, the rug being forever affixed to the floor.
We accomplish this by launching a parallel bucket sale contract at permafrost.foundrydao.com. This sale will operate in exactly the same way as the existing sale, with the following 3 differences.
- Instead of selling FRY for DAI, it will sell FRY for FRYETH liquidity on Uniswap.
- Instead of selling 30,000 FRY per bucket, this sale will sell 15,000.
- Instead of sending the received tokens to the treasury, it will send them to the 0x0 address. This will guarantee this liquidity is forever available and the exchange fees will deepen this liquidity over time.
As far as I can tell this will be an entirely novel thing to do. It will guarantee all participants that the rug cannot be pulled from under them, or rather that some significant part of the liquidity will always be around to exit against if needed. This should create visibility due to both it’s novelty and the increase of liquidity on various ranking sites.
The permanent availability of liquidity also creates some guarantees for the participants of the next part of the plan.
Part B - Yield farming
The majority of active capital on Ethereum appears to be moving from yield farm to yield farm at the moment. This has the side-effect that very little capital is deployed against less well understood plays, because all capital is currently scanning for a very specific type of opportunity; the yield farm.
What I propose is that we present a yield farming opportunity to liquidity providers and in return we get Foundry exposure which will benefit the permafrost program above and the existing sale (sale.foundrydao.com) through arbitrage between the secondary market and the sale itself.
The strategy is
- We create a Balancer pool with the following tokens yDAI(94%) - DAI(2%) - ETH (2%) - FRY (2%)
- We set up a farming program at yieldfarm.foundrydao.com that allows liquidity providers to stake the liquidity tokens of the above pool for FRY distributed at a pace equivalent 15,000 FRY per 7 hours period.
The pool as described minimizes risk for the liquidity provider (LP) in that:
- They still have exposure to cutting edge yield strategies via yearn.finance’s yDAI
- The pool gains fees through the inclusion of DAI and ETH, which attracts routing bots and arbitrage bots.
- The LP’s impermanent loss exposure to FRY is minimized because FRY is only 2% of the pool.
Because there will now be permanently locked liquidity and the pool represents very good yield via yDAI and limited downside, we suspect that the staking could attract a lot of funds, which will necessarily have to increase the price of FRY to have it account for 2% thereof. This increase in the price of FRY will allow arbitrage between the sale, increasing the treasury holdings and the permafrost program, increasing the permanently locked liquidity.
So the desired outcomes hit 3 goals.
- We gain a lot of exposure through novel experimentation with liquidity provision.
- We gain treasury funds through both market exposure and arbitrage between the sale and secondary markets.
- We provide a permanent liquidity guarantee, something not done before to my knowledge at this scale.
What say you FRY holders?
Head on over to https://dashboard.foundrydao.com/#/sentiment and tell us what you think.
PS A discerning Foundrarian would note that implementing the above would increase the FRY supply beyond the 100M for the after sale target. This is indeed the case and the dilution would either need to be accepted or accounted for. I will comment below how I think we can deal with the dilution such as to protect everyone’s current share of issued FRY.