‘I don’t believe NFTs are all about art. NFTs are, among other things, FINANCIAL INSTRUMENTS, and they should be used as such.’
Rob Montgomery, CEO of Revest finance
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Summary -
As of 6/4/2022, there is a little over 130,000,000 FOX ($16 million USD) sitting in the ShapeShift treasury all but collecting dust. This proposal would redeploy those tokens in a way that would benefit the DAO.
Here’s an example of one possible use:
“Ashley has 10,000 $FOX, and they will have 15,000 $FOX in one year of staking.
“Ashley utilizes the Resonate protocol and separates their principal stake (10,000 $FOX) from her interest (5,000 $FOX, (in one year.))
“The ShapeShift Treasury purchases the rights to the interest of 5,000 $FOX, (in one year) for 3,000 FOX, upfront.
“Ashley, understanding the time/value of money, gets an upfront, one-time payment of 3,000 FOX. (Every lotto winner and/or anyone who receives a pension is given a choice: an annuity paid out over the next 30 years, or a one-time, lump-sum payment. For example: With an annuity, you would receive a total payout of $200MM but with a lump sum you would receive $120MM. By accepting a lump sum payment you gain control over your income assets; even if the lump sum is less than the promised annuity payment.) Ashley would also retain the rights to their principal stake of 10,000 $FOX.
“ShapeShift is able to extend the staking APR bonus of 52.73% (as of midnight 6/5/2022) and, at the same time, reduce the emissions from the treasury by 40%.
“ShapeShift succeeds in locking up $FOX tokens for 12 months, removing them from the primary market, (which utilizes DEX’s,) and forcing them to be sold on the secondary market.
“Ashley sells the principal FNFT (10,000 $FOX) on a secondary market like OpenSea for ETH (equivalent to 9,000 $FOX,) ending with a net profit of $2,000 $FOX (or USD equivalent,) all while not affecting the price of $FOX.
(Ashley produces two FNFTs using the RESONATE dApp; one containing the principal and the other containing the rights to the interest:
a.) They deposit 10,000 $FOX into the ‘principal’ FNFT.
b.) They sell the rights to the ‘interest’ FNFT for 3,000 $FOX utilizing the RESONATE dApp.
c.) They sell the ‘principal’ FNFT on OpenSea for the ETH equivalent of 9,000 $FOX.
ShapeShift buys the rights to the interest of 5,000 $FOX for an upfront payment of 3,000 $FOX saving a total of 2,000 $FOX in interest payouts, slowing emissions. ShapeShift was also able to lock a total of 10,000 $FOX for 12 months, reducing the total circulating supply of FOX, and increasing the price.
Result:
Ashley: 9,000 $FOX + 3,000 $FOX = 12,000 $FOX gross profit.
ShapeShift: (50,000 $FOX) - (30,000 $FOX) = 20,000 $FOX saved.
In this example, we saw Ashley stake 10,000 $FOX for 12 months earning a 50% APR. They took a 60% buyout and then sold their principal FNFT on a secondary market. But the best part about RESONATE, my favorite part, is that we will not be restricted to a certain time frame, the amount staked, or even the amount for which we sell the interest-bearing FNFT.
Abstract (A summary in detail) -
Definitions
FNFT - Financial Non-Fungible Token
Voucher Decoupling - the separation of a stake’s periodic interest payments from its principal repayment obligation to create a series of individual FNFT’s. With Voucher Decoupling, the underlying stake becomes a principal-bearing FNFT and each interest payment can be claimed through the interest-bearing FNFT at any time.
Principal FNFT - This is the FNFT where the original sum of tokens staked is held.
Interest FNFT - This is the FNFT where the interest from the principal FNFT will be sent. You are able to withdraw the interest accrued at any time.
Fixed-Term - This is a type of voucher decoupling where the interest FNFT is locked for a certain length of time no matter how much interest accrues. i.e. 12 month vest, whether the APR is 75% or 2%.
and scene - You and I decide to go on a train vacation through the alps. The vacation is 7 days long, we expected to eat 21 meals while on vacation but lucky for us they had an abundance of food and we were able to eat much more.
Result - The trip took 7 days as expected but you were able to eat 33 meals. Your only requirement to be happy was a 7 day trip, you were happy.
and scene - The next time we traveled to Switzerland we took the exact same vacation.
Result - This time the trip again took 7 days, which made you happy but we were so busy you only got to eat 13 meals. You didn’t care about the food, just the length, so you were happy.
Fixed-Income - This type of Voucher decoupling is one where the interest FNFT is locked until a specific sum of money is paid out. I.e. As soon as 5,000 $FOX tokens are paid, the vest is concluded, so it might be 9 months or it might be 14 months.
and scene - A year passes and we decide to collect 3 jars of sand from 2 different beaches, you don’t care how long we’re at each beach, you just want to collect 3 jars of sand and then leave. The first is from Tokoriki. Since that place is garbage we collect the sand in 3 days and hop on the first flight to Malta.
Result - The trip to Fiji took 3 days and you collected 3 jars of sand.
and scene - Malta isn’t a pile of garbage so we stay for 11 days.
Result - The trip to Malta took 11 days and you collected 3 jars of sand.
Concept art of our eventual UI/UX:
NET EFFECT OF USING RESONATE VOUCHER DECOUPLING -
1.) The price of $FOX increases because the total amount of $FOX on the primary market decreases.
2.) The treasury emissions decrease by up to 40%, allowing the promotional APR to continue for a longer period of time.
3.) Stakers are able to sell not only the interest but also their principal, on a secondary market, not affecting the price of $FOX at all; all while removing themselves from the position they would otherwise have been forced to stay in for 12 months in total.
Drawbacks- As a protocol, shapeshift has the possibility to lose money if the interest rates drop because it’s paying money out upfront, though this can be prevented by using a ‘Fixed Income’ approach.
Vote -
FOR - A partnership with Revest Finance to utilize Resonate
AGAINST - No partnership