Spice DAO multisig signer Soby raised the idea of allowing $SPICE holders to redeem their tokens for ETH in a tweet on May 23, 2022. This proposal seeks to make that possible, while also allowing those that want to continue do so.
Deliver the Frank Miller Presents: Ancient Enemies NFT drop (Core Team member Kortelin has said public sale begins Aug. 1) and sell out the collection.
If the collection does not sell out within 4 weeks then redemptions will continue with what funds have been acquired from the sale
This will top up the Spice DAO Treasury with maximum ETH. Provide a window of time (1 or 2 weeks) that allows $SPICE holders to redeem their tokens for ETH.
Write a smart contract that lets holders decide if they want to process redemptions or stay with the dao to keep building. There should essentially be a “burn” function where a user can burn any amount of spice they have and get their piece of the ETH. Unburnt amounts are considered those that want to keep building and are staying for the DAOs future.
At exclusive decision of the core team, 10% of treasury assets can be held back and not be included in the redemption calculation. Once the drop happens funds need to be available to support the community that buys the NFTs (mods, leaders, future ideas, etc.) incase too many spice holders want to leave. If the core team feels sentiment is fine and this isn’t needed then it’s not required.
Due to the sustained market downturn in 2022 there have been multiple precedents set of DAOs allowing holders to redeem their piece of the treasury. Examples include:
- WONDERLAND DAO
- LOBIS DAO
- SQUID DAO
- SNOWBANK DAO
- OLYMPUS DAO (although via reverse bonding)
OPTION FOR REDEMPTIONS
Once the redemption contract is launched, give members two weeks to exercise an option for redemption.
Take a snapshot of all $SPICE holders before the NFT drop so there is no arbitrage opportunity for bad actors to accumulate $SPICE afterward just for the arb.
Launch a contract where snapshotted addresses can choose to either burn their $SPICE for their pro rata piece of the treasury, or do nothing ie. keep building.
Those that want to keep building are opting into future products of the DAO and benefit from the Phil Gelatt collab and anything else the DAO builds. Those that choose to leave get a fair exit.
Before redemption all non ETH and non SPICE or NFT assets should be swapped for ETH
The redemption math should be as follows:
let assets = ETH in the treasury
let circTokens = total supply of spice less any dao/treasury/unvested spice (essentially spice that is actually owned by end users)
let fee = a number between 0.9 and 1 where 1 is no fee and 0.9 is a 10% fee (funds to stay within the dao to support the NFTs recently minted) incase too many people want to claim
redemptionAmount = (assets * fee) / circTokens
BUDGET & TIMELINE
Spice DAO has a full-time Lead Dev so they can write the smart contract.
Within 4 weeks of the NFT drop, launch the contract and begin redemptions.
@dcfgod on twitter and SPICE holder