FreeRoss DAO — Community Call 31 January 2022 — Treasury Updates

by | Jan 31, 2022

Transcript

DoctorBitcoin.eth

For anybody listening that doesn’t know, I am rizzn. I am the leader of the Media pod and with me today, are UnicornDroppingz and schlomo, both of them are participants here in the various parts of operations of Free Ross Dow. Unicorn of course, you’re the leader of the Treasury pod and schlomo is a friend of mine who has been in the digital marketing world for maybe longer than me, a long time, and has been helping me in the Media pod, get things up and running and, and come up with exciting ideas to execute.

DoctorBitcoin.eth

I figured schlomo and I, we can tag team on the questions today and Terry and get unicorn droppings on the latest treasury update and provide some answers to the community.

UnicornDroppingz:

Awesome.

DoctorBitcoin.eth

That’s my dog Token, who’s wanting to participate as well.

UnicornDroppingz:

All species are welcome.

DoctorBitcoin.eth

Indeed. Okay. Introductions are out of the way. I’m trying to find where I put the questions so we can get things started here. The reason why I wanted to get something on the books and to the community early on here, not just because I think it’s a good idea for us to have regular treasury updates, as regular other updates, but we had to make an emergency move last week with some of the treasury funds.

DoctorBitcoin.eth

We can start out with what set the stage for that, what happened, there was a news event, some news that broke that prompted your recommendation. Maybe you want to get into that a little bit unicorn.

UnicornDroppingz:

Yeah. Happy to start there. At a high level, there is a D five protocol called Wonderland, which is a derivative of Olympus Dow, that originally launched on the Avalanche network. The project accumulated a very large pool of funds and had someone that was a co-founder and self-titled chief financial officer.

UnicornDroppingz:

This person went under the pseudo anonymous identity of 0xSifu and the thing that keyed this all off last week was that they were doxxed as being a known fraudster who has a history of stealing funds. The two main events that folks have been talking about are related to one, a centralized exchange based in Canada. For folks that have been in crypto for a while, they may remember that there was a co-founder that mysteriously died in India related to this. It was the sort of co-founder of this person, and also prior to crypto in the early 2000’s, this person was arrested and charged guilty for being active in identity theft rings.

UnicornDroppingz:

Anyways, this was exposed last week and because the treasury funds are held by a multi signature, which is ultimately controlled by people, there was a lot of concern that this person might execute a similar attempt to steal funds, which led to as mass Exodus, both from Wonderland and other projects that have association to him.

UnicornDroppingz:

The main connection that’s relevant to us is that one of his co-founders, Danny has launched a number of other projects. The two main ones being Abracadabra money and Popsicle finance. Abracadabra is a project that allows you to mint new staple coins, using interest bearing collateral to back it.

UnicornDroppingz:

Popsicle finance is a cross chain uniswap B3 optimizer, a lot of buzzwords there, but regardless the point being, is that anything that is within a degree of connection to 0xSifu was seen as concerning, and the reason for that is that ultimately there are people behind multi six and folks weren’t totally clear to what extent there might be back doors or exploits possible.

DoctorBitcoin.eth

Fair enough. Fair enough. As I understand it, we were able to beat the market, the reaction a little bit. You sort of already explained how we were exposed to it, essentially we just divested ourselves of some of the, I guess-

UnicornDroppingz:

Yeah. That’s exactly right. Our exposure was one degree removed. We wouldn’t ever have exposure to something like Wonderland, it’s far too speculative. We did use Abracadabra to mint stablepoints, which we then were using for yield farming.

UnicornDroppingz:

Broadly what we did was that we repaid those stablepoints that we borrowed and then removed our collateral from any smart contracts that are associated with any of these projects I listed. In our case, there’s only Abracadabra.money. The reason to do that is that there are close connections between the leveraged debt model that Wonderland deployed and sort of the MIM stablecoin. There was some concern that it could potentially lose a peg or something like that.

UnicornDroppingz:

If we go a level deeper, broadly there probably wasn’t really any risk for us because we still held the amount of the stablecoin that we borrowed and could always repay it regardless of its price and in some cases there are and had been some really good arbitrage opportunities. Because of that human layer, we wanted to be ultra cautious on the risks that we took on, which is why we totally divested. Yeah. I don’t know. I can pause there or talk a little bit about how this has rippled through DeFi in general if that’s of interest to folks.

DoctorBitcoin.eth

I don’t know about you schlomo, I’m interested a little bit what the ripple effects are. It’s an interesting thing, a little rabbit hole to go down and probably could inform our future decisions.

UnicornDroppingz:

I think the main in interesting ripple is how this has impacted the Terra LUNA ecosystem or LUNA, which is perhaps best known for the algorithmic stablecoin called UST and the anchor protocol. Which generally has very consistently paid out between 19% and 20% return for depositing the UST into it’s smart contracts.

UnicornDroppingz:

The reason that there’s this connection is that Abracadabra allowed for people to, in a single transaction gain leverage on their assets. What that means is that you would put something in a vault as collateral, borrow a stablecoin against it, sell that stable coin to buy more of the thing that you are putting in that vault, deposit it, which gives you a higher collateral value. Repeat that cycle a few times at a predetermined level of exposure.

UnicornDroppingz:

The connection to the Terra ecosystem is that there was something called the MIM-UST Degenbox, which is basically you could deposit your receipt token, a UST from anchor protocol, borrow MIM against it, sell that MIM for more UST and redeposit it. That way, you could have these returns of 80% to 100% APR on holding a U.S. dollar stablecoin, which is very compelling.

UnicornDroppingz:

The risk for that is that these aren’t backed, or at least the UST token isn’t backed by anything. It’s an algorithmic peg that is based on a seigniorage model related to the price of Luna. When everyone was divesting from projects associated with 0xSifu and Danny, the liquidity behind the MIM stablecoin was removed. It’s peg was decreasing, which could of course, lead to a number of liquidations on the UST token, which led to concerns about UST, which led to people selling the UST token, which hurts its peg, which then hurts the price of Luna. There’s basically a potential for a very big unwinding of that whole ecosystem, if there’s too much pressure on the various pegs.

Schlomo.eth

It’s interesting to me, because you left, not because of the plan wasn’t sound you left because in the end we want to be affiliated with the right people and positive people working in the ecosystem, it sounds like. This is getting in the weeds for me personally. I’m not just playing, but I am that one who doesn’t really understand a lot of what you were saying. In the end is just aligning ourselves with the right people because these folks have been seen as bad actors.

UnicornDroppingz:

Well, yes and no. That for sure is a good reason to leave something like Wonderland. Abracadabra is not connected to 0xSifu, or at least directly is not in any of the multi six to my knowledge. It also came out that key people in this ecosystem, Danny in particular was aware of who 0xSifu was.

UnicornDroppingz:

Allowing them to continue makes them be of questionable integrity on some level, which is a scary thought. You’re totally right schlomo, that is a key part of we want to be aligned with reputable actors. I would say that there are two layers of financial risk that we wanted to step away from.

UnicornDroppingz:

One, is the people layer where maybe there’s a group of people that are coordinating on these smart contracts and they would force something through that could result in a loss of funds. I think that’s very unlikely outside of Wonderland. I think it’s increasingly likely for something like Wonderland, but not so much for the projects we were using.

UnicornDroppingz:

The other risk would be related to the peg of the stablecoins. If the value of the stablecoin is basically what someone else is willing to pay you for it and if no one is willing to use the stablecoin, because it’s been tainted, it loses its ability to earn yield farming income as well.

UnicornDroppingz:

In the case of MIM, it’s unlikely to lose its peg and never retain it because it is an over collateralized stablecoin, which means that for every MIM in circulation, there is more like eath or other stablecoins that are backing it. There is a dollar value behind it, whereas with UST it’s what’s called an algorithmic stablecoin and it’s backed by arbitrage basically.

DoctorBitcoin.eth

I think Alona sent me a private about some of the thinking that we had in the core chat room about Danny and Sifu, which is there’s an idea that we want to give somebody a second chance in life and that’s important, but this gentleman 0xSifu, he’s not a first time offender. He was a habitual offender putting those that he worked with and the funds that he worked with at risk as a pattern of behavior, not as like, “Oh, he got caught for something that was a technicality or youthful indiscretion or something like that.” There’s also that aspect of things, obviously we believe in second chances as a part of the dow that we’re in, but this goes a little bit beyond that I would think is the key distinction.

UnicornDroppingz:

Right. Also, he’s not a member of the Dow anyway to give a second chance. He’s not like he’s-

DoctorBitcoin.eth

Also true. Yes.

UnicornDroppingz:

Right. If he was an actual member of this community, that’s how you give second chances. There’s no second chance of this. We don’t talk to him. Yep.

DoctorBitcoin.eth

Let’s see. Yeah. The next pertinent question would be, what do we transition stuff to? You outlined that in an announcement, but I was going to give you an opportunity to expand on that or explain it in case there’s any confusion.

UnicornDroppingz:

Absolutely. Basically, our treasury assets are sitting in a year end vault, earning about 4.8% per year currently. What’s in that vault is Ethereum and State Ethereum in a curve pool. Broadly, we’ve just unwound the stablecoin borrowing position we had, which if we were to retain it would probably be worth an additional a $100,000 to $200,000 U.S. of income per year at the current price point.

UnicornDroppingz:

It’s not like we are no longer earning anything against our treasury, we’ve just unwound one of those positions and are now currently thinking about what we would like to do moving forward. I do think that using our treasury vault as collateral to borrow stablecoins and do additional farming is worth it in terms of the earning potential over time.

DoctorBitcoin.eth

Great. Would you say this is a long term solution, or an interim one while we search for a more profitable strategy that fits our risk requirements?

UnicornDroppingz:

Yeah. I would call it interim. For folks that are excited about this stuff or have some expertise, we would definitely welcome you guys joining the treasury pod where I’m hoping to have some additional feedback and discussion around how we want to deploy treasury assets for yield farming. Loosely my goal would be that we redeploy into a new position sometime this week.

DoctorBitcoin.eth

OK. I did have a couple other questions that were treasury related that I wanted to ask you, but we’ve got Coinworth raising their hand in the chat. I guess we could maybe bring them on and-

UnicornDroppingz:

Yeah. Sounds great. Awesome.

DoctorBitcoin.eth

I pushed the button it may take a second to come in.

DoctorBitcoin.eth

Coinworth you can come up to the stage whenever you see the little notification. It looks like it’s taking a second. While we wait, the other part that I wanted to talk about today is like the perennial question that we tend to see a lot on the channels on the server, which is about the free buyback, which is well underway at this point. We can do maybe like a little update on that at this point.

UnicornDroppingz:

Sure. Yeah. From sort of a $free buyback standpoint, the TLDR, we have deployed 141.3 ETH in buying free back from the market. We’ve also added a 100 ETH and liquidity to the Uniswap V3 pool. This morning we also added over 200 million in $free to additional liquidity for the V3 pool.

UnicornDroppingz:

As far as what to expect next, we’re on track to finish the buybacks for proposal number two, by the end of February 2nd. We’ll be basically continuing with the rest of the buyback purchases. After this window, we we’ll shift to actively managing that V3 liquidity range from Dow controlled funds to ensure that there is liquidity around active trading ranges.

DoctorBitcoin.eth

Great, nice. Coinworth you’re on stage. What’d you got for us?

Coinworth:

Hey, thanks guys. Thanks for bringing me up. I think this is awesome. I’m a pretty new to Dow’s in general and discord also, it took me a while to see that you did invite me, sorry about that.

Coinworth:

Yeah, for any other new members, I don’t know who else is listening, but I guess the shore of how all this treasury management and how the Dow in general sees this translating to Ross Oldbrick being freed. I just wanted to understand and get my head around that. I don’t know if it’s been covered already. I’m sure this isn’t the first update, but how does, I guess the treasury, what is the money used for to get Ross freed?

UnicornDroppingz:

Yeah, it’s a really good question. We don’t do as much as we could to tie back all the activities to the actual point of how we all came together. At a very high level, the idea is that the Dow raised quite a bit of a theorem as part of the sale of Ross’s first generation of artwork. What we opted to do as a community was look for ways to turn that into productive capital that would generate income, which could be used to fund projects and volunteers working on his release.

UnicornDroppingz:

The alternate would’ve been to sell that raised money for U.S. dollars or something like that, which would have been an upfront one time working budget. Whereas with yield farming, we can effectively have an infinite runway because we’re generating income that can employ people and fund documentaries and things like that.

Coinworth:

Wouldn’t participating in yield farming or any of these protocols be exposing counterparty risk to the Dow? For those that did send money to help Ross be freed and promote these projects or any agendas that is working toward getting his release. I’m just concerned, I guess, that the counterparty risk involved in some of these protocols’ goes and gives the potential for that money to either lose value, there’s no reward without risk. I don’t know how you guys navigate that.

UnicornDroppingz:

Yeah. It’s a great question. The short answer is yeah, there is some amount of risk in the things that are being used. The way that we manage it is only engaging in projects that are the most battle tested, around for years have in many cases, billions of dollars of money deployed into them, audited by multiple independent auditing firms, things like that. We are very cautious about the kinds of risk we take on, but yeah, there is risk with anything in DeFi.

Coinworth:

Why wouldn’t you just take the money that was raised, convert it to Bitcoin, which allows you to store value over time while we come up with different ideas on how to actually move the needle on Ross’s freedom?

UnicornDroppingz:

Yeah. The idea there would be that if the thing that we’re holding doesn’t increase in value over time, or somehow generate a form of income, we’d eventually draw down the total amount of donations and have to close up shop. I see you’re jumping in here, rizzn, I can pause for a second if you want to respond to? Or maybe not, maybe it’s just the background.

DoctorBitcoin.eth

Yeah, no. Sorry. I’m muted to listen.

UnicornDroppingz:

Gotcha. Yeah. Yeah. The idea is like, can we do this in a way that gives us an infinite runway to work on this really hard task? Yeah.

DoctorBitcoin.eth

From the media angle, sorry, just to jump in, because you were asking how are you going to move the needle. With Dr. Bitcoin, me and the other people in the Media pod and anyone else who wants to join us, we’re just kind of getting started.

DoctorBitcoin.eth

We’re going to have a lot of outreach in terms of there’s documentaries we’re going to help get awareness for or help fund, we’re making podcasts that’ll be dealing with prison reform and dealing with this subject specifically. That’s a lot of what some of the money is going to be used for, we just haven’t started

Coinworth:

The exposure, raising the signal and bringing awareness to the situation, the political prisoner that Ross has become, I think those types of projects. I’m all for that. I guess my hesitation as somebody who’s new, doesn’t really know what’s going on here is if I’m sending money and then it’s being gambled with, in speculative, high risk, counterparty risk things, is that actually going to get to do what I want to do? Versus if I was giving money, it was being stored in Bitcoin, which is emerged as money, it seems like at some point when the funding, when the project, is ready, that would maximize, or at least give the most prosperous solution. Rather than kind of getting involved in what, my view probably differs than most here, some of these affinity scams trying to pull at what Bitcoin has done successfully, which has become peer to peer electronic cash.

Coinworth:

Ross introduced me to Bitcoin, that’s where the silk road days, that’s where I got into it. I unfortunately have lost a lot of Bitcoin in playing in these games, which over time I learned, I guess my lesson, the hard way. I call it, my wrecked education of participating in these rackets, I should have just been holding Bitcoin because Bitcoin actually is the ultimate form of private property and for trying to preserve value over time I don’t think there’s anything like it.

DoctorBitcoin.eth

Not to speak for the whole treasury pod, but there was a lot of debate discussion around how the assets were going to be distributed across multiple token types. We do have, I would say a significant portion, I don’t [inaudible 00:27:07] you could probably tell the exact amount that’s devoted to Bitcoin and storage.

DoctorBitcoin.eth

We have limitations as to what type of assets that we can allocate things to being that we are a Dow built on the Ethereum stack, our Bitcoin is wrapped Bitcoin. There was also some current concerns given the near term market possibilities of being in a bear of being completely wrapped up in non-stablecoins. Like unicorn mentioned earlier, there was some potion of it that was going to be on stablecoin, some portion of it was going to be in Bitcoin and Ethereum and other types of I guess more native coins.

Coinworth:

You’re aware that stablecoins is a misnomer, they’re actually inflation coins. You’re pegging to something that loses value by design versus the supply.

DoctorBitcoin.eth

I’m well aware of what you’re talking about. I don’t think I’d normally disagree with you in a larger discussion, but we still live in a world where most prison services that we are going to employ as a Dow denominate their worth in deflation coins, as you say-

UnicornDroppingz:

inflation.

DoctorBitcoin.eth

We have to consider what’s going to maximize the amount of value we’re able to deploy as a Dow. Part of that has to be a consideration of how can we maximize the UST value, at least for a portion of our treasury.

Coinworth:

Right. There really isn’t anything else with zero unexpected inflation that also has the liquidity of Bitcoin. Bitcoin’s an extremely liquid market, you can always get into dollars or euros or whatever you’re funding without the holding bags, where there’s another group that can just instantly, arbitrarily create supply expansion and devalue your holding.

Coinworth:

Bitcoin emerged as money because of that innovation and zero unexpected inflation. We have all the information about the supply, therefore we’re talking out stable, if you’re looking for stability, it might be that you guys might underrate the supply side of stability.

DoctorBitcoin.eth

I think you’re preaching to the choir here.

Coinworth:

It doesn’t sound like-

DoctorBitcoin.eth

You’re definitely preaching to the choir, but if you look at the short term ROI, and again, unicorn, you probably have these numbers close at hand. By spreading out our risk across a variety of different types of assets we actually preserved value for the Dow by having an across stablecoin’s, Bitcoin, Ethereum, and assets, we preserved value even relative to Bitcoin.

Coinworth:

You are benchmarking against Bitcoin?

DoctorBitcoin.eth

I mean, personally, that’s how I benchmark things. I think you could denominate, you could look at our performance denominator against a number of assets and probably see some positive returns. Even denominated against Bitcoin, we certainly did better than we could have done.

Coinworth:

Yes. To provide a quick, I’m not trying to like get on my OG status or anything, but a little bit on my background. I started a web three fund that I was managing and during the ICO’s 2016, 2017, I kicked Bitcoin’s ass.

Coinworth:

On the long run, all the effort and all of the time and some of it could have been avoided and I would’ve maintained, I think a better performance, had I just held 100% of the portfolio that I was managing in Bitcoin. I had a run when ICO’s were going crazy and Coinbase started listing Ethereum and light coin and all that back in March, 2017. In the grand scheme, nothing has really kept up with Bitcoin over the long run. It’s just a flash and a pan and then-

DoctorBitcoin.eth

I don’t want to make the Coinworth and Dr. Bitcoin show, I got Bitcoin in my name, I’ve been in this space since 2011, but I do agree with you.

Coinworth:

That was when I was trying to buy cannabis seeds and Ross introduced me because everything was priced on silk road with BTC. I was like, “What the fuck is this?” Around 2010, 2011.

DoctorBitcoin.eth

Yeah. I agree with you, you can play around and lose your shirt. That’s the story of a ton of hedge funds on wall street that don’t even beat the S&P, you’re definitely right. As someone who has, since I would say 2014 or so, maybe 2013, I have kept the majority of my personal assets in cryptocurrency and lived off of Bitcoin for all intent and purposes. I will say that yes, over a long enough timeline that has definitely benefited me as an individual for my network.

Coinworth:

Think about the effort reallocated to these projects, rather than the speculation and navigating DeFi and all this.

DoctorBitcoin.eth

We’re a big group here. What I was about to say is that if I for periods of time, when you live off of Bitcoin and this Dow has to live off of its assets, if you live off of one particular asset without, I’m blindly going to trust in Bitcoin to go up and to the right, there are going to be periods of bear markets.

DoctorBitcoin.eth

It seems like it’s Murphy’s law, every time I have to pay my electric bill Bitcoin takes a dump and now I’ve got to take a haircut on the price at Bitcoin, because it went down for one day. If you have a little bit of diversity, you can mitigate those types of situations, when you have an operating budget that you have to live off of. I think that’s really the goal here is to mitigate those speed bumps, not to measure our progress in something that’s not Bitcoin.

Coinworth:

Gotcha. Well, thank you guys for getting me up to speed and clarifying some of that so I can understand what’s happening. Appreciate it.

DoctorBitcoin.eth

Totally would love to have this kind of a conversation offline. In a continuing method. If you want to join the treasury pod and have some influence over stuff, I think you’d have to be a welcome voice there.

Coinworth:

Cheers. Appreciate that.

UnicornDroppingz:

That’s anyone listening in.

DoctorBitcoin.eth

For Sure.

UnicornDroppingz:

We got a big group here with a lot of smart people getting involved into it because people really care about, and it’s really appropriate to care about the hundreds of Ethereum that was donated and how it’s going to be dealt with and how we’re going to one, make money off of it and two, what we’re going to spend it on. As Coinworth was saying, how to push the needle on topics of prison reform and freeing Ross.

DoctorBitcoin.eth

I think having a lot of Bitcoin OG’s involved in that discussion would be a welcome thing just for the culture of the Dow, given Ross’s origin story.

UnicornDroppingz:

Amen to that. I agree.

DoctorBitcoin.eth

Cool. I don’t have anything else on our agenda to talk about today, unless anybody in the crowd has more questions or if you’ve got some stuff to want to talk about schlomo.

Schlomo.eth

I’m great. We’re just all getting started. I don’t know if you want to tell them this night’s pretty much done and that’s where the Hub’s going to be moving out from. We’re waiting for that all to get finalized and then we’re going to start doing a lot of outreach together.

DoctorBitcoin.eth

Yeah, absolutely. Yeah. I’m actually working on the PNL today. I was going to talk to you offline about that schlomo, but for sure.

Coinworth:

One last question. Is there any open line with Lynn? Is she aware of the Dow or this project?

DoctorBitcoin.eth

Yeah. Renee is the operations director of the Dow, is one of Ross’s oldest friends-

Coinworth:

Oh, cool.

DoctorBitcoin.eth

Is in close communication with the rest of the family. I believe, f I’m not mistaken, Lynn is on the advisory council as is Ross’s lawyer and other folks involved with the family.

Coinworth:

Thanks.

UnicornDroppingz:

If you want some more context on the connection of Renee to Ross, you can check the meet Ross channel, they’re very old childhood friends.

Coinworth:

Oh, cool. Okay, cool. Awesome. Thank you guys.

DoctorBitcoin.eth

Not a problem. Thank you. Okay. I guess that’s it for now, unless you got anything else to add before we call this thing unicorn?

UnicornDroppingz:

All set on my end.

DoctorBitcoin.eth

All right. I thank everybody here for joining us and thank you for sharing your time, unicorn and schlomo. Thanks for the questions Coinworth, and thank you for listening anybody on the replay, until the next one of these, cheers.

UnicornDroppingz:

Cheers everyone.

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