Lido's Lead, ApeCoin Governance, & The BreederDAO Factory

MAR 22, 2022 • 9 Min Read

Joo Kian + 3 others

DISCLOSURE: DELPHI VENTURES HAS INVESTED IN ETH, BREEDERDAO, AND LIDO. MEMBERS OF OUR TEAM ALSO OWN STETH AND APE. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

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Chart of The Day: Lido Holds 25% of ETH2 Deposits
  • Lido is a liquid staking protocol for Proof-Of-Stake blockchains to unlock liquidity for staked assets. They currently support liquid staking over five blockchains, Ethereum, Terra, Solana, Kusama, and Polygon.
  • Lido has long been a clear leader as other liquid staking protocols failed to gain traction. Since Jan 2021, Lido’s growth has been immense, with over 25% of total ETH2 deposits staked with Lido currently.
  • Last week, Lido had its largest daily deposit of 197k ETH, with a continuous higher trend of daily deposits. Total deposits into Lido the past week totaled 433k ETH, making it its largest depositing week.
  • As mentioned in our previous daily, ETH2 yields will rise post-merge as transaction fees move from miners to validators. This makes the future liquid staking yields incredibly attractive.
  • Not the only one in the market, RocketPool, a competitor liquid staking protocol, has also gained traction since its launch. It is now the 2nd ranked liquid staking protocol for ETH.
  • To learn more about Lido, read our Delphi Pro report here.

ApeCoin DAO & The Next Wave of Tokenized NFT Communities
[Excerpt from our Mar. 21 DAO Insights]
Governance Participation

We would like to point out two things regarding participation this week. First is the relative centralization of decision-making we saw. Lum Network, Synapse, Tracer DAO, Notional, and Stake DAO only had a few dozen addresses vote on their proposals, even if voters used a large portion of the token supply for voting. There is an extra bit of nuance in this particular case, however. LUM holders delegate tokens to validators who then vote on their behalf. So for Cosmos chains, we can expect a large portion of voting tokens originating from a small number of voters. The second point is, given ongoing regulatory uncertainty surrounding crypto, protocols and DAOs should seek to decentralize further than we are seeing. Admittedly, this isn’t the first time we’ve called for this, but we do believe many protocols are carrying more “centralization risk” than we’d like to see. Again, each project and protocol has different needs. Therefore, their approaches to decentralization will often differ, but it’s hard to argue that a few dozen voting addresses would constitute as “decentralized.” In this regard, Quickswap and dYdX showed a reasonable level of decentralization with at least a few hundred addresses voting.

Forum Spotlight – A New DAO of $APEs is Born

  • Synopsis: Yuga Labs shocked the NFT world on March 11th with its acquisition of IP rights for CryptoPunks and Meebits. Less than a week later, the team was back in the spotlight amid the launch of Apecoin ($APE), which officially went live on Thursday. Many were eagerly awaiting a BAYC token after the team revealed its plans to launch a fungible community token a few months ago, but the degree of thoughtfulness that went into this launch certainly caught many by surprise. For starters, the team created the APE Foundation to serve as the “base layer on which ApeCoin holders in the ApeCoin DAO can build”. They also have a live governance forum, which was pre-populated with a handful of forum posts outlining the first five AIPs (Ape Improvement Proposals) to formally establish the ApeCoin DAO, voting processes, year one budgets, and staking pool allocations. Holding ApeCoin ($APE) is the only requirement for membership in the DAO, and we’ve already seen thousands of people view the forum posts; not bad for a DAO that just launched a few days ago. Let’s go over these initial forum topics in more detail.
    • The DAO: This forum thread lays out the broader DAO structure for ApeCoin DAO. It begins with the values of the DAO, the rationale behind it, guidelines, and the governance process. According to the thread, there is an APE Foundation that serves the DAO in fostering a community of creators. Once per year, DAO members will elect members to serve on a board in the APE Foundation to help lead the DAO. This post also lists the various proposals and administrative steps required to move something through governance.
    • Voting Process: This thread contains a more in-depth proposal around how voting will work in the DAO. They are proposing to use binary voting on Snapshot. Token holders will also be able to delegate their votes.
    • Year 1 Budget: The document earmarks 6% of the APE Ecosystem Fund for events, games, education, marketing, and merch. Token holders will vote on specific proposals within each category. The DAO will allocate the majority of funds to game development. There is also mention of using funds to build out an NFT marketplace.
    • Staking: According to this post, users will be able to stake APE and commit BAYC, MAYC, and BAKC NFTs in their protocol to earn APE rewards. NFTs that users commit to the protocol will still be transferable, but any APE tokens earned and unclaimed will transfer with the NFT. The NFT itself earns the tokens, which, as long as you hold it and have committed it to the DAO, gives access to the rewards.
    • Pool Allocation: This post lays out the APE allocation in each NFT group and token staking pool. The proposal divides staking into three one-year periods and consists of 17.5% of the token supply. The allocation is heavily front-loaded, with the DAO issuing most tokens in the first year. Interestingly, the total $APE supply allocated to staking pools is higher than the initial 15% supply drop for BAYC/MAYC holders. 
  • Our Opinion: This is probably one of the most thought-out, comprehensive launch plans we’ve seen for a new DAO. There’s clearly been a lot of work conducted by several parties leading up to its launch. Cartan Group LLC, a Cayman Islands registered company, authored the first three proposals, while Animoca Brands authored the last two (Animoca is the same organization that helped launch REVV and SAND tokens). Given their involvement, it’s no surprise the year one budget proposal for the Ecosystem Fund includes a 3.2% allocation for game development, “ranging from top-tier studios to indies, creating games and providing in-game incentives that bring the APE community to the forefront of web3 gaming.” Since Yuga Labs has granted a commercial license to BAYC holders, we speculate this could be a way for the DAO to leverage the IP of BAYC NFT holders by allowing partners like Animoca to develop new games and virtual experiences around the IP of BAYC. In the future, the DAO could reward staked NFTs based on revenues generated from these games or applications, allowing NFT holders to signal their commitment to allowing the IP of their NFTs to be used in these contexts. Transferring a commercial license like this doesn’t seem nefarious, especially if it’s voluntary and benefits existing NFT holders. It does, however, illustrate the challenges that could arise from different ownership structures between community DAO members ($APE holders) and BAYC NFT owners (not to mention the complications with meatspace regulations like commercial licenses). I am curious to see if there will be any verbiage surrounding commercial licenses and NFTs when these features are voted on and potentially go live. Again, this is all speculation at this point, and I’m not a legal expert, so I foresee these intricacies being decided on by the community – with help from trusted lawyers and regulators – as ApeCoin DAO ventures into uncharted waters.
  • Zooming out, we believe the ApeCoin DAO launch represents an important inflection point for NFT-based communities. Regardless of whether or not you support their vision, the excitement and buzz generated by $APE and Yuga Labs over the last two weeks has piqued the interest of every major NFT community. Anyone who was already considering a fungible token strategy now has a playbook to reference, and anyone who wasn’t is likely having early conversations about what it could look like, even if they have no immediate plans. We’ve been talking about hybrid NFT and fungible token models for a while now, and fully expect to see more developments on this front over the coming months. ApeCoin is just the beginning…
  • For more, Delphi members can see our latest DAO Insights here.

BreederDAO: The Metaverse Factory Producing Strategically-Aligned Assets at Scale
[Excerpt from a Delphi Podcast]

In this episode, we sit down with Renz Chong, CEO of BreederDAO, an NFT asset factory for blockchain games. We discuss BreederDAO’s business model, $BREED tokenomics, critiques of the guild model, and much more!

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Joo Kian + 3 others