Introducing DIAMOND DAO - Treasury DAO for Diamond Hands Only

Pylon Gateway
#1

The Diamond DAO aims to become the largest treasury warchest DAO within the Terra ecosystem, incentivizing a long-term culture of HODLing and fostering a community of Diamond Hands.

All 100% of Diamond DAO’s tokens $VVS, which represent shares of the DAO treasury, will be launched via a singular 48 month Pylon Pool on Pylon Gateway. The project will be entirely community funded and based without any private sales or hidden team allocations of any sort.

Simply put, Diamond DAO membership is open to anyone who deposits UST into the Pylon Pool for VVS and thus holds a stake in the collective treasury.

Core Team

The core team will consist of @laine_ust and @Woody

VVS Tokenomics

In total there will be 100,000 VVS tokens for Diamond DAO, representing future claimable shares of the Diamond DAO treasury. These tokens will be distributed only via Pylon Pools. 95% of the tokens are made available in the Gateway Pool while the remaining 5% will go to the core team. The team tokens will be subjected to the same 48 month lockup schedule.

Distributed pro rata to the amount of UST deposited at each blocktime of duration staked, this token distribution method largely aims to reward the earliest Pylon Pool depositors.

At the end of Pylon Pool expiry, users will be able to claim their share of VVS tokens, which they can burn in return for a pro rata share of the total assets accrued in the Diamond DAO. On top of the Diamond DAO treasury rewards, the underlying UST deposited into the Pylon Pools for VVS will be redeemable in full upon Pylon Pool vesting period expiry.

Unlike traditional Pylon Pools where the tokens are usually unlocked halfway into each vesting period, VVS tokens will only be claimable at the end of the Pylon Pool vesting period in order to reward long-term HODLers.

(After initial launch and traction, members of Diamond DAO may vote to pivot the pool into a Liquid Pylon Pool in order to allow VVS tokens to be traded at market prices pre-unlock.)

Treasury Yield

The UST yields generated from the Pylon Pools for VVS will go towards periodically buying tokens in the Terra native ecosystem, starting with LUNA, MINE, ASTRO, ANC to begin with; with potential other add-ons like RETRO, PRISM, etc. as the DAO votes.

Depositing into the Pylon Pools for VVS is akin to engaging in a yield-based dollar cost averaging of selected tokens without risking the principal deposit. The earlier you deposit into the Pylon Pools for VVS, the more shares of the Diamond DAO treasury you will receive.

Diamond DAO members will govern the treasury portfolio and engage in governance of other protocols on Terra with the treasury assets, receive membership NFT airdrops, share revenue from profitable DAO activities (i.e. bribe mechanisms or NFT sales), and eventually receive a share of the DAO treasury pro rata to VVS tokens vested from long-term holding.

(Meta)-Governance

With the initiation of governance, Diamond DAO members will be able to govern the Diamond DAO portfolio, overseeing decisions over which Terra native tokens the yields will gradually buy up over time. Protocols in return may submit bribes to the Diamond DAO for their tokens to be added as part of the Diamond DAO portfolio.

Provided that the tokens held by the Diamond DAO are functional governance tokens, the Diamond DAO may engage in governance over other Terra protocols by actively participating in voting for governance polls. For instance, MINE that is held by the Diamond DAO could be staked in the Pylon WebApp to actively vote for particular projects over others.

As for the yield-based portfolio itself, Diamond DAO members can vote to deposit assets into governance staking, yield farming pools, delegation to validators, and propose other DeFi engagement ideas to boost treasury returns.

That said, the core principle behind the DAO treasury would be to hold and engage in governance for protocols contributing to the health of the Terra ecosystem.

Diamond Hands NFTs

All Diamond DAO members staking above X amount of UST in the Pylon Pools for VVS (amount to be determined at a later date) will also receive tier-based membership NFTs as a symbol of appreciation and their engagement in the DAO. The more and the longer one stakes, the rarer tier of NFT one will receive.

Grant from Pylon Protocol

In order to bootstrap initial deposits and engagement for Diamond DAO, there will be a governance proposal on the Pylon WebApp to apply for a community grant in MINE to form the first assets that constitute the Diamond DAO treasury.

Given potential concerns on the handling of funds, all grants and funds will be handled by a multi-sig wallet composed of core DAO members and advisors.

Roadmap

The rollout of the Diamond DAO is multi-phased in order to get started as quickly as possible with core features and required functionality, before rolling out the “add-ons”.

Please note that depending on developer capacity some phases can be worked on concurrently.

Phase 1

Diamond DAO multi-sig wallet, VVS token contracts, and Pylon Gateway Pool for VVS are launched. Grants are applied for. This will bootstrap the collection of yield and purchases of assets can be performed manually by the Diamond DAO development team.

Phase 2

Implementation of core treasury contract that will handle deposits of harvested yield, purchases of tokens and ultimately burn of VVS and claim of token shares

Phase 3

Development of UI for the DAO.

Visualizing the contained treasury, historical performance etc.

Development of a minimal backend for indexing on-chain transactions for fast reporting.

Phases beyond

Governance will be added, by means of voting via accumulated VVS tokens in the Gateway. Voting can be used to change tokens to be purchased (add new tokens etc.) or changing the weight of tokens being bought.

Bribing mechanisms can be added, for other teams to bribe the DAO into voting for them on ASTRO or other Terra protocols for which voting tokens have been acquired.

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#2

entirely community funded and based without any private sales or hidden team allocations of any sort

the remaining 5% will go to the core team

Seems like you’re asking people to build you a warchest and then you get a free 5% cut.

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#3

Sounds good, Im in :muscle:

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#4

So people put money into the pool which contains 95% of the tokens. You keep 5% along with the other developer. Is your 5% Locked up for 48 Months? Seems like a way to get a nice buck to me

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#5

Hi @ActiveInvestor & @PylonStaker666.

Yes @PylonStaker666 the team’s tokens will also be locked for the 48 months.

Given we hope to work on/for the DAO for the 4 years, we feel it is only fair we get paid for the work. We chose 5% because we feel that it is fair and reasonable compensation. It also allows us to scale our capabilities if/when the DAO grows.

The roadmap outlines what we envisage our initial work to be. We are also working behind the scenes to develop beneficial relationships and outcomes for the DAO (i.e. potential tokenomics changes for other projects :wink:… make of that what you will). In addition, there is the ongoing work we will be doing to meet the needs/demands of the DAO over the 4 years (i.e. executing all the proposals that pass).

We chose to receive VVS and not UST as we 1) want to show we are aligned with the long term success of the DAO, 2) genuinely believe in the DAO being successful.

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#6

Interesting idea although effectively competing with others like Apollo.

I’m not clear why you would be applying for grants though. This seems to be a private commercial proposition for benefit of investing members, not a community development. In that case why would the whole community be funding the wealth accumulation of a few?

2 Likes
#8

Different approach and strategies to Apollo, but yes both aim to build strategic treasuries. For example, we are keen to discuss with the DiamondDAO community the idea of accruing pLuna instead of Luna, as that may act as heavily discounted governance power.

We believe DiamondDAO has a symbiotic relationship with Pylon/MINE. That being, the better Pylon does the better DiamondDAO does, and the better DiamondDAO does the better Pylon does.

for example, DiamondDAO will use Pylon Gateway as well as buying and holding MINE. So a % of DiamondDAO’s yield goes to Pylon’s treasury as well as a % of DiamondDAO’s yield going towards buying and holding MINE (just quietly, the current approach would mean over 35% of DiamondDAO’s TVL would be added to MINE’s value). So the success of DiamondDAO should benefit MINE.

For context, DiamondDAO would buy and hold MINE over a 4 year period. As a group committed to the long term success of Pylon and MINE, it would be silly to depreciate MINE when we are the ones holding it the longest.

Ultimately, we hope the initial grant would help to bootstrap the launch of DiamondDAO. With all that said, if the grant is something the community feels strongly against then they are welcome to vote against it :smiley:. At the end of the day, the success of Pylon/MINE is something we feel strongly about.

2 Likes
#9

Hello Woody

Thanks for the taking the time to make a response with a little bit of detail.

I’m not persuaded though regarding the grant.

Qualitatively there’s simply no difference between Diamond Dao buying and holding Mine and me holding Mine for the long term, or the many others committed to the same. I’m not asking for funding to do so. If the community wants more long term holding then boosting incentive to governance stake, with a long term pool (selectable terms?), would be a more sensible and equitable way of doing so than funding a private commercial venture.

Structurally, will the Diamond Dao have Mine locked away for 4 years irrevocably? That would strengthen your case. However, again I would suggest it would be preferable and more equitable for Pylon to have and incentivise it’s own version of the same.

This aspect is the only negative about your proposal to me. Otherwise it seems a good proposal and certainly you and Nick have prominent credibility for the Pylon community.

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#10

Yes, they will be locked away for the 4-year duration of DiamondDAO. For context, we have extensively collaborated with the Pylon team in designing this and they will be advisors for us.

I think we are looking at this differently. DiamondDAO is ideally a positive-sum game, whereby the more people/capital in it the more value it can capture. With this, it has no upper limit to the amount of $ it has. As for individuals, there are $ upper limits as well as no positive-sum mechanics. So there should be some minimum threshold amount of capital that DiamondDAO wants to reach for it to gain positive-sum growth (which benefits should outway the costs for MINE stakers), whereas an individual doesn’t have that. This is why we think the grant could be useful.

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#11

This is certainly an interesting idea. Would drive attention to Pylon Protocol for sure. I do think the 5% fee is high. A normal ETF fee range would be 0.5% - 2%.

I would propose that you come up with a way to taper the fee structure, like start the pool off with 96% of VVS tokens. The idea is that people who only buy in during the first year pay the highest fee and people who join later pay a lower fee.

Example

  • First Year - 4% Fee
  • Second Year - 3% Fee
  • Third Year - 2% Fee
  • Forth Year - 1% Fee

I’m not a developer, but based on the scope of the project this doesn’t sound like it will be a full time 40-hour week job for the next 4 years. Thus it doesn’t justify such a high labor cost for the team.

3 Likes
#12

It’s a done deal. They “have extensively collaborated with the Pylon team in designing this and they will be advisors” per Woody’s comments above. This discussion is only for formalities.

#13

Hi @ProbeRusher.UST

Thanks for your honest and constructive reply. We will be taking a second look at the team allocation, however, there are a few things I would like to “point out”:

In ETFs the fee is taken off the TVL and not off the yield, and also the fee is paid yearly in UST. In our case, we take 5% off the directed yield after a total of 4 years. So 5% off 20%, which lands us closely to a 1% “ETF fee of TVL”.

I do agree with your observation that we will not need 100% full time development resources for all the 4 years, but we also do expect the work to pivot more into community management and talk with potential partners etc.

Anyway, thanks for the feedback. We will be looking into whether a TVL based ladder for the team allocation can work (so the higher TVL the smaller % for the team).

We will update here before taking it to gov-voting.

#14

I’ve got a few questions for the Diamond DAO team —

Is there any more info, for instance. website, twitter, webapp, that you could build out before launching this pool? Would love to see more of what the team can do versus just relying on the Pylon team to carry them as @dabbler mentioned.

As for the 5% fee, just to confirm, that’ll only be coming off of the yields redirected, correct? So it’s 5% of 20%, not 5% of UST deposited and treasury holdings?

If it’s only 1% of TVL, my intuition is that it sounds alright, since other funds usually charge much more like a 2% flat management fee and considering that the Anchor Earn rate might come down.

In terms of what @ProbeRusher.UST said about tapering the fee structure, I think that could work. But to confirm, the treasury holdings management fee is locked as well for the entirety of the 4 years right?

Agreed with a couple of others here @dabbler that this would likely not qualify for a community grant from the Pylon community, unless you can do something more for MINE stakers in particular.

My only big concern boils down to potential security vulnerabilities (make sure you get proper audits on the project before launching the token/treasury for this) and the multi-sig signing off transactions. As long as we have enough trust and decentralized mechanisms in place, it should be alright.

I think this is great way to bootstrap TVL to Pylon Gateway, especially when there is no limit to how big the entire treasury can get, which creates a positive feedback loop of more deposits → more governance power → more community attention → more deposits

What would the roadmap for shipping this project look like when it comes to rough timelines?

Let’s have this shipped ASAP!!

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#15

Hi @butaw, thanks for your feedback

Correct , it’s 5% of the 20%, so ~1% TVL over 4 years. So 0.25% of TVL yearly if we break it down like that.

We’re looking into a different fee structure :blush:

We hear you all there too - we are looking into alternatives that we’ll share in a single update that includes all answers to all points raised.

Agreed. It becomes a high value target and it’s front and center to us as well. We’re looking into existing audited treasury contracts at the moment, and were aiming for a Halborn audit of the contract.

Twitter, discord is on the way.
Website soon. And all other dev is also getting into gear (contacts and reporting backend).

In terms of time line we do not wish to commit to any date yet. But we will update on that soon too :blush:

Edit
Team tokens have the same lock as the GW pool. No unfair advantage for the team for when it’s claim time.

1 Like
#16

@laine_ust @Woody

What is your approach to dealing with legal issues that might arise from creating and operating the Diamond DAO? Is the Diamond DAO going to be established as an LLC like Flamingo DAO?

What is the stance on securities law, accredited investors for Members and etc.

1 Like
#17

Owww good questions.

Neither @laine_ust or myself have legal backgrounds, so it is something we have been discussing with people in the know. We are yet to reach a conclusion about the legal structure of DiamondDAO. However, there are a few things worth knowing.

1 - Unlike most investment DAOs (like Flamingo) we aren’t actually investing people’s principle. Instead we are given access to their yield and utilise that. I believe this is why Pylon Pools don’t require KYCs.

2 - Neither of us are based in the US and we don’t plan to register the DAO there.

3 - If we can get everything set up in time, nobody will be trading the capital (it will all be automated).

Hope this helps to bring some insights into our current situation regarding legal matters.

#18

To add to what @laine_ust said, we are really keen to work with the Pylon community on all of this. We have already got some pretty cool ideas brewing for alternatives :wink:.

We have specifically chosen a loose timeline because it does heavily depend on what DiamondDAO members want. So we are aiming to build out the fundamental stuff first and go more specific once the community has more involvement.