[DISCUSSION] Current events and what's next for Solana

In light of the recent events which have involved FTX.com and FTX.us, we would like to confirm that metaCOLLECTIVE had no exposure to any of the entities involved neither on the FTT token.

Despite this fact, our exposure towards Solana, the token and all the protocols of the ecosystem remains.

We opened this thread to collect any thoughts the members of the community may have around the current circumstances and the next steps.

Kicking off this thread by saying that in my personal view we have experienced a 10 sigma event which was not imaginable not even in the worst prediction scenario.

As a consequence of this, we are now really moving into unchartered waters with uncertainties both on the token performance and in the ecosystem.

In my view, on the token performance, for sure a lot will depend on the future of FTX and on the legal implications of that (e.g. will the US/Bahamas freeze the assets of FTX/Alameda in the near future?).

On the ecosystem side, which is the part which hurts me the most, we have witnessed in the last few months huge improvements both on the reliability and on the development (e.g. market for fees, second validator Firedancer provided by Jump). It’s hard to predict what the impact of this disaster will be on the projects and on the people active in the space, and if the tech will save Solana in the long term.

It’s time to shut this dao down

This thing has been losing money since inception

At some point enough is enough right?

Thanks for your comment, it seems you are new on the forum. Yes the DAO has lost money, however:

  1. It has overperformed SOL (this is off little conform though, as SOL is -90% from inception)

  2. All discussion concerning deployment have been public on several levels: Discord, this forum, and a public governance vote

In hindsight, several investments did poorly but never we have seen concerns raised from you? If you would like to be more active in the process please do so. This is a DAO and every proposal is kept in consideration, discussed and voted publicly.

I don’t think it’s a matter of “at some point” but more what to do “at THIS point”. I think ultimately investing is about following a vision of how the world will be and not just going long when pumping and selling when -80%, and various market cycles have shown this. ETH got his $80 moment and maybe Solana will have that too now (or maybe not, and this is the last swan song).

I see three ways that can be take from here:
1- shut down and realise the loss
2- continue and deploy the dollars left during the prolonged bear market that this event will trigger and wait for the longer term
3- let who wants to leave the DAO go and continue with a smaller number of people who are still believing in crypto or Solana

As a further statement, I think the mandate of the DAO is wide enough that if the community doesn’t believe anymore in full or in partial on Solana, other types of investment can be pursued (as for example we are holding ETH in our treasury)

double down

dca capital in liquid tokens over the next year and some - 70% sol, 30% critical sol infra

it never pays to be a bear - you’re often wrong and even when you’re right, the world you longed is a shittier one

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This has nothing to do with believing in crypto or Solana but belief in this DAO.

Agree 3 should be an option for holders to redeem against the treasury if they’d like, those who want to stay can stay.

I hear and respect your opinion, but allow me to say that if your first comment since the inception of the DAO was 5 days ago, well there was a fundamental misconception on the being part of a DAO. If we don’t create a community is hard to deliver value, both financially and non financially speaking.

Anyhow, let’s give some time for other people to express their feedbacks and then we evaluate how to move forward with the options above.

I know I have been inactive for awhile because of life, but just logging in because this is important.

I don’t think it makes any sense from my perspective to abandon the DAO.
Personally I always saw this project as exposure to solana + alpha. We got unlucky with external shocks, but the same is true in almost every corner of the market.

While I am now personally bearish on the entirety of crypto for the next 5 years, I don’t see a point in realizing this loss, and all the complications it would entail. I would only support a cashout of people who want to exit at a decent haircut, because liquidating positions now would be at a big detriment to those who stay (and IMO those leaving too).

Lastly I support expanding the scope of the project to other tokens, while keeping a large allocation to solana. I would also like to see a more active investment style, and am willing to give up more granular/democratic control of investment decisions to do so.

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I agree with what stated above. Both on the haircut and also on the diversification.

for what regards the “active” management style, it will be for sure hard to achieve return but i think we need to take some market view and at least try to partially get out if we see too much volatility ahead.

Having said that, we as no one else in this market is immune from black swans like what happened with FTX

Id personally like to hear a temperature check from the founders. Are you still enthusiastic about managing these assets well and leading the DAO? If not, I vote dissolving it. If so, then Im happy to keep it going.

Hi everyone @Winslow @PorcoRosso @boink @gab, after a long internal discussion, we believe it’s in the best interest of the DAO to wind down and redistribute funds to cMETA holders. This comes after many considerations, that we’re going to detail below.

The DAO was started to give anyone access to a diversified basket of strategies and exposure to the Solana ecosystem. There are a number of factors that have fundamentally changed our view of the ecosystem and made for an extremely uncertain outlook, at least in the short/medium term.

The latest catalyst has been the collapse of FTX. The destruction of capital and credibility for the entire crypto industry, as well as the contagion effect still to be realised and the delayed adoption that this will cause on the general public, will likely have negative effects for the next year and beyond.

Unfortunately, the Solana ecosystem has been caught in the cross-fire, and given its close proximity to FTX and Alameda Research it has suffered more than any other ecosystems. While getting rid of this toxic partner may prove beneficial in the long term, in the short term it is definitely a disaster. Even more so, as FTX has likely brought down some VCs who were strong believers and supporters of the Solana ecosystem. Without them, it’s going to be hard for the new projects to come aboard and/or they will likely build on different chains.

There is a Cold war going on right now between different ecosystems, which is being fought with disruption and hostility from large CEXs and their partners. As of now, it looks like the only large institutional player left standing and supporting Solana is Jump Crypto. There were a couple of other large institutional names that used to back Solana but it is now unclear whether they will continue to do so.

We still believe in the mission and the tech which is powering Solana, a fast and cheap blockchain that can scale to the masses, but tech is not everything. There are other critical areas such as the onboarding of new users and going to the mass market which are both in danger under current conditions. Moreover, in general the DeFi ecosystem on Solana is not healthy, with little user activity left and with most of the main protocols having been hacked or rugged (Mango, Solend, Saber). TVL went from 6.5B when we started to a mere 0.3B (-95%). With little on-chain activity, yield-farming opportunities are not attractive anymore, and we are unable to justify deploying capital in such a high-risk/low-return environment.

Apart from the more recent events around FTX and Solana DeFi, the other main factor that made us come to this decision, is the lack of participation in the decision making process from DAO members. Despite our best efforts, we were never able to engage vMETA holders and external communities to participate in the DAO. We tried multiple times to gather feedback and open up the discussion on the forum on what would have been the best way to drive engagement across the members, but we never managed to reach a strong consensus around any initiative. This is definitely where we feel we failed more egregiously. DAOs can represent the future of collaboration but we believe we are still in the very early days and at this point, even looking at other DAO projects in the markets, it’s hard to predict what are the driving forces behind running a DAO vs a traditional organisational system.

Next steps

This has been an incredibly difficult decision to make, both as founders of the DAO and as investors in it, but ultimately the majority of the core team believes it is the right course of action. We’re happy to keep engaging here and hear your thoughts. As for ourselves, we have decided to forfeit any type of fee and compensation that we received as core team of metaCOLLECTIVE, including all the cMETA and vMETA that were minted in the beginning of the year (this corresponds to 4M cMETA and vMETA tokens that were split equally between the team)

The treasury was first deployed on-chain on January 18th with $5m. On that date the price of SOL was $140 while today is around $11.5, a drop of around -92%. The current value of the treasury is ~$1.1m so a -78% from the initial funds. This number does not include Cashio hack funds’ for which the DAO is still a creditor of circa 300k USDC.

Happy to hear others’ thoughts.

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While my initial inclination is to continue going and ride out this crisis, so as not to sell at the bottom, the market statistics are telling. A 95% drop in TV and 90% drop in price might not be recoverable. At least the funds weren’t on FTX.

I agree that it is disappointing we never managed to get the kind of engagement we had hoped for, nevertheless it was still my hope that those involved would still be able to deliver alpha and correctly position the funds to capture upside. External factors are largely to blame for the poor performance up until now, so I don’t don’t place any blame on the founding team. Indeed your decision to forfeit any fees or compensation for months of work is telling of the team’s ethics (cough FTX). I commend you for such a decision.
This loss will sting, even if I was a smaller investor compared to others, but you need to know when to cut your losses.

I guess my only two questions are the following;

  1. Is shifting the focus of the DAO away from Solana not an option?
  2. What will be the mechanism by which you will liquidate the fund?
  3. Do we have any illiquid VC investments still?
  4. Would you have any recommendations on where to place the funds? Do you see anything positive in this mess? I wrote off my investment as speculative, and I hardly see a reason to just eat the loss and put it back into cash.

Thanks everyone for their hard work and contributions.

First of all, Hi to everyone.

It’s the first time I write something here but frequently read everything since the beginning. Since day one I was a big believer in this and still believe that this can succeed. But not now imo. I actually had a big stake since day one but I am more than happy now to take my loss and move on and come back in 2-3 years. In my opinion this DAO only suffered from a market that took one hit after another calling for Adrian in the ring. You guys did and excellent job but sometimes it’s better to bury your first creation and come back when the environment is pushing and with the knowledge of the fails of the past. I am more than happy to invest again and letting more crazy minds in crypto space handling Investments. Speaking about market conditions I think there is little to no time and imo we should switch everything to usdc and distribute to wallets according to their cmeta and vmeta holdings quickly. We’re close to a high chance of a capitulation which could value the small rest even 30 to 50% lower. And even if not we’re facing a minimum of 1 year or more in 2023 of crypto winter seeing this DAO not improving at all because retail is done and institutional money is costly. From my perspective and it could be already in 2 days when US releases inflation data it could be close to something where we could save a lot value of the bitter rest. Not selling in bear market normally sure but our outlook is worse. Def better to start something new when markets recover and people we want in a DAO don’t look at something that wasn’t moving since years.

Stay safe everyone

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I’m in agreement with Sparrow. Maybe not about what inflation (I didn’t understand if you think it will be bullish or not [I do]), but in the fact that we should move everything into USDC. Then we can take our time and figure out distribution mechanics.

if we’re dissolving the dao - can we please dissolve it fast?

thanks

Thanks for you words @Sparrow @PorcoRosso .

I agree with you and @gab that we should move everything to USDC. My concern is that of liquidity which is very thin at the moment. A lot of SOL defi got wiped out and to exit completely our position will not be so easy. The current solana TVL is around $280m so our treasury is ~0.5% of the chain TVL. For comparison, it’s as if we had $130m on Ethereum.

In terms of next steps, we submitted a proposal to withdraw everything from DeFi protocols, and will soon submit a proposal for liquidating all assets. I think in certain cases (e.g. Lido) it makes sense to bridge the tokens to ETH and given that we expect some LPs to prefer USDC on ETH for the redemption (due to more limited support of Solana USDC recently), we can leave the funds there until the redemption. As for the exact process, it’s less urgent but would probably be on the line of cMETA holders sending the tokens to a designated address and receiving USDC back from the treasury.

@PorcoRosso with regards to your points:

I think that as of now it would not be the right course of action, as we don’t feel to have a strong edge on the market, also because we are/were deeply inside the solana ecosystem and know most of the people/protocols

No VC investment, as the one in Sharky was cancelled

Don’t have particular recommendations here unfortunately. Personally, if I had to hold a single asset long-term without touching it, it would be BTC. At the same time and especially in the short/medium term, it may not have the returns of other alts

if we act quickly, i’d much rather take a distribution in kind in the different assets (or at least the ones for which it makes sense) than swap everything in usdc

can’t seem to see the proposal yet

The proposal is this one. As for the in-kind distribution, I would personally not be against it, so if the majority of holders is in favor we can do it. It would probably make sense to do it only for the major holdings and liquidate the rest. We will have the exact picture as soon as we withdraw everything but the major tokens are: SOL, USDC, LDO, LFNTY, SHDW

Let’s try to conclude this unwind before EOY so that we dont have an extra year of tax reporting to deal with.