Hi everyone, I would like to kick off a discussion about the overall strategy of the DAO.
Is there already some consensus among the large holders of META about what the target allocations should be to farming, direct token exposure, venture investments, etc?
We should also discuss how active/passive the DAO will be etc.
Happy to hear the current thoughts, or if there aren’t any to kick-off the discussion.
Hello, very happy to see us start this discussion to find objectives for how we want to structure the portfolio. Given the structure of the META along with the protocol (discussion then vote) I do not believe META is prepared or built towards active management. If we look at the main objectives of the portfolio I believe that META should be a relatively passive investment vehicle into the SOL blockchain. I think we should always be looking at new opportunities and ways to increase profit from the fund but to not actively trade direct token exposure to make short term profit. I believe most people would want a rather stable long term investment in SOL rather than a volatile asset with active trading.
How do I propose we allocate funds? I love venture investments, I think we are in a space where we have not even discovered the complete potential of what is possible. I think we are in a nascent technology that will change the world and be part of every day life in 10-20 years. Given we are in a technology at its birth I think that the blockchains/projects that have dominated so far are likely not to be the ones dominating in 10-20 years due to better tech and better understanding of the space and what is possible. I therefore believe that finding projects that can help solve real life problems more efficiently should be the largest driver of this fund through the community that we bring to the table.
I therefore propose 60% stable coins, 20% direct token exposure, 20% venture of capital (of whatever % of portfolio we want to have invested). However I would love to hear others thoughts on the management of the DAO, especially concerning the volatility of cMETA as this would have an affect on our direct token exposure especially.
Like crypto/blockchains I think we are only at the beginning and must discuss how direct token exposure will be managed (I vote for passive) and how we will manage venture investments (our appetite for risk and volatility if we do not sell early).
My biggest hope and concern however is for active vMETA users and META community to give their knowledge, expertise, and want to play a part in the community. We all have one common goal and will all prosper together if the value of cMETA increases. Therefore the more people who join discussions and vote the better we will be as a community, especially if you have a voice that disagrees. If we do not believe that we can alter the trajectory of the community with our vote and chose to not vote instead, we are heading on a dangerous path where certain outspoken people will decide for everyone what happens which is IMO not what META is meant to be. Even if your vote doesn’t swing a decision between approval/disapproval it is important for the community to know. Like this we know what we all heavily agree on, and issues where the community is split.
I am sorry for the long message especially as I do not yet have the experience of some in the collective. I hope everyone has a good week. I am looking forward to continuing the growth and discussions of our metaCOLLECTIVE.
Will have to disagree a bit with @EliteMentality here as I think we should strive to be an activist DAO. That doesn’t mean buy something in the morning and selling it in the evening but more like be active in forums, governance of other protocols, and often rebalancing the portfolio in an opportunistic way.
This is also due to the nature of the nature of the industry which is always rapidly changing. I don’t think an investor in MC would be looking for a passive investment, as that can more easily achieved by an ETF on Solana (without the whole DAO structure). Moreover, 60% in stable is also very high imo as the natural benchmark for MC is SOL and if in 1y we make 25% farming stables vs solana 10x that’s not acceptable.
In my opinion farming stables should be done only for idle funds not currently invested and the main focus should be SOL + token investments, used also for heavy farming. Given the potential abnormal returns of venture investments a part should be allocated there and other high risk / high reward trades, say around 10% of portfolio.
In then end all these allocations should be taken as not written in stone and if we see a great opp we should take it opportunistically without being worried too much about allocations.
Enjoyed reading your points, thanks for adding your comments. I agree we should be active in forums, governance of other protocols as this is our community remaining plugged in.
I understand your position on % of portfolio invested in stablecoin farming as too high. When I initially suggested those numbers it was more of a general idea to get the ball rolling but I concede the number is too high even for this. 60% is too high but I do not think it is a bad idea to keep 10-20% farming in stable-coins on top of idle funds. This is more so applicable for the days where we have deployed most our capital. Doing this would offer us capital for moments that are great buy opportunities in token investments and for a venture allocation in case we are above the 10% aim and still really value a project. This would be our rainy day funds. You bring up the point of Solana being 10* up but lets not forget the flip side of that discussion. If we had started this project in November and gone 90% tokens and 10% venture…
I do think that on top of token selection that venture is a great way the DAO can offer value. I still am of the opinion that we should be willing to have 20% in venture projects if the projects are good fits for our community, offer value to society through fixing issues, and we are not too exposed on specific projects.
My updated % (roughly speaking). 20% stable, 60% tokens, 20% venture. Just in my humble opinion.
Thanks for the thoughtful replies.
Let me start with the venture side:
In my non-pseudonymous life I am a professional venture capitalist. And while I absolutely think there is money to be made there, I think we will struggle. Even at $5M AUM, we simply don’t have enough money to successfully diversify in early-stage projects (the only ones we will likely to be able to invest in). We would need a portfolio of around 20 projects, maybe 10, to normalize our risk taken. That would mean our ticket sizes would be tiny, and therefore we won’t get allocation to any private rounds. By the time it gets to public crowdfunding, we will be buying in at a high valuation. We also will need to develop enough clout / a strong community to convince projects to take our funds over traditional crypto VCs. It’s also not entirely clear to me how we can be transparent with the DAO community while handling confidential decks/fundraising information. If you guys have some solutions in mind would be happy to hear and help.
That being said I have already shared one project with the founders, and will continue to do so as I see some decent dealflow in crypto even if it is not my focus.
As for the trading strategy: I think we just need to arrive on a consensus on what our average holding period will, and how actively we will trade/rebalance. Are we going to be taking opportunistic trades, or just shifting our exposures around as prices move? How much do we hold in Stablecoins? I would prefer not to have a completely passive approach, but on the other hand the voting mechanics prohibit us from being really nimble.
Lastly on the point of community: from my contacts in the crypto hedge fund industry most of the gains come from “insider” information. That is - close ties with projects, and having visibility on new features/big news announcements before they happen. Given that this is an open forum, and votes are public, I also struggle to see how we can capitalize on this to give us an edge in the market.
I still agree that we should see more dissent and people voicing their disagreements on proposals. I think up until now all the proposals have passed? I was one of the few so far to vote negatively on something. Some leadership from key members is great but we need to find a way to prompt more engagement from “passive” holders. As with most things online, 1% of users generate content, 10% engage, and the rest silently watch. Maybe we can devise some incentive structure? For instance fictional points for submitting or commenting on proposals? A ranking system perhaps?
Thanks for your inputs and experience! I understand your position concerning venture, do you think we should not look to find these projects at all? Concerning confidentiality of decks I know that the team is trying to make access to certain groups private based on if you own vMETA or not. If there is a channel on discord for verified holders of a high amount vMETA (can have a separate channel with a lower entrance requirement of vMETA) do you think this would be a possible solution to share decks? Would that still not be adapted to the projects who share their decks with confidentiality etc? For discussions and voting the team/people in the specified channel can make a summary of the positive/negative of the project. This would allow the team/some people of community to verify the tokenomics/team/risk factors and try and limit risk in this regard. It would then allow people to vote on the project but with an easy summary and not have to spend too much time going through each project. I also think that some people would like to co-invest with the Collective but it would be tough to offer potential figures to projects fundraising, especially at the beginning with limited data.
Would love to hear from the team about the trading strategy as they have considerable experience in this department. IMO I would like to view the trading more as investments in terms of time horizon and risk management. I agree that I would not like a completely passive approach as well.
The separate discord group would make the forum slightly more closed to discuss information on tokens but still would not stop members of the group from moving earlier or discussing with other people.
I agree 100% with the fact that we need to avoid “herd mentality” while discussing and voting on issues as much as possible. I think people with experience especially should share to help people with less knowledge and information to get a full picture of what they are voting on and think of things that they did not realize were important. Perhaps it would be a good thing to include Pros and cons/risk and potential for every proposal by protocol? This framework would help the person submitting the proposal to remember that they aren’t just trying to sell us their idea, but offering an opportunity to the community with its strengths/weaknesses to vote on (not saying that people proposing votes so far haven’t). I believe as a principal the community must always be encouraged to vote and participate in discussions, incentive structures are worthwhile to explore. Even if a vote is probable to go one way people should still be encouraged to vote to gauge the true interest of the community. Otherwise people could think that their vote has no meaning and one day those people won’t vote on discussions where they can change the outcome. A different approach could be to not show the results of a vote during voting but only when the vote has finished.
@PorcoRosso agree with your point on check size. I think right now the most difficult part is to establish ourselves in the space and make the MC name known. I do believe that an investment by a DAO has a lot of positive aspects, especially in the current environment where there is some (to some extent justified) criticism on traditional VC funding, particularly on Solana.
We just posted a venture proposal on the forum, where the team accepted a lower ticket size, which I think is an important first step. In this case I checked first with team before posting and will share more private info on request. As soon as we have the verified Grape channel on discord we can also use that to share more confidential information.
With regard to trading strategy/rebalancing, I would still avoid to have any a-priori decision about horizon or allocation, but rather continuously evaluate proposals and current market opportunities
With regard to voting participation/consensus, I think that it’s still very early to draw any conclusion. So I would wait maybe 1-2 months and then have a discussion on whether some incentive structure is needed to increase participation.
@EliteMentality you raise good points and highlighting pros/cons for each proposal is definitely a good practice. While we currently can’t change the governance method (as we are using a standardized smart contract developed by Solana labs), we definitely need to encourage people to vote more. As I mentioned above, I think in the early stages and with still relatively small community is quite normal to have low participation, so would wait some time to have more data points before taking any specific action (for example incentive structures)