Add a Dash of Spice to Nouns DAO
It’s clear that with Nouns, community comes first.
Spice brings Nouns DAO a unique opportunity to benefit their community and increase their longevity.
Nouns DAO’s impressive treasury should be looking into sustainable ways to earn yield and support their vibrant community via NFT Finance. DeFi is great, but competitive returns can be generated using NFT-native solutions.
Spice Finance is the answer.
By supplying Nouns DAO with a means to earn, Spice can increase the longevity of the organization via healthy and sustainable native $ETH yield.
Spice could then help Nouns DAO set up their own community vault. This would allow the DAO to choose NFT lending parameters, including specific collections. For example, allowing for vaults that benefit Nouns only.
A yield-generating vault by a community, for that community.
Spice is a suite of DeFi protocols that help depositors and treasuries access NFT finance products. By combining appraisal, lending, and cross-exchange aggregation, Spice aims to be the one-stop solution for new avenues of yield from NFT-backed loans.
Spice is building the financial infrastructure for a permissionless and decentralized metaverse where NFTs represent the vast majority of value. Spice will do this by bringing scaled liquidity solutions to NFT lending marketplace and by merging DeFi with NFTs.
How Spice Works
Spice is built to simplify; aggregation is key due to highly fragmented NFT Lending markets.
Spice aggregates two main types of NFT lending protocols: (1) Lending pools and (2) P2P loans.
Lending Pools (price-based liquidation)
Lending pools with price-based liquidations use marketplace-specified oracles to determine loan amount and liquidation thresholds (structurally very similar to P2Pool lending systems in DeFi like Aave or Compound).
- Variable Interest, which is based on pool utilization, is accrued continuously.
- Once the amount borrowed exceeds the oracle price times the liquidation threshold set by the marketplace, the marketplace takes custody of the defaulted borrower’s collateral (NFT) and lists it for liquidation, typically on a fixed length auction within the protocol’s UI itself.
P2P Loans (time-based liquidation)
Loans with time-based liquidations have a fixed interest rate and a set maturity date determined by borrower and lender negotiation.
- If the interest and principal is not paid by the maturity date, Spice’s Vaults will take custody of the collateral and list it for liquidation, typically through simultaneous listings on Blur, OpenSea, X2Y2, and LooksRare.
Early this year, Spice released a collection of 555 unique NFTs that served as keys to the most competitive lending vault in NFT Finance, the Prologue Vault.
The Prologue Vault is the first live Vault on Spice, as such owners of Prologue NFTs will always be some of the most important individuals to the protocol. The Prologue Vault gives depositors immediate exposure to diversified NFT lending yields across the industry.
The Prologue Vault runs a medium-risk lending strategy optimized from several months of live market testing and continuous live updates.
- Strategy Uptime: ~2 months
- TVL: 395 $ETH
- Historical APY: 16.97% (rewards in $ETH)
Prologue Leverage is an exclusive feature in Spice’s platform where Prologue Holders can:
- Take out loans against their Prologue Vault position
- Loop those loans back into their Prologue Vault position
This can be accomplished all in one transaction to increase position size and boost real returns from the Prologue Vault.
If the Nouns community decides, they can take this risk-on approach to enhance yield capabilities.
Spice has big plans for the NFT Finance ecosystem. We envision a world in which every NFT Community or DeFi project interested in NFT exposure is set up with their own permissionless lending vault.
What can that bring to the table?
A few things:
- Creative exposure to NFTs
- Support for community-led borrowing markets
- Clean, simple to understand $ETH yield
- Potential airdrop exposure to lending protocols
Creative NFT exposure and airdrop exposure go hand-in-hand. Want to be exposed to the broader NFT market but don’t want to risk holding illiquid assets? Supply liquidity to loans. Want to be the first in the door using & accumulating the tokens of various lending protocols? Be our guest.
Likewise, supporting community borrowing markets + clean $ETH yield go well together. This gives you the opportunity to create robust market activity for your collection and earn attractive returns. Furthermore, the additional benefit of allowing other community members to join in supplying liquidity is an added bonus.
Here’s the deal.
Spice would like Nouns DAO to:
- Deposit 500 $ETH into their choice of:
- The Prologue Vault (via the acquisition of a Prologue NFT)or
- The upcoming Flagship Vault
- Strike an official partnership with Spice Finance
In return, Spice will promise to:
- Deliver amazing ETH yields, derived from NFT-native sources, to the Treasury
- Guide Nouns through the process of constructing a Community Vault
- Co-market Nouns as an official Spice partner
How This Proposal Would Benefit Nouns
By entering into this agreement, Spice can provide a better native $ETH yield than some of your current strategies.
A little while ago, a proposal was passed for the Nouns DAO Treasury to deposit 5000 $ETH into Lido.
At today’s LSD rate of ~5%, that is ONLY 250 $ETH in rewards.
Nothing to scoff at, but Spice can do better.
We can generate the same rewards with approx. 1,500 ETH
Our proposal could deliver 1/3 of the Lido rewards, with 1/10 of the budget.
Plus, you are supporting NFT-native protocols and bringing incredible future opportunities to your community.
Nouns would also be plugged into Spice’s vast network of NFT Finance partners.
We could help broker partnerships for Nouns with many of the big players in this industry.
We would love to see healthy discourse around this topic as we believe that discussion will lead to the correct determination for the project.
We can be readily available to answer any questions here on the forums, and would be amenable to taking a call with the Nouns DAO team if they see fit.
Thanks so much for reading all the way through, we’re here to make sure Nouns can keep delivering incredible advancements in the NFT industry!