Silo brings together two new types of token designs into a single product, and creates dramatic implications for how communities manage Liquidity on Velodrome.

1. Transferrable LOOT | SHARES tokens for Moloch DAOs.

2. NFTs with Token Bound Accounts, via ERC 6651

LOOT | SHARES:

DAOhaus recently deployed Moloch v3, and one of the more innovative components is the ability to designate LOOT or SHARE tokens as Transferrable.

• LOOT Tokens represent the pro-rata claim that an account has on a treasury.

• SHARE Tokens represent both economic and governance rights over a treasury.

When was the last time that the shitcoin you were trading actually represented a share of a treasury that you had a right to claim from launch?

The closest thing that we’ve seen is the RFV [Risk Free Value] of OHM, which only recently became claimable, after their ponzi collapsed and laid dormant for a year.

Silo takes a note from OlympusDAO, except, instead of Bonding LP to a managed treasury, Moloch v3 allows that treasury to be directly owned and managed by its contributors.

The RFV of a LOOT Token is the pro-rata share of claimable treasury assets at any given time.

siloDAOs will stake LP for yield, and veVELO NFTs are not divisible, but if the Membership DAO passes a proposal to dissolve the treasury, each SHARE and LOOT holder can burn to redeem.

Liquid LOOT Tokens will trade on Velodrome relative to the RFV of their treasury.

Token Bound Accounts:

Silo Squad collaborates with TokenBound, uses ERC 6651 as a core component of our launchpad. For those unfamiliar, ERC 6651 creates a registry of Smart Wallets, and assigns an NFT as the Owner.

Moloch v3 allows siloDAOs to bind non-transferrable SHARES to an NFT, meaning that the economic and governance rights of the NFT belong to whoever owns that NFT.

Most NFTs do not have an underlying value upon which speculators can base their trades. siloNFTs will always have a floor value reflective of the value of the Economic and Governance Claims of their Treasury.

We are a crowdfunding platform for 6651 NFT Membership DAOs.

ERC 6551 NFT membership DAOs allow current and new communities to form on-chain multiplayer coordination games.

USE CASE: Multi-Player ACTIVE LP Management.

OBJECTIVE: Accumulate Tokens

Active LP understands that when the price action moves upward, the most lucrative, consensus trade is to hold the token itself.

When Price Action finds local tops, profit can be captured, and Liquidity provided as an accumulation strategy.

By cycling between Spot, and LP, it is possible for the Membership DAO to increase their holdings of any specific token.

ENDGAME: Whale Status

Active LP requires conviction on the underlying project and discretionary trading between LP and Spot Positions.

The Membership DAO absorbs volatility by providing LP in price bearish trends, and captures market value by holding tokens bullish trends – always be seeking a greater market share of your token.

Profitably trading LP involves difficult concepts, and most people are not fluent.

While, the DAO may not out perform every member of that community, it can provide a support structure for community members who want to learn more about DeFi and LP.

When the project reaches its next ATH, the DAO could decide to dissolve via Rage Quit, or rebalance into a Delta Neutral Hedged LP.

$SNX Pattern:

Active LP is a good strategy for currently existing projects, because it acts as a project specific, High Time Frame, Hedge Fund.

Synthetix would be a great token to form an Active LP with because the Membership DAO would be able to:

• HODL

• STAKE and earn OP Incentives | SNX Ecosystem Drops

• Actively or Passively manage exposure to SNX Counterparty Risk.

• LEVERAGE with a conservative Collateral / Debt Ratio.

• LP | FARM VELO within a SNX - USDC Pair

• Use Onchain Perpetuals or Options to hedge.

This suite of tools allows for a full range of DeFi Positions.

The Membership DAO would also act as “training wheels”, for new members of the Synthetix Ecosystem, who would like to use the Membership DAO as as a mentor for navigating available positions relative to the market.

Similar “Full Spectrum” Patterns could be achieved with:

• ETH

• OP

• LINK

• PEPE

• MATIC

• ARB

• stETH

• alETH - ETH LP

Less complete patterns [without Delta Neutral Hedging] can be achieved with smaller, high beta projects, the Membership DAO will need to accept greater treasury volatility.

• VELO - USDC LP

• THALES - USDC LP

• KWENTA - ETH LP

An Automated Transaction Build which allows for Limit Order DCA into LP Zaps would be useful here.

USE CASE: BOOTSTRAPPING DAO Owned Liquidity

Silo offers a competitive advantage to new projects, seeking to Fair Launch on Optimism, and list their LOOT token on Velodrome. These projects will by definition have Deflationary Tokenomics, with underlying RFV.

In addition to these structures, Projects will equally distribute the responsibility of DAO owned Liquidity during the Fair Launch.

Launching a project with Silo holistically solves the following issues:

• Build Liquidity and veVELO as a DAO from Fair Launch.

• Get your Token Listed on Velodrome, and allocate LOOT for bribes.

• Offer your community meaningful governance and ownership.

• Form Token Gated Communities with Discord via Collabland.

• Art Assets for Socials | Marketing are included with NFTs.

Whether you are a DeFi Protocol, NFT Project, Social Token, or a Worker Cooperative, this foundation is going to help your community hit the ground running.

More detail about New Projects Bootstrapping Projects in our last article about Community Cooperatives.

RAGE RUG: Exit as a Community

Just because the blockchain lasts forever, doesn’t mean your Community has to do the same.

Membership DAOs have the ability to “Rage Rug” their DAO LP, dissolving the project, and offering an equitable exit to members.

A strategy called Conviction Voting, can be used which requires you to stake your SHARE | LOOT Tokens as a part of your dissolution proposal.

If the proposal passes, the Rage Rug process begins, and the treasury is liquidated.

If the proposal does not pass, then, the person who submitted the failed proposal gets their SHARE | LOOT burned.

Shutting down a project is something that a community ought to be able to do, if they can form a consensus to do so, and if not, they ought to be able to absorb the shares of people who waste time with bullshit proposals.

Defend your silo, or Burn Everything – it’s your call.

USE CASE: DEEPENING Protocol Owned Liquidity

OBJECTIVE: SUPPORT pre-existing POL.

Protocol Treasuries which already have Liquidity would benefit from a Membership DAO which focuses on increasing LP.

However, because tokens are already distributed, and because the cost of that LP is not packaged into a fair launch or fee structure, you cannot socialize those costs | risks.

Community members would be required to accept a sub-optimal position, and operate at a disadvantage to other speculators.

Viable Patterns:

The position could work on a longer time frame, or if the asset in consideration was alETH - ETH LP, because then, you are just exposed to ETH as a DAO.

In a VELO - USDC LP Membership DAO, which was started now, assuming that DAO was not using ACTIVE LP strategies, your best bet would be a multi-player Yearn Vault Strategy, held over a long period of time.

But, even in that situation, if the price of VELO went up significantly, the Membership DAO would perform poorly compared to holding spot and selling, due to IL.

For this reason, we encourage ACTIVE LP, or Bootstrapping LP from Fair Launch.

USE CASE: The VELO FED | BRIBE MAXIMALISM

Bribe Maximalism has joined Mercenary LP in the quadrant of extractive degen strategies, and it has found market fit.

• The Curve Ecosystem

• The Hidden Hand

• Stake DAO

All have thriving Bribe Markets whose participants are solely focused on Yield.Where is Velodrome’s Coordinated Community of Bribe Maxis?

ENDGAME: Build an OP DeFi Index Fund

Velodrome V2 Introduces the VELO FED, which allows veVELO holders to vote on raising or lowering VELO Emissions rates.

A large, coordinated veVELO Membership DAO would be able to raise funds though launching a NFT Collection. There are a few strategies here, but the Objective would be to perma-max lock as much veVELO as possible, and then claim the highest bribe rewards each epoch.

The DAO would vote just before the end of the EPOCH each week, and capture the Juiciest Bribe.

The LOOT Token, in this case would represent exposure to all Bribes, LP and locked veVELO, and it would be the responsibility of the Membership DAO to manage the fund:

• HODL, and allow the tokens to qualify for Rage Quit

• Manage ACTIVE LP Strategies, as a high beta index of OP and ETH.

If there is a speculative OP DeFi ATH at some point in the next couple of years, the Membership DAO could vote to sell their veVELO, and each LOOT holder can burn to claim their share.

ALCHEMIX: A Hedge against Locked VELO

Alchemix provides a unique value to siloDAOs on Optimism, because it acts as a workaround for the 4 year veVELO Lockup.

When a NFT Collection is sold, the ETH that is raised, is deposited into a Yearn Vault on Optimism, and alUSD is borrowed against a non-liquidatable collateral.

Suppose the Membership DAO enters and the price of ETH is 2k:

• 50% TVL on that loan means that half of the ETH can be borrowed against collateral, and locked for veVELO.

• When the Price of ETH reaches 4k, the veVELO has been paid for by the appreciation of the underlying collateral.

• The Membership DAO can now distribute that initial ETH to members as LOOT, or vote to use the funds for some other purpose.

• The veVELO 4 Year Lock remains under management by the DAO, courtesy of a levered, non-liquidatable ETH position.

Other strategies can also integrate Alchemix into their Zap Patterns, to take advantage of this structure.

Each Membership DAO can structure their strategy as they see fit.

USE CASE: Multi-Player OP Lobbyist Cartel

The Final Use Case for this article is the $OP Lobbyist Cartel.

OP’s core value proposition surrounds governance, and the distribution of Grants to stimulate Development, Protocol Incentives and Public Goods.

There are Delegates, and Ambassadors who would benefit from a significant block of support being aligned toward their causes.

Silo allows for a grassroots Membership DAO to amass a huge OP Position and solicit backroom deals from existing Delegates, to advance their causes in swing vote situations.

OBJECTIVE: Build Governance Influence to Capture | Direct Grants.

Governance Focused Membership DAOs:

• Love to read forum proposals, and participate in Discord AMAs.

• Chat with interested parties to understand the motivations behind different proposals.

• Have opinions about where they would like to see the OP Ecosystem headed.

Governance Focused Membership DAOs could also be profit driven, Machiavellian bribe maximalists in a governance related bribe market that currently doesn’t exist.

How do you want to play it Anon?

ENDGAME: Grassroots OP CARTEL

Aligning currently existing OP Whales, or starting from the ground up, and playing parliament – An $OP Membership DAO seeks to gain as much exposure to OP as possible, and use it to participate in the distribution of grant funds in the ecosystem.

Paladin, is a project which handles this on Mainnet, and there are multiple projects that could use this Governance Cartel Structure.

OP is a fun playground, because of the diverse set of currently existing Delegates and Initiatives. It might be fun to seize power and attempt to mold the future of the Ecosystem.

Conclusion

The patterns described here intersect with each other, and are ultimately custom made for the project itself.

• The Artwork for the NFTs

• The size of the collections

• The amount of Risk | Volatility being taken on by the Treasury

• The Tokens that the project focuses on

• What their objectives are with those tokens

• What their exit looks like as a community

All of these things are tailored to the desires of each Membership DAO.

Silo Communities are designed using a social marketing concept called Psychographics, meaning, “People Like Us, Do Things Like This.”

Individually, there are a broad range of interests and strategies amongst DeFi participants, and for the most part, they are individualistic and zero sum.

However, within each community, there is a common thread of interest, and a section of that community who would prefer to play positive sum, multi-player coordination games to achieve their goals. – Beyond that group, there are newbies who would jump at the opportunity to be in a group and learn the ropes.

Silo provides communities an opportunity to organize under shared objectives, and offers the flexibility of ownership instead of hopes placed in the hands of core contributors, or multi-sig holders, or delegates.

Did this article inspire you to create your own siloDAO?

Join the Discord, and we’ll chat about a solution that works for your community.

Check back soon for another article exploring Art Collectives.