For the last several months, we have been operating in accordance with our baseline plan that we established earlier this year in April. Today, we present a proposal that seeks to extend that baseline plan through the end of March 2027 and allocate the necessary resources to fund essential services during this time period. Rejection of this proposal will necessitate a complete shutdown of Hifi DAO and put the protocol into a “withdraw only” state. We believe that extending the terms of our baseline plan gives Hifi DAO members the greatest opportunity for success.
To this end, the core team will put up for consideration a proposal that includes the following:
Deploy a new market that will mature on March 26, 2027.
Burn the 25M HIFI tokens that were minted as a part of HIP 15.
Update terms of HIP 6 agreements to be compatible with our baseline plan, including a possible future wind-down scenario.
Allocate 800K of USDC for essential services through March 26, 2027.
Continue to support ETH and the existing RWAs as collateral.
Essential Services Resource Allocation
Matching the same terms outlined in our previous proposal that established the baseline plan, this proposal allocates 800K USDC for ongoing support and maintenance of our outstanding obligations through the end of the proposed March 26, 2027 market. The essential services that will be provided are limited to DAO administration and accounting, hosting and maintenance for the blog, website, web app, forum, and liquidation bots. Explicitly absent in this arrangement are new marketing and product development efforts.
Contingency Plan
If the vote on this proposal fails to pass or is rejected, the existing baseline plan remains in effect, and we will move forward with a final wind-down of the protocol and DAO.
Continuing Operations:
Maintain support for ETH and existing RWAs as collateral.
Continue compounding earned interest within the protocol.
Upon approval:
Execute deployment of the new lending market.
Allocate specified financial resources for essential services.
I hope we can discuss HIP-17 here and bypassing the normal request for discussion on the forum instead.
Im curious as to why tokenholders should consider extending hifi for another year via HIP-17? I’m not against it, just in the interest of fully understanding the the reasoning and/or potential benefit of extending. As a holder and delegate, we are left out of the conversations that are happening between hifi and whomever the other party is. If conversations are even happening at all. We are left out of the for lack of a better term, restructuring of hifi. From whats been shared so far, there doesn’t seem to be any benefit, other than to provide hope that hifi will become a pheonix. For example, if its clear that spending $800k for another year, will earn the protocol $3m in interest from existing clients, then it makes sense to keep it alive as hifi can self-fund itself. That said, a final wind down is potentially on the horizon and as such, i think the community also is in a position of needing clarity as to what exactly something like that would look like if this doesnt pass as this has the potential to be the final vote for the protocol.
Thanks for your response @Mainbrain
I think the blog post does a reasonable job of outlining our hope here that you also highlight. Which is that extending the term that we support the protocol gives us the opportunity of additional time. Having been in this position before and knowing the impact that can come from outside forces this was a natural default for me, as opposed to giving up and shutting it down by choice. It’s not sexy, but I’m an optimist by default.
You mention being cut out of other conversations with other parties, and it’s worthy clarifying that all the parties are still the same, albeit with reduced headcount and resources. So there isn’t anything you are in the dark about.
Finally, you ask for clarity on what a final wind down would look like exactly, and this is laid out in our baseline plan blog posts. And consists basically of burning any HIFI the DAO has, liquidating everything else to ETH, and making it available pro-rata to token holders. As it stands, a token holder is actually better off selling their tokens at today’s prices, rather than holding out for the value that would be distributed in a complete wind down. And presumably, if it looks likely that a wind down were to take place, I’d expect the market to reflect that reality and readjust to be in line with those expectations. So a wind down would only bring downside for token holders today.
From the people who’ve DM’d me since HIP-16 to today, and with the high amount of emoji’s from Discord on my response, and the lack of participation, we have a lot of lurkers and zero participation. Because of that and whats been disclosed to me privately, it will be the most beneficial for all parties if you or someone else from labs could be very explicit and spell things out as clearly as possible for both sides for both scenarios.
Example:
If HIP-17 passes, Hifi Labs will sell tokens from the 25m stash of tokens minted with that purpose from HIP-15 with the approximate goal of acquiring $800k via open markets, market makers and OTC. This money will be use fund hifi labs for approximately 1 more year. This covers supporting ETH + RWA’s as collateral. Continues to compound interest with the $25m of RWA collateral within the lending protocol. (if any interest payments have not been made, and a repossession is in expected to happen soon or already in progress, then these need to be disclosed as well). This also covers a multi-person goal of doing biz dev to find more lenders, borrowers and financial lifelines with lifelines being the priority.
If you could also include the amount of interest the protocol has earned per month from the start of the year, as well as the per month protocol owned liquidity that would be extremely helpful in determining the viability of continuing on. Bonus points for providing something publicly auditable, like a dune dashboard.
I don’t have everything you ask for immediately available, but I can clarify some of the more important points.
No HIFI is being sold to fund this proposal. The DAO already has the USDC to pay for this proposal.
All outstanding loans within the protocol are healthy and in good standing. No borrowers are behind on any of their payments. This is a point of pride for the labs team, we’ve done extremely good at sourcing great loans, from excellent borrowers, and still to this day have not had issues with any of them. So just to be clear, none of our loans are non-performing, there is zero bad debt, and there is no anticipation of any repossession of any assets.
The 25M HIFI from HIP 15 will be burned regardless of this proposal passing or full shut down taking place. Those tokens were returned to the DAO by the labs team and are owned by the DAO, thus why we need permission from the DAO to burn them. Again, passing this proposal will not create any new selling pressure on HIFI, no new HIFI will be minted or sold, because the DAO will pay for it with USDC from interest and fees earned over the past several years.
Your right, you did say that the 25m tokens would be burned, but I was confused as to where we were getting the $800k from, that enables this new leg of the journey to show up. Now i know that its, i think, protocol owned liquidity from the lending that enables hifi labs to go for another year.
Speaking of PoL, the hifi dashboard https://metrics.hifi.finance/ shows that the TVL is $1.53m, and thats what? The last remaining loan or two for RWA’s? Do we know when their expiration is, because sadly i’m assuming when thats done people will pull their liquidity and when that happens, the TVL will drop to nearly zero… and we are right back to where we were before started HIP-6… and if thats the case, how do we go from $0 to $25m again?
Additionally, the PoL shows that the protocol has earned ~$3m USDC?, so the PoL will go down to $2.2m if we do another year?
we’ve discussed that HIP-17 will be burning the 25m tokens minted previously in HIP-15. Whats happened to the 20m tokens minted from HIP-6 after they were returned?
They remain a part of the same HIP-6 program. As discussed in HIP-14:
HIP 14 proposes to continue Hifi’s successful Liquidity Bootstrapping Program by authorizing the redeployment of any HIFI tokens that may be returned to the DAO through HIP 6 refunds. This proposal ensures we can reuse returned tokens for the same purpose, with the same terms as HIP 6.
So these tokens come back to the DAO and may continue to be used to bootstrap liquidity to the protocol.