Crypto Unicorns Treasury Report 2024 Q3
Read more about the Q3 2024 Treasury Report in this article.
Q3 has presented the DAO with many challenges. With the sunset of the core game in August 2024 and the news of XAI grant closure, the DAO shall see itself reshape its the structure and operations moving forward.
As a form of disclaimer, the Q3 treasury report covers transactions until September 30, 2024 only. Any transaction happening from October will be outside of the purview of this report.
Before we delve into the details, let us review the treasury balances at the beginning and end of the quarter.
July 1, 2024 Balances
September 30, 2024 Balances
Understanding this report necessitates familiarity with the factors influencing treasury flows within our project. These are categorized into four areas: disbursement, NFT sales, treasury diversification events, and token transfer events. And lastly, while not exactly a type of treasury flow, price fluctuations greatly affect the total valuation of our treasury report.
Disbursements (↓): In the CU project, disbursements encompass operational costs, marketing, market-making, and payments for goods and services from partners. These transactions invariably result in a decrease in our treasury balance.
Treasury Diversification
a. LP/Yield Positions (↑): These primarily consist of staked tokens aimed at generating a regular token yield. Examples include staking ETH for stETH to earn token rewards These transactions typically increase our treasury balance.
b. Loans (-): Depending on whether we are borrowing or lending, loans can affect us in two different ways. For instance, borrowing involves staking w/stETH or sfrxETH, where tokens are staked with the option to borrow an equivalent value in stablecoins, subject to repayment to prevent liquidation. Lending involves loaning $CU to market-makers for market-making operations in exchange for a small monthly yield.
Token Transfer (-): Token transfer events, such as the $CU token burn, investor and team $CU allocation unlocks, and Safe migration, do not directly affect the overall treasury value. While these events may impact the market, they do not alter the total dollar value of our treasury.
NFT Sales and LP Fees (↑): Revenue is generated through secondary sale fees on marketplaces and direct primary sales via the Land Vending Machine. This also includes fees earned from transactions conducted on our protocol-owned liquidity pools.
Price Fluctuations (-): Depending on the velocity of the market movement, our treasury’s valuation may increase or decrease along with the price of ETH. As our treasury is mostly composed of stables and ETH, any fluctuation ETH prices can significantly affect our treasury’s valuation.
I. Summary
We commenced the quarter with a combined LP and treasury value of $ 4,758,005 and concluded with $ 729,030. Similar to the previous quarter, we observed limited income from yield positions. Unlike the previous quarter though, no income came from NFT sales.
II. Disbursements
Disbursements encompass all expenses related to the DAO’s operations and influence the overall liquid portion of our treasury.
A. Business Development
Our business development activities include marketing and market-making that were meant to enhance project visibility and facilitate onboarding in-game and in the token market back when the game was live.
Marketing: This quarter, given the scaled down operations from August 2024, only $36,418 was spent on marketing, considering the month-end ETH price. This includes KOL campaigns, play-to-airdrop campaigns, the affiliate program, partnerships, etc. With the closure of the core game, marketing efforts have been halted for the time being.
Market Making: Given the scaled down operations, no additional market-maker fees were paid to the service providers. Due to contractual obligations though, we did have to send the second tranche of the loan.
Note that funds allocated for market-making should not be classified as long-term expenses as this loan shall be either be returned to the DAO or purchased using stables at the end of the loan period.
B. Core Game Operations
Game Bank Maintenance: Regular replenishment of the game bank ensures smooth in-game operations. $CU is sourced from the P&E allocation. No top-up was performed on UNIM this cycle, and thus no UNIM was minted during the quarter. Given the closure of the core game, we can expect no more additional top-ups moving forward.
Staking Reward Maintenance: With the introduction of $CU LP staking rewards, outside of maintaining the regular $CU staking pool reward, maintenance on the $CU LP staking rewards, which includes XAI and Grail, is also included here. Given the termination of the grant agreement with XAI, we can no longer expect XAI rewards from the staking positions.
Operations Cost: A quarterly draw of $1,308,850 was made to support the core game development. With the subsequent closure of the core game in August 30th, 2024, September has been reduced to $150,000. This includes the fees to staking platform, marketplace, and website maintenance, as well as all the other operations related to the DAO operations turnover.
Rewards: These include player reward for in-game activities, events and leaderboards.
C. Grants and Rewards
Development Grants: The CU has funded community developers through the ecosystem fund. Using the end-of-month prices of ETH, a total of $42,366 was spent on grants this quarter.
In Q3, active grants paid for were Unicorn Fight Club and the UniWU projects.
White Hat Bug Bounty: 1,000 was spent on White Hat bounties this quarter to reward security researchers who report bugs and help maintain system security.
Ecosystem Fund Grants: These grants support contributors and creators beyond game development.
In Q3, the only ongoing $CU grant is the Community Support & Knowledge Sharing.
III. Token Transfer Events
As mentioned in the introduction, token transfer events cover operations that do not impact the overall dollar value of our treasury but are of interest to the $CU economy and DAO.
A. Migration-related Events
RBW to CU Migration
The leftover RBW from the P2E and Staking allocation has finally been migrated to Arbitrum.
B. Governance-related Events
Burn Operations: With the approval of CUIP-049 and CUIP-050, burn operations that started in Q2 continues.
A total of 5 ETH was taken from the $CU LP fees from Camelot and was used to buy $CU for burning.
CU Token Unlocks: Since March 2024, the Team and Investor allocation unlocks been disbursing monthly. Due to migration, disbursement was deferred until completion, with the retroactive disbursement for March and April first occurring on May 10, 2024. This continues through Q3.
III. Loan Positions
AAVE Loan: In Q3, we supplied an additional 379 wstETH to our position and borrowed a total of $1,489,000 from our AAVE same position.
AAVE Loan Liquidation Event: In early July and early August 2024, a total of 2007 wstETH position were liquidated. This happened when ETH prices dipped beneath the threshold.
IV. Revenues
Yield Positions:
In Q3, only the protocol-owned LP positions remain along with the Aave position.
It’s important to note that the DWF loan here refers to the token we lent DWF that is generating yields. As mentioned in the market-making section, the token the DAO loaned to DWF Labs shall be returned or purchased by the team at the end of the loan period.
NFT Sales: Unfortunately for Q3, there are no primary nor secondary sale revenues.
LP Fees: As shown in the burn section of this report, we extracted 5 ETH or $13,430 to use for the $CU Buyback and Burn program.
As we conclude this treasury report, it’s important to acknowledge the current status of the DAO. With the closure of the core game and the termination of the XAI grant, the DAO must now redirect its effort to other activities given the limited resources.