Floor V2

A comprehensive explainer of Floor V2

What are the goals of Floor?

Floor aims to create a fully onchain governance mechanism for sweeping and deploying NFTs to profitable NFT-Fi strategies as well as seeding liquidity for its own NFT-Fi products.

The DAO's NFT-Fi strategies (and any future products) will generate yield for the DAO, which feeds back into the protocol’s NFT sweeping mechanism.

FLOOR token holders will have ultimate control over what collections are swept every week, imbuing the FLOOR token with voting power that can be traded for yield on vote markets.

The ultimate goal of the DAO is to drive as much ETH as possible to the sweeping mechanism, scaling the treasury with desirable, yield-generating collections and becoming a major player in the inevitable multi-trillion-dollar metaverse.

What does FLOOR do?

The FLOOR token acts as the gatekeeper of the Floor treasury. It allows the holder to decide what NFT collections are allowed into the treasury, and of these collections, which should be swept each week.

With sufficient yield generated from NFT-Fi strategies and protocol-owned products, the value of each week’s sweep will help to position FLOOR holders as kingmakers of new NFT collections.

Ultimately, FLOOR is a token that coordinates capital to solve the inherent liquidity and financial utility issues of NFT collections.

What does the FLOOR token vote on?

The two core features of FloorDAO governance are:

• New Collection Votes

• Sweep Votes

New Collection Votes determine which collections to add to the DAO’s treasury, enabling them to be swept each week in Sweep Votes.

These two votes exist under the umbrella of the “Floor Wars” with them often referred to as the Sweep War and New Collection War.

What is the lifecycle of a Floor War?

A new epoch begins every Sunday at 5pm UTC, the epoch, known as a Floor War, runs for 7 days before closing.

During the Floor War, yield accumulated by the DAO’s treasury strategies and (in the future) products is tracked and made available for a sweep at the end of the epoch.

In the case of the Sweep War this yield is split proportionally by vote across the top collections. In the case of the New Collection War, all the yield is used to accumulate the winning collection.

By default each epoch starts as a Sweep War unless the DAO has scheduled a New Collection War, which would take its place for that epoch.

When the War finishes, a sweep transaction is stored onchain and can be executed by a privileged DAO authority at a random time to avoid front-running.

How does a collection get added to the Floor treasury?

In V2 any collection can be put forward for the next New Collection Vote by submitting a form in the Floor Discord.

FloorDAO’s Collection manager then determines which of the submitted collections should be put up to vote based on quantitative metrics like floor price and volume as well as qualitative metrics around the community and potential for future volumes.

The DAO then schedules an epoch for when the New Collection Vote should start.

The threshold and process for triggering New Collection Votes is hoped to also move onchain and handed to FLOOR holders in the future.

Once the New Collection Vote starts, FLOOR holders will have 1 epoch (1 week) to vote for which collection should be added to the Treasury - winner takes all. During this time, the Vote Market will allow anyone to pay for votes on particular collections.

Is it possible to vote with NFTs?

The initial launch of V2 does not include the ability to vote with NFTs. The mechanism and balance of the system needs to be discussed more thoroughly with the community before being implemented.

How does the Treasury earn yield to sustainably sweep collections?

The DAO currently deploys NFTs and NFT liquidity to various NFT-Fi strategies to earn yield these include:

• NFTX liquidity and inventory provision

• Sudoswap single sided and concentrated liquidity

• Uniswap V3 concentrated liquidity

• Automated Charm.fi Uniswap V3 liquidity management

• Papr liquidity provision

50% of the yield generated via these strategies is directed to the Floor Wars to sweep collections. The remaining 50% is retained by the DAO.

As the yield generated may not be paid in ETH, while the sweeps are executed with ETH, the DAO naturally has to occasionally rebalance into ETH.

In V2, the lowest voted collections in the weekly sweep wars are available to the DAO to rebalance. This gives the DAO a mandate to partially sell or remove liquidity of the lowest performing assets.

The DAO typically earns double digit interest across its strategies, which has - in some weeks - generated enough yield to deploy 20 ETH sweeps.

To extend the yield sources, new NFT-Fi products could be created to generate revenue to further boost the value in the Floor Wars. The more ETH fought over, the more power for FLOOR governance.

Is FLOOR V2 backed by its treasury?

Floor’s mission is to be an NFT liquidity layer and the FLOOR token is a governance token used for onchain voting in V2. FLOOR is also used in offchain voting through Snapshot to help signal community interests.

FLOOR has no strict requirement for market cap vs treasury parity but as the DAO contracts further decentralize and move onchain these ideas can be explored.

What’s next for Floor?

With V2 launched the DAO's North Star will be to drive as much ETH as possible to the Floor Wars each week. This will be fuelled by further development of NFT-Fi strategies but, more importantly, through the launch of NFT-Fi products. More ideas and details to be shared in the future.