I’d propose an amendment to Mechanism 1. Change Compound to Alchemix. Using compound is nothing more than leverage and provides no real world benefit. CityDAO would be paying the market a premium to get access to this leverage with a substantial risk for liquidation. An event similar to the May 19th could easily cause an ETH wick in the $1900 range and all the collateral would be liquidated. Using Alchemix, CityDAO can get leverage without the risk of liquidation (because the cost of borrowing is always equal to the rate of return on ETH).
The process would be as follows: deposit 90 ETH, borrow 45 alETH, swap alETH for 45 ETH on Saddle, swap ETH for USDC → purchase land.
The alternative for those that aren’t comfortable with smart contract risk would be Mechanism 2. If contract risk isn’t an issue to members, Alchemix provides the most economically productive way to spend treasury assets.
what would the delay be in setting up a CityDAO bank account since the LLC already exists? And what would the tax liability be to Scott personally if we were to use his personal account? I think we should avoid using a personal account as a pass thru.
as much as I like idea of financing, think if we finance via above mentioned way, over long term the liquidation risk is high. for first purchase not opposed to buying outright - especially if citizens are paying for the purchase again in cash/eth after land is subdivided. in a way they’re double paying as is because the purchase of the nfts is going to buy the land. undercollateralized loans are worth exploring imo - especially if no liquidation risk. would rather be margin called and have sufficient cash in bank
I’m liking the half and half method, the middle ground of risk, and allows us to experiment with that mechanism, not the first to do it, but definitely a noteworthy action. Agreed, Alchemix or Aave are good bets, risk wise Aave is probably the lowest from smart contract risk, but the no liquidation of Alchemix is enticing.