CIP 4: Execute a purchase of Parcel 6 on Hail Basin Rd

Proposed purchase mechanism:

Goal: Convert our ETH to $110k in ETH to cover our land purchase.

MECHANISM 1 - ETH BULL

  1. Lend 85 ETH on compound

  2. Borrow 125k in USDC for land purchase (liquidation price: $1960).

  3. Transfer 125k to Coinbase

  4. Transfer 110k to CityDAO LLC bank account

  5. Send funds to broker

MECHANISM 2 - EASY AND SAFE

  1. Transfer 45 ETH to Coinbase

  2. Sell 45 TH for $133k USD.

  3. Transfer 110k to CityDAO LLC bank account

  4. Send funds to broker

MECHANISM 3 - HALF AND HALF

  1. Sell 22 ETH for $55k to fund half of the NFT

  2. Loan out 85 ETH and borrow $55k USD (liquidation price target: $900)

  3. Transfer 110k to CityDAO LLC bank account

  4. Send funds to broker

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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.

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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.

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good feedback - im trying to rush open a bank account. it’s hard for crypto related projects, will keep you updated

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Transposing discussions from the pre-townhall chat.
IDEA: Let’s do something in between to get a lower liquidation price point (safer) and use Aave to borrow (decent rate, good TVL and legit lender)

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.

Which coinbase account (so we can watch funds together) – who has keys
How will we communicate proof of transfer to LLC bank account and transfer to IRL escrow for the purchase.

I think a coinbase vault would be easy enough and provide a little more proof for the first steps.

Thanks for the feedback - here is the latest on how the process could work.

  1. Create Coinbase vault with 5 signers from the core team (that is coinbase max right now)
  2. Gnosis safe Signers approve transfer to CityDAO Coinbase Vault.
  3. CityDAO Coinbase Vault signers approve withdraw to CityDAO LLC wells fargo account
  4. Scott executes wire transfer to Title Escrow company and shares wire transfer details in the Citizens channel.
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Also seeking feedback on idea of raising the cap from 50 to 100 Founding Citizen NFTs. This would help us incentivize new contributors.

Interesting discussion, feels like it requires a separate CIP and key consideration around floor-price and auction method given many current holders exist.