Pudgy Buyout Fund
So I like the Penguins, it’s a pretty hilarious community and holds a particular place in my heart as it is the first PFP projects that I got involved with.
Admittedly, lately I’ve had a ton of things going on and haven’t followed things. I watched the Lil Pudge drop, and ROG (Pudgy Presents reveal), and like many people was kind of underwhelmed. I don’t have anything against the team, and understand how a community can put intense pressure to deliver and then is never satisfied, nor do they necessarily see the full picture of the team’s idea, so I won’t necessarily critique their decisions.
Regardless of my own feelings about the project and its success, a lot of people are openly calling for a change in management. Seeing some of the cool things happening in other communities, that gave me an idea. Tokens!
I know, I know. More tokens… Hear me out.
First the high-level. There are basically three possible paths that I see:
- Status-quo — the team (or a majority of it) stays and keeps doing what they’re doing or adapts.
- Third-party take-over — a centralized third-party buys the project, or otherwise assumes ownership of the project (including IP, social media accounts, Discord, treasury, company, and smart contract ownership). Some names have mentioned this, and have discussed with the team.
- Community buy-out — if we can try (and unfortunately fail) to buy the Constitution, why can’t we try (hopefully with more success) to take over an NFT project? The community could basically direct resources to hire centralized teams and see that the project succeeds. This is the option that I want to talk about today.
So aside from the obvious of launching a token, raising some funds, and buying the project rights from the current team, there is at least one other alternative. The OpenDAO($SOS) way.
Let’s start with a few facts. There are three NFT contracts in the Pudgiverse: OG Penguins, Pudgy Presents (ROGS), and Lil Pudgys
These contracts are fairly standard ERC721 NFTs, but with one notable feature, a Pause function. This allows the owner (the core team) to freeze trading of the tokens. I have not heard the team state that they would use this, so I don’t want to FUD, but it is worth nothing that it exists and any takeover would have to assume control of this function.
The next thing to mention is that outside of the revenues paid for minting Penguins, and Lil Pudgys, the core team and devs receive a sizeable ongoing income from Opensea royalties. I believe that this is probably the most important factor in any successful negotiation.
We also know from disclosures from 9x9x9 and others that the core team is looking for a buy-out in the order of 888 ETH.
Long enough — what’s the plan?
I think that one option to assist in a community led buy-out of Pudgy Penguins is to launch a token (I’ll call it PengDAO or $PENGU), which can be minted by all holders of Pudgy Penguin, Lil Pudgy and Pudgy Present NFTs. This token would be fully fungible (a basic ERC20 token). Initially $PENGU could be only claimable by OG Penguins (e.g. at a rate of 1000 $PENGU per NFT). Later the other two collections could be added, and could be weighted (e.g., each Penguin NFT receives 1000 $PENGU, each Lil Pudgy get 10 $PENGU, and each Pudgy Present (ROG) gets 5). In addition to the amount that would be claimable directly, a community run multisig (eventually switching to a full DAO) would be setup and control a mint function on the PengDAO token.
These tokens have the advantage over the NFT that they can more easily be used for voting than doing so with 3 NFT contracts, users wishing to buy or sell these tokens could do so without selling their NFT, but must understand that by doing so they are giving up their vote. In addition, if things got heated or contentious (again, don’t want to FUD and I have no reason to believe that the team would work against their community), the NFTs could be frozen whereas PengDAO tokens could not.
The goals of the PengDAO would be three-fold:
- Establish a clear mandate amongst the community, with the ability to express that voice clearly through votes
- Lobby Opensea (and other marketplaces) to redirect ownership of royalties to the DAO (can elaborate separately but this is controllable by Opensea), which would take the necessity to pay for the community’s own cashflows twice (at a buy-out and through future royalties).
- Negotiate hand-over of the project to a new structure with the current team. This could include trading control of the project for PengDAO tokens under a vesting agreement, which could provide a strong incentive for the current team to contribute to the effort.
If the PengDAO is successful in taking control of the project the royalties, ability to mint new $PENGU tokens could be used to initiate projects directly and/or hire centralised teams on behalf of the community.
For those interested, I drafted some code for a PengDAO token:
https://rinkeby.etherscan.io/address/0x062d50708386d03847046b1985be0eb02adce781
and a distributor to release the tokens:
https://rinkeby.etherscan.io/address/0x54f0b97d4924a5364bc6a3dc9f5bdcf79dce2d7f
the user can either claim all for a given ERC721 they hold, or specify the NFT to claim for (either individually or as an array).
I have also created three mockERC721 contracts that are free to mint to test the functionality:
https://rinkeby.etherscan.io/address/0x15b6327a21f4dc1c9016cd3aeb0ffd828bf82f59#writeContract
https://rinkeby.etherscan.io/address/0xf2d10d48e45c027dce3d686af30e89b99fe1613c#writeContract
https://rinkeby.etherscan.io/address/0x054f1156d98900d0a0831b81a15af03a3f6085fc#writeContract
