AIP - 5: Debt DAO <> Angle Partnership

Hey Anglers,

I’m William from Debt DAO.

We’re building a marketplace to provide debt financing solutions for growth-stage DAOs. This enables them to accelerate their growth with less dilution of their token value.

We’d like Angle, agEUR and its future products to benefit from the marketplace.

agEUR is a good currency for borrowing and Angle as a protocol might find it useful to take out a loan.

We’ve already partnered with Frax and Olympus and have many more exciting partnerships in the pipeline.

The value of Debt to DAOs

DAOs rarely raise funding via debt. This is largely because their options aren’t clear.

For growth stage DAOs with product market fit, onchain revenue and strong communities, debt is a far superior capital efficient option to fund operations and acquisitions.

It’s a much better bet than just selling more tokens to pay contributors or to rent liquidity. We’ve expounded on that here.

Whilst the likes of Olympus Pro has improved this situation somewhat, that still involves selling tokens. This is dilutive, and isn’t always the best approach.

If a growth stage DAO has revenue, and can take out a credit line to fund its working capital and reduce the need to dilute. This would be facilitated by the spigot, a mechanism we’re building out that trustlessly allows for the collateralization of current and future on-chain cash flows.

Proposal to Angle

  • Partnering for DAO Payrolls

One area that I’d like to point out as particularly interesting as an area for collaboration is the usage of agEUR for payroll. We’ve been pushing the payroll angle with a recent channel partnership with Utopia labs, with more coming soon.

In conjunction with some of the work that Angle is doing on Fiat offramps, providing access to agEUR via payroll financing will be a very compelling option for DAOs to take on debt for the purposes of paying contributors.

  • agEUR liquidity in our lending pool

Angle provides 20k agEUR liquidity to our Fuse Pool #122, secured by collateral to be posted by DAO borrowers in an external multisig.

The obvious benefit here is that this represents a further use case for agEUR, establishing it as an option for DAOs that have expenses in Euro.

  • Protocol Owned Liquidity

Exploring fyFRAX (a Frax denominated zero coupon bond, funded by Frax) in order to build up PoL for Angle.

Angle can then use this for a variety of purposes, chiefly building up cross chain liquidity.

Future possibilities

  • Potential for a token swap to ensure alignment between the communities
  • Additional deposits from Angle into our lending pools, whether it be via treasury deposits or via a future Module integration
  • Angle could incentivise people who deposit agEUR in a Debt DAO lending pool (pending audit of contracts). Depositors could receive a deposit token that can be staked to receive ANGLE incentives.

The team at Debt DAO would like to thank the Angle Community for considering this proposal. We hope that we can work closely with Angle on onboarding many new DAOs and empowering a new wave in how DAOs get financed.

Our links
discord. gg/debtdao
debtdao. org
twitter. com/debitors
(the forum software doesn’t allow me to put more than two links)


Hi William, thank you for your post ! It sounds super interesting.

A few questions:

  • Is there any documentation available yet on the spigot contract (aside from Spigot - Onchain Revenue Collateralization - Debt DAO Docs) ? Especially what you are considering as a “revenue flow” for a protocol ?
  • From my understanding of Defaults - Debt DAO Docs, loans will be reimbursed using the spigot and overcollateralized in DAO token, is that correct ?
  • Could you expand on what fyFRAX is ?
  • When do you plan to launch the first loans ?
  • “Angle provides 20k agEUR liquidity to our Fuse Pool #122, secured by collateral to be posted by DAO borrowers in an external multisig.” Could you expand on that ? I can’t load, but from what I understand this will be a pool where you can borrow against CREDITUM, an ERC20 that you’ll mint for DAOs opening loans. What would be the external multisig for ?

Bob here from Debt DAO.
Thanks for these questions.
We’ll collate the replies from our various contributors and get back to you as soon as.

The contracts are being worked through right now, and come early March, pending completion of an audit, we will release this alongside documentation for the spigot.

The spigot is a tool for DAOs seeking to secure their interest payments or revenue. If the DAO lacks revenues, or chooses not to secure against their cash flows, and instead chooses to add more collateral - that’s fine by us.

fyFRAX is an upcoming product we’re hoping on debuting, which leveraged fyTokens, which resemble secured zero coupon bonds. More details soon :), and we’ll work on a proposal that goes into more detail on how Angle can begin to leverage this.

Soon (thinking next month?)

For holding the collateral that the DAOs put up. This allows us to insert our arbitration process. Putting the tokens directly into the pool opens significant risk for the DAO in the scenario of a default.

(also, had to remove links because the forum software is being particular about links :confused: )