BIP 96 - zeroDAO Deal Restructure

Background:

In Q1 ‘21, Badger conceived of the Badger Annex. It would use Badger treasury to fund new start-up DAOs in return for a percent of tokens at the Token Generating Event (TGE).

BIP 50: Add 0confirmation to BadgerDAO Annex was approved in the Forum in early April and in a snapshot vote on April 7, 2021.

Badger received a 20% token stake and options on 5% more at a 20% market discount.

In return, Badger:

  • Invested $500k in Zero
    • $450k USDC
    • $50k wBTC
  • Invested $500k, at the 7-day TWAP at time of the agreement, locked for 12 months in bBADGER and bDIGG
  • Badger agreed to:
    • Help with production launch
    • Assist with DAO transition
    • Help bootstrap execution of long-term roadmap

Current State:

ZERO has created a working product, ZERODAO Bridge and will refine this product and bring ZERO to a TGE when the product is market ready and there are favorable market conditions. They are actively seeking additional investors to inject capital so they can complete their product roadmap and get to a successful TGE.

The locked bBADGER and bDIGG were not claimed or spent by ZERO and are worth 10% of their value when originally locked. They no longer provide the financial support required by Zero to reach TGE.

Badger and ZERO did not collaborate to the level originally intended. It’s agreed that there is shared responsibility for this and that it resulted in higher costs for Zero and less investment in the protocol by Badger than was originally planned.

ZERO and Badger agreed to negotiate in the best interests of both DAOs to:

  • Align Badger tokens with its capital contribution
  • Provide ZERO with capital needed to raise capital, complete their roadmap and bring ZERO to a TGE
  • Create an incentive for Badger to return some tokens for ZERO to use for fundraising
  • Provide Badger with a reasonable return on its investment

Proposal

Fundraising:

  • Zero is actively raising capital and BADGER will get 30 cents on every $1 of future pre-TGE fundraising. For example, a $5m raise will result in $1.5m to Badger.
  • Any proposed raise below a fully diluted valuation (FDV) of $30m require pre-Approval from Badger

Badger Investment:

  • The $500k Badger / DIGG token commitment from BIP 50 is forgiven and Badger keeps the tokens
  • Badger gives up the discounted 5% post-TGE options
  • Badger stake in ZERO is reduced from 20% to 12%

TGE:

  • At the TGE, Badger will receive it’s full 12% stake
  • Use of these tokens will be determined by a vote from the Badger Council and Badger Treasury in consultation with ZERO team representatives

This proposal accomplishes several things:

  • Cleans up ZEROs balance sheet/cap table so that they have clean liquidity to offer prospective investors
  • Remedies all matters related to support promised but not delivered by Badger
  • Gives Zero and Badger the incentive to find new Zero investors
  • Provides both DAOs with new liquidity to assist getting through the Crypto Winter
  • Yes - This is The Way
  • Keep the original deal terms - and I’ve explained why below
  • There is a better deal to be negotiated and I’ve explained my reasoning below

0 voters

1 Like

I’m in support because parties from both protocols have come together and compromised to arrive at these terms.

1 Like

After strong community engagement and both sides on board, I think this restructure checks all the boxes.

2 Likes

I’d like to propose language be added to have Badger DAO report back to the community, monthly, on the state of Zero fundraising and what’s been paid to Badger.