Fortress DAO proposes allocation of 50% of treasury stablecoins to Fodl Finance USDC/USDC position rewards farming

As discussed in our previous Medium post, Fortress DAO will continue to focus on the accumulation of treasury reserves in the first several weeks following launch.

Initially, we will invest token reserves into a combination of:

• Low-risk strategies such as stablecoin-based farming or high-volume arbitrage
• Venture-style investments into newly launched protocols
• Development of revenue-generating subsidiaries of Fortress DAO

As part of our low-risk investments, we propose a DAO vote to allocate 50% of our stablecoin reserves (past what is required for $FORT token backing) into a maximum-leveraged USDC/USDC position on Fodl Finance currently paying out over 200% APR on position rewards.

What is Fodl Finance?

Fodl Finance (https://fodl.finance/, $FODL) is a highly innovative, fully decentralized leverage trading platform launched in October 2021.

We believe that Fodl position farming is an ideal fit for Fortress DAO’s low-risk investment needs for multiple reasons:

• Fodl is developed by the team behind 0xb1 (https://twitter.com/0x_b1), a pseudonymous group of experts in decentralized finance with experience managing 9-digit yield farming positions (https://cryptoslate.com/a-400m-ethereum-address-known-as-0xb1-is-doing-a-giveaway-to-boost-defi/)
• The Fodl platform has been extensively audited by Quantstamp: https://certificate.quantstamp.com/full/fodl
• Fodl position rewards are paid out in the form of $FODL tokens, which we currently believe to be highly undervalued given that the Fodl platform is maintaining $330M TVL with a market capitalization of $76M

By taking on a leveraged USDC/USDC position, we expose ourselves to a very limited risk profile:

• Loss of peg: We believe that it is unlikely that the USD Coin will lose its peg. However, even in that eventuality, there is zero risk of liquidation given that the asset being borrowed is identical to the asset being supplied.
• Impermanent loss: There is zero risk of impermanent loss in a USDC/USDC position.
• Contract/platform risk: We believe that the contract/platform risk of locking up treasury funds in a Fodl position is extremely low due to the following factors: (1) the Quantstamp audit, (2) the extensive experience of the Fodl Finance team, and (3) the fact that existing venture capitalists have publicly announced investments in Fodl.

As previously discussed, this position would pay out an APR currently estimated at ~230%. Because the Fortress DAO team believes that Fodl Finance is currently undervalued by a ~5x factor, in practice the realized returns may be much higher. However, even if not, we feel that the risk/reward profile of this position is extremely compelling.

Implementation details

Opening a leveraged position on Fodl consumes a substantial amount of gas (1–2k USD). Because of this, we would plan on potentially adding to our USDC/USDC position every several days depending on the rate of treasury growth. If the proposal passes, Fortress DAO will initiate this position within the next week.

Contact

Twitter: https://twitter.com/fortressdao/

Discord: https://discord.gg/fortress/

Telegram: https://t.me/FortressDAO/