Investment Proposal: Firn Protocol

Proposals
#1

We are pleased to present this proposal for investment and partnership between LunarDAO and Firn Protocol. This memorandum outlines several avenues for investment, as well as opportunities for growth which will benefit the DAO as well as Firn. Firn will work closely with the DAO to ensure that this partnership represents the optimal confluence of risk and reward for all involved. These conditions are provisional and subject to change if one or both parties request amendments.

Avenues of Investment

OTC Sale

As of April 25, 2023, the DAO’s treasury safe held approximately $19,000 (10.49084 Ether). While our previously discussed minimum token investment was $30,000, we have revised our offer to reflect the change in the DAO’s treasury balance, offering the DAO opportunity to diversify their portfolio during this critical launch phase.

Minimum Investment to Receive OTC Discount:

$10,000 – Discounted 7%

Note that this offer provides a greater volume-to-discount ratio than the previously discussed $30,000 minimum at a 10% discount. For any amount over $10,000 this discount ratio will scale an additional 3% for every $10,000 purchased, with a maximum discount of 30% at $85,000. This discount represents a composite between the price impact of a market buy, and the remaining percentage of total discount, the resultant figure will be the ­net discount. At the date of this proposal the price impact of a $10,000 market buy was 1.56%, the calculated discount applied to this purchase would result in a net discount of 5.44% (7% total – 1.56% market = 5.44% net). Firn shall not remove sell-side liquidity at any time between the submission of this proposal and the DAO’s decision. Firn may add sell-side liquidity to cushion against undesirable or erratic price action, in this case the percentage of net discount for the DAO would increase. Any OTC purchase would require $FIRN token to be locked for a period of 12 months by a third-party locking service.

Market Purchase

A discounted market purchase may be provided in the case that the terms of the OTC sale are not suitable to the members of the DAO. In this scenario, significant sell-side $FIRN token liquidity will be added to the pool, reducing the price impact of a purchase of a minimum of $10,000 $FIRN to 0.56% from the current 1.56% impact. Price impact is variable and may change between the time of this proposal and the DAO’s decision. If the DAO chooses to perform a market buy, the exact discount applied will be calculated at the time of the purchase, and will be no less than 1%, with the discount increasing in an appropriate manner for higher volume purchases. In the case of a market purchase there will be no locking requirements.

Growth Opportunities

We believe that a partnership between LunarDAO and Firn would provide significant upside potential for both parties. Our cutting-edge privacy platform enables unfettered access to private transactions and contract interactions, irrespective of a user’s access to high-speed internet or computational power, truly delivering on the promise of privacy for all. The DAO’s commitment to upholding the rights, philosophy, and mission of privacy in the broader sense conform perfectly to the values Firn represents.

Incentivizing Dao Membership

Firn may offer special airdrops of $FIRN token to LunarDAO members, in an amount proportional to their deposit size in the DAO, as well as their deposit size in Firn. The airdrop amount will be calculated based upon a 1-to-1 deposit-deposit size in LunarDAO and Firn. The minimum deposit size will be 0.5 ETH in both the DAO and Firn, respectively. This will allow DAO members to access the $FIRN airdrop without needing to buy $FIRN token, while also incentivizing growth for the DAO. The specifics of this arrangement will be discussed between Firn and the LunarDAO community once an investment proposal has been accepted.

Co-Marketing

Tapping into the knowledge, skills, and networks of the Firn and LunarDAO communities will expand the reach of both entities significantly. An investment in Firn will give the DAO a profit incentive to grow our service, not only to increase the fees the DAO will receive from holding token, but the value of the underlying asset itself. Firn will be incentivized to help grow the DAO by working towards future investments and partnerships. Together we believe we can make privacy open and accessible to all.

These offers are only valid for LunarDAO and are not representative of any future offers made to LunarDAO or any other investor. This document does not represent financial advice and is not legally binding. The actions taken by LunarDAO, or any other investor, regarding any form of investment in Firn Protocol are the sole responsibility of the investing party.

Thank you for your consideration,

Captain McAteer - firnprotocol@proton.me

Gravning Amundsen - gravning_amundsen@proton.me

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#2

Hey, thank you for sharing @Grav . Gonna look through it tonight.

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#3

@Grav I have two points before I write up more stuff:

  1. Would you b up to make a Lunarpunk Future event with us? That is a twitter space hosted by us where potential allies and partners present their thoughts, projects, solutions, proposals etc. Ideally this week.

  2. Would you mind to share here more about Firn itself, so the community coming in different times can see under the hood of the protocol?

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#4

Hey @ogma, we are definitely available to make a Lunarpunk Future event. Feel free to DM me on twitter or telegram and we can get scheduled.

Here is a quick overview of Firn, for a more in depth look into our cryptography and features you can visit docs.firn.cash. You may view our technical whitepaper at www.firn.link/whitepaper.pdf.

Firn is a state-of-the-art, zero-knowledge privacy utility for Ethereum and EVM-based rollups. Firn supports not just private payments , but the private invocation of arbitrary smart contracts. Firn moreover allows deposits and withdrawals of arbitrary amounts of Ether, as well as private, peer-to-peer payments (in which the sender’s and receiver’s identities and the amount being transferred are all hidden). In this light, Firn can be viewed as something like a general-purpose private wallet for EVM-based blockchains.

Unlike all other projects in the privacy space, Firn uses an account-based architecture. In practical terms, this means that Firn’s browser-based wallet can retrieve and synchronize your account state extremely efficiently, downloading less than a kilobyte of data in the process. Other projects require data downloads in the megabytes or more, and feature extremely long synchronization times. This latter requirement has proven prohibitive in multiple instances (including Aztec Connect , which had an insurmountable bug load and was deprecated, and Zcash , which faced a crippling “spam attack”). As privacy projects continue to grow and mature, we believe that our wallet’s superior efficiency will prove decisive.

Firn’s front-end is hosted entirely statically on IPFS, and can even be accessed as a Tor hidden service. Firn has no off-chain rollup, and Firn proofs can be generated by the browser entirely unassistedly. Firn’s browser client must only download a few hundred bytes (compared to megabytes in the case of Aztec); it’s completely stateless, and stores nothing locally (unlike Aztec); finally, Firn synchronizes instantly, even on fresh devices. Firn’s liveness depends only on the L1’s liveness. During synchronization and proof-generation, Firn communicates only through the selected wallet (whose RPC is controlled by the user), and does not initiate any “backdoor” connections to Firn-specific services. (When you actually dispatch a withdrawal or transfer, a one-time zero-knowledge proof gets sent to the Firn relay, which pays gas and forwards it to the blockchain. This proof reveals nothing to the relay. The relay does not collect any IP information.)

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#5

Announced:

https://twitter.com/lunarpunksquad/status/1651297732458323968

Lunrapunk Future VI w Firn:

https://twitter.com/lunarpunksquad/status/1651346075238686720

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#6

After discussing with Captain McAteer we are prepared to make a significant increase in our offer.

We would like to move from a 7% discount on $10,000 investment to a simple 50% bonus on any investment over $10,000. The structure will thus be:

  • $10,000 investment will receive $15,000 $FIRN
  • $50,000 investment will receive $75,000 $FIRN, etc.

This investment proposal represents our dedication to the Lunarpunk community, and the Lunarpunk vision. If the DAO chooses to invest in this extremely generous offer, we expect that LunarDAO will work closely with Firn to grow together, and work for the best interests of both groups.

All other requirements outlined in the original offer apply to this offer, including the 12 month locking period, and this discount will only apply to an OTC purchase. This is not financial advise.

Thank you

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#7

Hi, this is great savings for the Treasury. How are the rest of the Firn tokens be distributed. I believe it’s hard capped at 1M but are all circulating? A significant portion is in 0x…3B0dC. What’s the plan for those? If they belong to your team, any lock-up periods?
I love the app by the way. Good job.

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#8

The distribution is as follows:

30% - Team Tokens
30% - Partnership Tokens
10% - Airdrop Tokens
17% - Future Liquidity
4.6% - Current Liquidity
7.8% - Circulating

The large non-circulating supply is retained by the Firn multisig. While we are still a relatively young project all of these allocations will remain in the multisig, for maximal security, until we are ready to actively parse them and control several multisigs. At some point the team will hold no more token than the alloted 30%, which will be divided between team members. There will be no lockups of the multisig tokens until we are slightly more established and have reached some critical milestones.
While this structure is slightly uncommon in crypto it is relatively standard in tradfi corporations. Having more fluid controls over the token at this point allows us to do things like offer 50% bonuses to early investors.
We renounced our token contract ownership few days ago, so there will never be any new tokens minted. Because $FIRN is a token which pays dividends any token ownership is very much akin to being a part owner of Firn Protocol. Again, the fees are paid based on the size of the circulating supply.
For example, If LunarDAO were to choose to invest $50,000 right now, they would receive ~5000 $FIRN (worth $75,000). At the current circulating supply that amount would grant the DAO access to ~7% of all Firn fees generated.

#9

One of the criteria I always consider when investing is determining the answer to the question, would a fork of that be as successful. I am thinking if Firn token gets the network effect of this series of tools, would similar protocols with no tokens (or with alt-tokens) also be successful enough. I understand the developing team and initiators must be handsomely paid in order to encourage development but personally think 30% is a lot for the reason I mentioned above (it will be forked and the forks will also work as good as original). Am I missing something? Is liquidity necessary for your protocol to work?

#10

Understandable, right now our front-end is not open-source, making it essentially impossible to fork us. At some point we will open-source the front-end, but that won’t happen until we are very well established in the space. A similar protocol with no token (or with a governance token only) would likely be less successful. The dividend token model provides users with an avenue to reclaim some of the fees they pay, and it also drives adoption of the service. In the case that a fork happens with no token, the devs would be paid 100% of the fees, not just 30%. We are not retaining 30% of the token so that we can sell the token for profit, we are retaining 30% so that we are able to profit from the fees generated by the protocol.
I think the confusion comes from the standard fundraising model in crypto being the “governance token”, which is pretty much just a worthless token which devs sell to make money. Governance tokens have no inherent value, and so we have gotten used to ~5% team tokens. $FIRN token has inherent value, and holding the token is the only way the team can collect fees.
We could have chosen to go with the governance token model (or have no token) and collect all of the fees ourselves, but the dividend model allows investors to earn passive income. Without the dividend model any gains on the DAO’s investment in Firn would be solely dependent on a hope that the token value would increase.
We believe our tokenomics are significantly better than many other tokens in the space, that said, we still need to earn money from our work. So the tradeoff is that investors get significantly more value for their purchase, but the team holds a larger portion of the total supply. Does that clear things up?

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#11

I wonder what allocation you all think shall be on the voting proposal for Firn?

Here is an escrow @Grav was sharing.

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#12

I will look into the escrow and share my thoughts asap.

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#13

I think to have a balanced portfolio we could put 25% of thr current treasury in Firn, 25% in Mel staking.

Then, as new proposals are made (dark.fi? Navcoin?) We can allocate 25 to these as well. By then, we’ll be ready for another raise and hopefully have another good second round.

It would be great if each project isn’t just a speculative investment but one that generates revenue.

#14

Firn has these dividends which is very good for the DAO. We can see it similarly like the DAO VOX - like shares. Here the shares are not exposed to a speculation by themselves, instead equal to a fragment of the treasury net asset value, $FIRN is a share of how big % of the fees the DAO collects.

#15

Once we move with DarkFi towards some deal talk, imo shall announce that and make another raise. With the DAO size we cannot execute as much as we aim to do. Same with Mel. Mel has a minimum of 100k.

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#16

I agree 100% with both - not throw all the ETH towards one project and make another raise before the possible support of DarkFi or Navcoin.

In TG and the last meeting there was a talk about the supporting the stewards, is there a proposal anywhere?

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#17

Given the Mel proposal cannot proceed with the funds we have, DarkFi and NAvcoin is for later talks, maybe smth like $30k investment to $Firn can be a good figure to discuss.

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#18

FIRN PROTOCOL INVESTMENT PROPOSAL.

Open for a discussion:

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#19

The time for the vote is setup by Firn in ~3 weeks, which gives a lot of time for discussion.

Besides that in TG was shared an idea about a Lunarpunk Future event with several cryptographers discussing some of the deep tech, so users can make a better picture. This seems to be a supported way to go.

With everything shared prior to the formal LIP, I am in favor of Firn proposal for investment and close partnership. I see Firn in similar position with the DAO/ We are the platform to bring people together, build a squad and scale it up to a movement, Firn is one of the needed solutions for that movement to have the protection needed. When I say movement I mean anyone who does not comply with data extraction by the governments, regulations and other oppressive matters.

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#20

Hi all, after speaking with Cap we have come to a decision on how the funds will be used if the DAO approves our proposal:

$25k - Will be spent on receiving a full audit of our contracts from BlockSec
$20k - Will be added to Firn contracts to increase the privacy of the service

Please let me know if you have any questions of comments.

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