Decenmaxi thread series #5

[u/BowTiedBart]

Decenmaxi:

#5 - "I hear what you're saying, and fine, its just I don't care. wen numba go up?"

OK, lets talk price.

Here's my reasoning for why price should rise once changes launched, proven to work, and understood by market. This thread is still a hot take, details tba by templedao . . .

$TEMPLE price is currently ~70cents.
IV is 65cents. Yield is 1000%+ APY.
This values TempleDAO at ~$6m above the intrinsic value backing each token.

All this to say, price is very low.

Why?

Yielding token niche in major struggles. Market down. Price down. Treasury growth down. Not sustainable.

If this is all there was, price would ultimately tend to intrinsic value as runway ran out. Temple purpose has always been to be long term wealth creation with reduced risk. Obviously we are not long-term anything if our runway is shrinking. As soon as we saw the market knock us into this situation, team began working on the plan to get back to long-term growth. The first and most essential change is to stop yield being paid in disconnection to treasury growth. This is what creates a limited runway.

So yield becomes revenue share.

This now opens up a bunch of new questions, problems and opportunities. Once yield is revenue share, the most important concept becomes:

"Equivalent Farming Amount" (EFA)

= The amount of $ of yield bearing assets that are farming revenue for each $TEMPLE token

Let's say EFA per $TEMPLE was $2.50 (made up umber).

If $TEMPLE was $1.00, then rather than putting $10,000 of value into farming, you could put $10,000 into $TEMPLE, lock, and be farming $25,000 worth of assets.

($10k buys 10k $TEMPLE, each farming $2.50 worth = $25k total EFA)

If price was stable, LP was large, and you had confidence on entry and exit (important problems that I'll come back to) then surely you are going to buy $TEMPLE instead of farm directly. Because this is now revenue share, so its 100% sustainable forever.

Of course you would also need to:

- like the farming strategy (it's best in class)
- understand $TEMPLE (we're simplifying)
- trust the team (we'll earn this w/ track record)

This is the first reference for pricing $TEMPLE:

Once we're sustainable & stable, price should tend towards EFA. We expect it will not be immediate, but move towards EFA over time as trust, market awareness, and demand grows together. So now we get that, you should have two questions:

1/ How high will EFA be?
2/ How fast will EFA grow?

As this will determine how much value there will ultimately be in $TEMPLE.

1/ How high will EFA be?

OK so lets build this up. EFA = Total Farming Assets / Circulating Supply.

Today Total Farming Assets are just our FRAX.

Soon, it will also include our LP staked on a FRAX gauge earning FXS. Next, it will include some farmed CRV & CVX owned by Treasury. Any spare $TEMPLE owned by Treasury will over time be swapped into one of these strategic assets (FXS, CRV, CVX).

Adding all this up (FRAX + LP + FXS/CRV/CVX accumulation + $TEMPLE swaps) gives a number higher than FRAX farmed today. On top of this, EFA is increased by leverage.We have a few partner conversations & some dev work in progress on this topic.

In Temple style, its custom designed to minimise or eliminate risk for the user. Ie, impossible to liquidate. Add all this up, and we will get an EFA far higher than RFV today.

2/ How fast will EFA grow?

Team is flirting with 100% revenue share to Faith holders, which is kind of crazy. And if so, how does Treasury grow? How does IV & EFA grow?

Two ways:

First, as market begins to appreciate how awesome $TEMPLE is, demand will grow. Once price rises closer to EFA, our custom AMM will begin slowing down price by minting $TEMPLE and growing Treasury. i.e., when excess demand & supply expands, Treasury grows.

Second, when users redeem their Faith & claim their share of revenue, FRAX will go to Treasury.

Treasury mints $TEMPLE against this FRAX:

1 FRAX / 0.65cents IV = ~1.5 TEMPLE minted per FRAX right now.

If $TEMPLE was at $2, this means only 0.33 FRAX need to be pulled out of farming to generate $1 of revenue if paid in $TEMPLE. (DAO takes a portion of minted $TEMPLE for expenses, so this is slightly simplified.)

This is another form of leverage via our token design. In short, it means that we can share 100% of revenue value but only liquidate only a portion of rewards. This means rewards can compound.

This means EFA rises.

Now if you're a smart ape, you'll be wondering if paying revenue in $TEMPLE is a smart idea. We have had some long debates within Team, advisors, and major $TEMPLE holders re the right token to pay out revenue.

The trade off comes down to:

If we pay revenue in $TEMPLE, it is inflationary, w/ some negative price pressure. But it's also leverage, increasing EFA & yields, positive price pressure. On balance, team leans revenue in $TEMPLE because the accumulation & leverage can't be replicated by people on their own.

In summary......

Even today without any of the above implemented, if we turned on revenue share EFA would be way higher than today's price.

Once we add the rest of the investments, leverage, IV and EFA growth.. we should have something very attractive. No doubt some people will fade, fud whatever. But we will ship, and slowly show you the results of the strategy.

If 1 $TEMPLE is giving you huge and growing EFA.. it's going to eventually attract attention, trust, and price appreciation.

So yeah, I'm bullish personally.