AIP-11: Repositioning ALD as a High Yield Cash Flow ETF

Summary
With the hard cap of 150 million ALD tokens reached and no further minting planned, and with the imminent launch of veALD and reward distributions, it is time to reposition the ALD token. While the f(x) protocol and FXN token have performed well, ALD’s price and trading volume have lagged. This proposal aims to transform ALD into a high-yield cash flow ETF that is accessible across DEXs, Layer 2 networks, centralized exchanges, and eventually even traditional finance platforms like PayPal and Fidelity.

Motivation
High dividend ETFs backed by cash flow-generating protocols are appealing to investors. Although Aladdin DAO has created three such protocols, ALD has underperformed due to:

  1. The complexity of the Curve and broader DeFi ecosystem deterring many users.
  2. Users can’t maximum their reward without being degen.
  3. The high transaction costs on the Ethereum mainnet.

Note:

  1. One of the Founder podcast talk about when vanguard publish their SP500 ETF and totally change the market. For us, we need a simple financial product for everyone.
  2. I have heard many complain that ve token always sink. I told them they don’t know the degen way to play these ve token on chain to max reward. Instead of spend time to educate the market, why don’t we design a better high yield cash flow ETF token for these users who don’t do on chain activity.

Proposal

  1. Abstract away all DeFi complexities within the ALD treasury, providing a single wrapped product (aALD). Holders simply receive weekly/monthly rewards in fxUSD/afxUSD for holding aALD, with no voting, locking, or new concepts required.
  2. Within the ALD treasury, permanently lock CTR, CLEV, and FXN to collect rewards.
  3. Build protocol-owned liquidity through an AMM and treasury acquisitions:
  • Increase liquidity depth and trading volume to attract whales and institutions despite high APRs.
  • Accumulate more stablecoins (fxUSD) to ensure sufficient runway during bear markets.
  • Generate more cash flow to support the core team and future audits.
  1. Conduct an ALD treasury token sale to acquire more stablecoins and incentivize long-term supporters:
  • Core team and A-team sale (1M ALD limit per member, 5M total) using 30-day average ALD price.
  • Public sale (50K ALD limit per participant, 5M total).
  1. Merge the CTR, Clever, and FXN treasuries into the ALD treasury, with isolated emergency funds for each protocol.

This repositioning aims to simplify the ALD value proposition as a passive high-yield investment vehicle while funding the DAO’s continued growth and development through owned liquidity and cash flow generation.

Again, it is just my personal suggestion without align with Aladdin Core team yet. But it should be a good start to discuss.

2 Likes

Interesting proposal.
AldOg

Thanks Tao for posting this.

Just a quick question:
How would the rewards for aALD be generated?

The reward is from the veToken reward from CTR, CLEV, f(x).
Once the f(x) protocol factory completed, CRV, CVX can be minted to different Stable coin, which can be stake to stability pool to earn more stable coin.

ok, but then what it’s the incentive for ve holders?

Not sure I see the benefit for the DAO of selling from the treasury up to 10M ALD now at the prices today, and the 5M off the market to team/a-team?

Very Intersting proposal, However, how would this work for CVXFXN stakers and ve lockers of the CTR and CLEV tokens?

Actually, I should specify that we don’t need veALD here since it is fully circulate token now.
We can create a simple ETF for more crypto users who are not Defi degen.

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For CVXFXN and veCTR and veCLEV holders, they will continue get the reward. No impact. Aladdin Treasure will do a degen work to farm all the ve reward, either compounding or fx to stability pool to get stable coin. The main purpose here is create a Dummies 101 cash flow ETF which will give monthly dividend or auto buyback system like bnb did.

I just throw some ideas in my mind and let the DAO member to discuss even further.

Good Question.

The primary rationales for this proposal are outlined below:

  1. Diversifying Treasury Holdings: The current treasury holdings are heavily weighted towards ALD tokens. To facilitate more aggressive automated market making (AMO) strategies, the treasury requires a more balanced composition including higher allocations of ETH and stablecoins. Rather than directly selling ALD into the market at what is perceived to be an undervalued price, an over-the-counter (OTC) token sale may be a preferable approach to raising additional capital.
  2. Compensating Core Contributors: In the original token design, the core team and A-team did not receive any allocation for their creation of new protocols. This proposal seeks to rectify that oversight and properly compensate those who have devoted substantial effort without commensurate financial rewards by raising stablecoins/ETH to fund their compensation in a less volatile manner.
  3. Employee Stock Purchase Plan (ESPP): It is common practice for companies to offer an employee stock purchase plan, typically allowing workers to purchase company stock at a 5-15% discount from the fair market value. This proposal includes an analogous provision for core team members and top contributors.
  4. Recognizing Community Builders: As a community, we should express our gratitude to the dedicated builders who have invested significant time and effort while earning comparatively modest compensation, an unfortunate reality prevalent in the crypto industry. This proposal aims to better align incentives and rewards for those driving the project’s development.

Again, it is just my own opinions and it is one of the optional proposal. So any comments or suggestions are welcome

I like the idea of a simple cash flow ETF, “Dummies 101” :joy: if that is possible now.
It was actually what I thought Aladdin aimed at from the beginning. Crypto version of BRK stock.

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Thank you for your thoughtful and interesting proposal.

I agree with the idea of earning money just by holding aALD.
However, there may need to be incentives for long-term investors.
For example, a boost in yield or a discount on other Aladdin product fees.
(I don’t know if this is technically possible…)
Anyway, the act of getting aALD only during high earnings periods should not be made to be beneficial.

Also I would further propose that aALD investors can choose(weight) whether revenue distributions will be receive in fxUSD or ALD.
(ALD pays from what is in the treasury or buys back it from the POL pool.)
This continued demand to buy ALDs will lead to higher prices, rebalancing of treasury assets, and encourage the utilization of POL pools, and will also prevent ALDs from being sold at too low a price during treasury token sales.

The team/DAO can switch the aALD reward weights to accumulate fxUSD to prepare for a bear market or ALD to prepare for a bull market.

I read that we don’t implement veALD, is that correct?
Will the xALD be eliminated and will the aALD holders have voting rights?

Just to clarify, It is all my personal thought without align with Core team yet.

Personally, since the ALD is fully distributed and it might be a perfect token to be ETF for non-degen invest to join.

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