The War Chest — Treasury and Investment Fund
Let me introduce you to what we believe will be one of the more integral cogs of Inter-Stellar’s long-term growth mechanics, The War Chest.
You’ve probably noticed that project “Treasuries” are becoming a big deal, and with good reason. It shows that the protocol has skin in the game and usually the larger the treasury, the safer the investment. Look at Wonderland.money’s treasury fund. In less than six months, they were able to grow a treasury worth (at time of writing) $1,033,067,440. That’s one billion dollars. Heck, that’s a whole lot of power for a relatively new DeFi protocol.
You are able to implement code into your treasury, to use it for specific reasons (i.e. buybacks, token mints/burns) based on different things such as time, supply and price. Imagine if sh*t hit the fan over at Wonderland Money, they have $1,033,067,440 to release to combat it or help recover token price etc. That’s an unbelievable asset to have, sort of like a cat having nine lives which gives the protocol that extra security if something critical happens. Investors and communities love that security, so why not implement a treasury?
Inter-Stellar is a project ran by innovators.
We looked at the concept of a treasury instantly it was a no-brainer to implement one into the infrastructure of the protocol. We call it, The War Chest.
8% of the total supply of $ISX is allocated to fund The War Chest, with a four year vesting period of 12,500,000 tokens per year. This capital will be deployed into DeFi and other investments utilising our DAO to come to a consensus. The capital will be deployed and will be used to grow The War Chest over time. We’re looking for steady growth from audited, doxxed and well respected protocols, no high-risk quick returns.
You might think, how does this affect me as an $ISX or NFT holder? — Why should I care about the project’s treasury?
Well, remember I said if sh*t hits the fan, having something up your sleeve to help combat a crisis is crucial. This is what we’re aiming for. We’ve been in crypto and DeFi long enough to know that volatility is pretty much guaranteed with any investment and we’re no strangers to seeing our portfolios fluctuate 10–15% in a day. Inter-Stellar won’t be immune to these crazy fluctuations. I know not everyone wants to hear that, but it’s true.
But what if we have a strategy to combat some of this volatility using funds that we generate from The War Chest? — Let me share some ideas of where we can deploy funds to help the protocol stabilise during periods of heavy volatility:
- Let’s imagine price dumps -25% over the course of a week-long period. The community’s faith is shaken and there’s tons of panic selling about to occur. We can deploy funds from The War Chest to provide HUGE buybacks at market with two outcomes. One, we can hold these tokens during periods of high volatility and then redeploy gradually over an extended period of time (think months to years vesting ratio) to not cause market fluctuations. This way, price of $ISX will be stabilised and the $ISX will be redistributed following an extended vesting period so the selling won’t affect market volatility, the treasury will over-time be reimbursed and filled back to it’s original balance, allowing us to stock The War Chest back up ready for the next deployment or investment.
- Buybacks and Burns. Music to every degenerates ears. Periodically we may decide to perform buybacks and burns, removing $ISX from circulating supply which encourages price appreciation as the market capitalisation is split between fewer assets. To do this, we would deploy capital from The War Chest, purchase $ISX at market and send to a burn address so that the tokens are physically removed from supply. Thanks to the Stellar network, this is extremely easy to perform unlike other networks where tokens are sent to a dead address, but still count in the circulating supply making the whole process pointless in its entirety.
Anybody involved in the Inter-Stellar protocol stands to benefit from The War Chest as it provides value to the $ISX token and holders and gives it a layer of protection against whales and sellers. It also helps increase and sustain the value of your Inter-Stellar NFT’s as the native token to purchase them will be $ISX.
The War Chest is going to be a game-changer as it gives us a way of fending off crypto dumps and keeping volatility at bay by utilising the capital held by the protocol with zero profit intention in mind. Remember, this is to stabilise the price of $ISX for our community and investors, not to turn over for a profit for the protocol.
With this in mind, the protocol will only actively use The War Chest when price demands it. For example, we will NEVER add to periods of selling pressure by selling the vested amounts per month if the market is red. We will only ever gradually sell tokens at periods where there is high demand so that we don’t crumble price. But remember, the $ISX that is sold during these periods helps the protocol long-term as the funds it raises will be redeployed during the periods of heavy downturn.
Finally, The War Chest enables $ISX to become deflationary over time with a Buyback and Zap (Burn) mechanism. If the DAO votes for a recurring Buyback and Zap feature to be added to the protocol to increase sustainability (constant buying pressure added to the liquidity pool pair) we could look to investment opportunities that pay a passive income on a regular basis. Example — Think if the DAO votes for the protocol to invest $50k of capital from The War Chest into Strongblock’s $STRONG nodes, which would return a $15,000 per month (rough % returns), we could allocate that $15,000 per month to a random $ISX purchase. Once the tokens have been purchased, they can be zapped into non-existence.
The above is just an example as to what’s possible when you combine a DAO and Inter-Stellar’s The War Chest to help achieve long-term sustainability. After all, who doesn’t look a good token burn… I mean ZAP!
Everything in this article is innovative and although protocols have used similar ideas in the past, the way we are going to try and implement The War Chest is unheard of. For full transparency The War Chest will most likely come with teething pains that we will have to overcome when they occur and it is not designed to protect any investment from any risk of loss, however, more so to reduce volatile moves in both directions to achieve longer-term sustainability.