Vote on Sellout.io

I am voting YES on the governance action with hash 35b44189eb4795d5775122da52a3a115753f83fd662dd1ff205ea633fc99b34e#0.

The metadata for my vote is located here, and this blog serves as a more human-readable form of that justification.

Justification

First, I have no ongoing conflicts of interest with regards to this proposal. I have had some discussions about whether Gummiworm would be a suitable solution for the layer 2 traffic he will require, but such discussions have not materialized into anything concrete, and would not constitute direct revenue to Sundae Labs in any case.

I am strongly in support of this proposal, for the same reason I have been in support of Blockfrost, Pogun, and Eternl: commercial endeavors to bring long term sustainable revenue to the Cardano treasury, and real world usage of both Cardano and its surrounding ecosystem, are, to me, king right now.

That being said, I did have some reservations that I discussed with the team and that were received well:

1) This allocates nearly a third of the funds to improving the existing web2 product; If this were a company approaching a strategic investor, an 8:1 fund to company ratio would be considered fairly high, and the company would likely be asked to cover their own improvement costs and count it as their own contribution to the partnership. Structurally that is difficult for Sellout to do in this market, but that means that the terms need to be more favorable to offset.

2) Which segue’s into the terms. This is presented as a single financial instrument, but instead, I view it as two things:

• a 0% interest, long term loan with no teeth on default
• a 5% (of whatever percentage they decide to take as a cut of the fees!) return, deferred by 5 years

Typical financing deals have between 1.35x and 1.5x payback terms over that timeframe. And 5% of 600k (assuming a sigmoid, rather than an exponential as the team has done), deferred by 5 years, has a present-value of $25-75k, a pittance.

Don’t get me wrong; this is still structurally better than other proposals which are pure grants, hence my somewhat useless Yes vote.

But if Anvil / Sellout wanted to strengthen this proposal, then either raising the payback to 1.5x, adding an acceleration after 5 years, or raising the percentage cut would all do wonders for this proposal, financially.