Requesting 40 Million UST to Fund a Terra Brand Partnership with the {REDACTED} Sports Franchise in One of the Four Major American Professional Sports Leagues
Disclaimer – I am employed by Terraform Labs Pte. Ltd. (“TFL”)
BACKGROUND CONTEXT
The Terra Community Pool swelled in valuation throughout 2021 in parallel with the meteoric growth experienced by the Terra ecosystem at large. Standing at its current mark of roughly $2.74 billion, the Terra Community Pool constitutes one of the largest DAOs in the crypto industry.
Over the past year, most of the community spend governance proposals have been related to grants for funding ecosystem projects, allocating funds for liquidity mining (LM) incentive programs, and ancillary initiatives targeting broader ecosystem development.
Governance of DAOs is incipient, though. The potential design space for capital allocation and treasury management is massive and only limited by creativity. For the first time, discussions on the Internet can be converted into active resource allocation that performs tasks on behalf of a globally distributed user set.
Throughout the market, the variety and vigor of capital deployment from community pools have tarried behind their true potential to deploy capital productively across diverse dimensions, however. Such is the nature of DAOs in their current state, where decentralized, Internet-native governance is only scratching the surface of what it’s capable of achieving.
In most instances, DAO allocation and treasury management are insular. Similar to a broader issue with DeFi itself, we need to begin looking outwards rather than inwards. If mainstream adoption is the ultimate goal of Terra, then meaningful strides towards that end should be attempted.
Bribooors, threadooors, incentivizoooors, and all types of DeFi degens will always play a pivotal role in the further manifestation of a new financial stack. But we should welcome newcomers into the fold when the right opportunities present themselves.
This is one of those opportunities. It’s time to fuse the real world with the metaverse. We would like to propose a novel community spend initiative – the first of its kind in the industry.
This proposal involves a legendary sports franchise and a household name in one of the major four American professional sports leagues – the NFL, NBA, NHL, and MLB. For legal reasons, we cannot reveal the identity of the franchise (the “Franchise”) until after the voting period has concluded, and the partnership agreement is settled.
However, we can confirm that the term structure of the deal and other details have been negotiated directly with the sports franchise, with pending execution ready to initiate the partnership if this proposal passes an on-chain governance vote.
THE PROPOSAL
We are requesting from the community to provide $38.15 million USD to the {REDACTED} franchise (the “Franchise”) from the community pool to fund a 5-year exclusive partnership deal to promote the Terra brand across various parts of its home Venue and its TV network as one of its leading partners.
Under the terms of the proposed deal, the community pool will pay to the Franchise (i) $37.50 million USD upon execution of the deal, which represents the total sum of the annual fees of $7.50 million USD per year for 5 years, and (ii) $650,000 USD to cover construction, renovation, and re-design costs. If the costs related to the construction, renovation, and re-design exceed $650,000, the parties will cover the excess in a mutually agreeable way.
The Franchise is a leader in the sports world with cutting-edge fan experiences and is looking to make a grand entry into the world of crypto. The partnership agreement includes Terra brand exposure to the most valuable non-naming rights that a sports franchise can offer.
The high-level list of the partnership terms is detailed further below.
Terra Branding and Naming Rights to the Entire Premium Club
The Franchise’s most premium club and lounge will be rebranded as the Terra Club (the “Club”), and be emblazoned with the Terra logo and messaging. The Club maintains one of the leading media values in its respective sports league, with some of the growth and engagement metrics provided in the original proposal from them including:
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Over the life of the partnership, the prior Club sponsor saw a 94% increase in fan likelihood to use their service compared to the general population.
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34% of their fans are more likely to try a partner’s product/service, with that number doubling when the partner supports a cause, charity, or community initiative as part of the partnership.
Total Regular Season Media Value – $16,821,114
Further details available for the Club include:
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The Club’s current account holders maintain a total market cap of over $1 trillion, including:
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6 Fortune 100 Companies
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8 Fortune 500 Companies
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67% of Club Season Plan holders have an individual income greater than $125K
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42% of Club Season Plan holders hold a post-graduate degree
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The Club is the preferred year-round venue for high-profile, non-game day events
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90% sell-through rate
The Club is also ideally situated on national TV broadcasts. It will introduce the Terra brand and provide exposure of our ethos to a diverse and expansive group of people who enjoy watching the team and sport on both TV and in-person. In particular, it grants Terra exposure to a national audience that may not have any other avenues for brand exposure to Terra.
Entitlement to the interior and exterior branding of the Club includes:
- Co-branding of the entire interior Club space
- Permanent audience-facing signage
- Permanent branding on all Club seat backs
- Branding inclusion on tickets, including across all Club references and other products
Venue Signage & Flexible Messaging
The Venue signage includes prominent Terra branding on a 20’ by 7’ space in the Venue that is regularly featured on national TV broadcasts, visible to both home and away team markets. It also remains in place for the duration of the playoffs.
2021 Relometrics Media Value (Full Season):
- 100% Media Value – $2,929,243
- Sponsor Media Value – $672,234
This aspect of the partnership also includes several rotational signage of the Terra brand in other parts of the Venue, visible to both the live and broadcast audiences. In addition, this consists of an LED Fascia Ribbon display of the Terra brand across 580 feet of LEDs inside the Venue that can be changed regularly to align with new messaging, campaigns, or other initiatives.
Other aspects of the flexible signage and messaging include:
- Both animated and static branding of the Terra logo on the primary Venue scoreboard.
- Terra brand placement on 5 massive, rotating LED boards hosted on the exterior of the Venue, providing exposure to more than 100K cars per day and delivering 2.8 million monthly impressions and 200 scheduled daily exposures.
Finally, the franchise maintains its own internal television network, which offers a constant digital presence throughout the Venue. The network delivers exposure on over 700 screens in high-traffic areas such as bars, restaurants, clubs, suites, concession stands, and team stores.
During each home game, the television network will deliver Terra brand placement, including:
- Side panel rotation during live gameplay – approximately 44 exposures per game
- 400 x 850 size ad panel
- Full season package on the in-Venue television network
Digital and Social Elements
Primarily, this aspect of the partnership contains a custom, 5-part video series about Terra created to highlight the Terra ecosystem. The videos will each be 30 - 60 seconds long and will be produced by the Franchise’s digital team.
The videos will be co-promoted from the Franchise’s social media accounts alongside Terra, including the Franchise’s vast Twitter audience, and will be permanently hosted on their YouTube account as well.
UST Adoption in Venue
The Franchise is a leader in deploying venue technology to drive the fan experience. Once the partnership is approved, the Franchise will use all commercially reasonable efforts to implement UST as an accepted currency in venue transactions.
SUMMARY
To conclude, the partnership agreement with the {REDACTED} franchise in one of the major American professional sports leagues represents an unprecedented and groundbreaking opportunity to capitalize on the entry of a household and well-reputed franchise into the Terra community.
The deal includes a variety of attractive Terra brand exposure deliveries, ranging from pronounced signage inside the Venue to national broadcast TV exposure and decorating the entire Club with Terra branding. It also unlocks potential future collaborations with the franchise beyond the details elucidated in this proposal. Specifically, we will continue to work to expand this partnership into new areas beneficial to the Terra community under an exclusive negotiating window with the franchise.
You can find #LUNAtics in the most surprising of places…
Below, you will find the screenshot of the cost summary from the original proposal for the partnership terms. As you will notice, the asterisks at the bottom indicate payment delivery to the franchise in USD.
We describe the execution flow of the payment settlement in the section below.
Payment Execution & Delivery
This proposal is a Community Spend request to the Terra Community Pool to fund a broad-ranging advertising and branding partnership for Terra. It’s a major sports team with an expansive fanbase interacting with a DAO. Nothing like this has ever occurred before.
As a result, there are some nuances to consider in the payment flow as sports franchises of this caliber are not DeFi-native institutions and require delivery of payment in USD to initiate the partnership.
On the back-end, the terms and structure of the contract have been negotiated directly with the franchise, including mapping out the necessary flow of funds from the requested UST in the community pool to the final leg of the delivery of USD to the franchise.
Let’s walk through the process below.
Should the proposal pass, the 40 million UST will be distributed to a multi-sig controlled by a newly formed Guernsey Trust, the Terra Community Trust (TCT). The TCT has been set up so that the Terra Community Pool (i.e., DAO) is the beneficiary of the trust, where the 3 trustees selected are beholden to acting on behalf of the will of the beneficiary – the Terra Community Pool’s governance outcomes in applicable cases such as this instance.
The 3 trustees include 2 trustees and 1 enforcer. The members are as follows:
- Enforcer – Gabriel Shapiro (General Counsel at Delphi Labs)
- Trustee – Remi Tetot (Co-Founder of RealVision)
- Trustee – Ryan Moore (Partner at Accomplice & Board Member of Draft Kings)
Should the proposal pass, the TCT and franchise will execute the agreement. The flow of funds from the community pool will then be immediately executed as follows:
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40 million UST sent to the multi-sig controlled by the TCT.
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At this point the franchise owns the agreed upon 38.15M UST. The franchise and a reputable OTC trading firm agree to a transaction to sell UST for USD.
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At the request of the franchise, the TCT trustees sign the multi-sig transaction to send 38.15 million UST to the franchise’s OTC trading firm account wallet.
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The OTC trading firm delivers the 38.15 million USD to the franchise, completing the transaction.
Successful completion of the process will be confirmed publicly.
When the contracts are signed and the $38.15 million in USD is received by the sports franchise, the partnership will form, and the remaining details precluded from this proposal will be revealed – including the unveiling of the Franchise. The 1.85M in UST balance will remain in the multi-sig to compensate the trustees and pay for any potential ancillary costs over the course of the 5-year deal and/or, as discussed more fully below, for any other initiatives the DAO wishes to use the TCT to execute.
The Terra Community Trust
Notably, the TCT was not established as a one-off entity either. Although it was formed for this specific purpose, the significance of the formation of this community-controlled entity cannot be overstated. The TCT has been assigned all intellectual property rights in Terra, Luna, and UST marks and branding. This is yet another groundbreaking milestone for the Terra community and further evidences its commitment to always be the most decentralized public blockchain and to continue to forge a path for other chains to follow.
Moving forward, the TCT can be utilized by the community for carrying out actions pursuant to successful governance proposals where a legal entity capable of signing contracts and distributing funds to relevant counterparties is needed or otherwise appropriate. This is a first-of-its kind legal structuring for a DAO and we are incredibly excited to see what the community uses it for next.
Below is a link to an FAQ regarding the TCT:
https://docs.terra.money/docs/learn/community-trust.html
REASONING & CONCLUSION
Besides the fact that having a major US sports franchise directly interact with a DAO via the Terra Community Pool is objectively inspiring, there are several notable reasons why this is a net positive for the Terra economy at large.
First, the narrative.
Since its inception, Terra has been focused on bringing DeFi to the masses – wielding stablecoins as the vehicle to achieve the ultimate goal of mainstream adoption. Many of the #LUNAtics are ardent supporters of this vision. They have contributed significantly to the growth of Terra through a variety of means that are not lost on those who have worked so diligently to bootstrap the network and get to the point we are at today.
What better reward for the painstaking work, loyalty, dedication, and resolve of the Terra community than to see their flagship logo draped from the rafters of a major US sports Venue?
Together, we have come a long way from the days when the notion of an application-specific chain in the Cosmos ecosystem becoming the #2 smart contracts chain in TVL behind Ethereum seemed like a pipedream.
But we’re not finished yet, nor are we tired of tilting at the original vision we set out to manifest. We’re only getting started.
Part of achieving mainstream adoption means appealing to the mainstream demographic via mediums they are accustomed to absorbing and deriving information from. Exposure for crypto is budding but remains sparse and hard to attain as compared to the large budgets and networks commanded by tradfi corporations and centralized companies.
DAOs can change that narrative.
In particular, education, in all its diverse formats, is the golden goose towards the end of reaching mainstream acceptance. But the mainstream user, while perhaps curious, often does not have the impulse to dive into educational videos, documentation, and other resources on the learning curve towards understanding crypto.
There needs to be a catalyst that captures their attention, persuading them to dive into the rabbit hole, satiate their curiosity, and consider using a network like Terra with all the advantages to the average Joe that it affords.
Situating the Terra brand amidst a boisterous audience during live action of one of America’s most beloved sports is a logically compelling avenue to catalyze that curiosity, especially with national broadcast TV exposure on the table.
It stokes further exploration into the question that so many people ask themselves:
Why should I care about crypto?
Second, dynamism is the name of the game.
Terra didn’t get to where it is today by being docile. We got here as a bold community pushing the boundaries of what’s possible with the innovation of money.
If a decentralized economy necessitates decentralized money, then Terra and UST are staring down an exacting task.
Opportunities like this proposal don’t come by often. On the road to mainstream adoption, realizing the vision of Terra becoming the base layer money for an emerging, decentralized financial stack requires a healthy dose of ambition and decisiveness hell-bent on manifesting that goal. Again, it’s not every day that a once chastised industry has an opportunity for incredible exposure to a mainstream audience, courtesy of a sports franchise willing to engage with a DAO.
Moving fast in a hyper-competitive market warrants pursuing the right opportunities when they present themselves. Branding Terra to a massive, untouched market of potential users unlocks future synergies that would otherwise not be available. The network effects take care of the rest.
Third, and finally, inspiring the creativity of DAO governance to realize its full potential.
If anything, we hope this proposal changes how we consider DAO governance, particularly where and how it can be applied to effectively reach a desired end outside the insular confines of DeFi. DAOs are novel mechanisms for social coordination and performance that produce tangible results. They actually DO something at the behest of a bunch of random people on the Internet – bound by shared interests and beliefs.
We have a real-world institution requesting funds from a community pool to perform tasks that provide a net positive to the Terra economy. This is a meaningful stride towards the confluence of old and new and that amounts to real and productive capital allocation.
Moving forward, the hope is that unveiling governance proposals such as this will broaden the scope of how the Terra community considers and realizes the use of DAO capital. Sure, LM incentives, protocol parameter changes, and ecosystem development remain paramount to the success of Terra, but we should remove the blinders prompting a singular focus on a DeFi-native environment.
If the goal for Terra is to set money free, then this proposal propels Terra further down the path of mainstream acceptance. Dynamism, vigor, and creativity are required to reach the goal we all set out to achieve when Terra was just an idea.
A decentralized economy needs decentralized money. Neither is possible without mainstream adoption nor without the network effects that drive the adoption of a new form of money – one that’s superior to the incumbent regime.
Please allow for open discussion in the comments below. An on-chain vote will go live for the above proposal within 48 hours.
