NFT Index Creation (Updated PFP Index proposal)

Proposal: NFT Fund Creation


PieDAO has been discussing the idea of a $PFP pie in various forms for many months, but various issues with how the pie would be constructed have prevented us from formally organizing the product. This proposal is the result of a recent effort by the $PFP team (@Adrian.A, @BlockEnthusiast, @dantop, @Gabo, @hamball, @naan, @RichAndCreamy) to move the product forward in a realistic and timely manner.


The NFT space is large and broadening quickly. As a DAO, we started exploring this investment space with our pie, $PLAY which has a focus on metaverse gaming. Earlier iterations of $PLAY included small amounts of PFP coins such as $PUNK and $MASK, which were eventually removed during processes to narrow the scope of the product. However, we believe that the initial inclusion of these assets was an early indication of interest in a now-large PFP / NFT art space that is emerging as its own sector, with markedly different dynamics than gaming projects.


In the first proposal to build a $PFP pie, the mechanism that was suggested to fund the underlying assets was a pie made up of shares from NFTX floor-priced vaults. However, it became clear that this approach was not currently possible due to issues with liquidity, which would prohibitively limit both the maximum size of the pie and the diversity/quality of assets it could contain. While this kind of approach may be possible in the future as organizations like FloorDAO release their products to supplement liquidity, the team has decided to propose an alternative model to the $PFP pie.

Proposed Model

In the model the team is now proposing, the pie would take the form of a closed investment fund, with the DAO organizing an initial funding round where participants could deposit ETH into a smart contract during a specified period and receive tokens in proportion to their contribution.

Assuming a successful fund raise, a $NFT fund administration and curation group would then use the ETH collected to purchase NFTs meeting a clearly defined set of criteria developed with input from the DAO.

NFTs would be purchased at ‘floor’ prices from collections with sufficient supply and liquidity to allow the tokens to be easily valued, purchased, and liquidated. With the evolution of the space toward multifaceted utility that extends beyond use of an NFT as a profile picture, the team anticipates expanding beyond PFP projects and including other high-value NFTs with long-term potential.

If a minimum amount of ETH is not reached during the initial fundraise, contributors would receive a refund.

After a predetermined amount of time, the NFTs purchased by this fund would be liquidated, and any holders of the $NFT token would be distributed a proportional share of the ETH that resulted from the sales.

Depending on implementation cost and complexity, we may also choose to open the fund at regular intervals before the liquidation period to allow new capital contributions and/or token redemptions. These would occur at a valuation determined through a methodology developed by the team and published at the time of the initial fundraise (rather than calculated through an oracle or similar automated technology).

The team believe this approach will result in a product that is:

  • Safe
  • Understandable
  • Easily traded and accessible
  • Comparatively inexpensive to build vs. oracle-based alternatives
  • Quick to launch, meeting demand from new users flooding the NFT space

As a bonus, a new product type will be added to PieDAO’s technical portfolio, which can be used in a wide range of scenarios that involve assets that are non-fungible, illiquid, and/or difficult to value.

Risks & Potential Mitigation

Risk Potential Mitigation
Curators / Project Team Use of human curators introduces risk of poor investment decisions or malicious actions Multisig authentication for fund wallet; veto / comment period for investment decisions
Market Risk NFT market is highly volatile; many projects go to zero value in bear market conditions Well-defined asset allocation strategy that includes blue-chip / established collections
Collection-Specific Risk Risk of rugs, IP violations, malicious or poorly-written contracts 3rd party and/or PieDAO audits of contracts for projects included in index; require doxxed founders and/or legitimate companies operating collection
Legal Model is a departure from PieDAO’s other products and may have different liability implications for PieDAO and project team Legal opinion / advice on fund structure


Role Team Member(s)
Project Lead Hamball
Project Management Internal communication / marketing, documentation, PieDAO governance & processes Naan, Rich
Finance Develop financial screening criteria (e.g. liquidity, market cap, trading velocity)
Periodically refresh / maintain analysis TBD
NFT Diligence Identify and evaluate potential NFT collections vs. fund investment thesis; engage with communities & leaders of projects contained within the index; surface potential issues or actions to be taken (e.g. project-specific drops, staking, etc.) TBD
Marketing Execute marketing strategy (e.g. identify and engage with target investors and communities, develop content, manage socials) TBD
Consultants / Advisors DeFi subject matter expert Block
Liaison w/ Development Team Conduit between project and PieDAO dev team Adrian
Development Team TBD / PieDAO core dev team

Additional Responses to Community Questions

Since several questions were asked during the polling period about issues the team is still exploring, the following Q&A is included to provide directional answers and information:

What is the set of acceptance criteria proposed at this moment in time and is there a revision policy being considered to keep them up-to-date?

These are in progress and will be fleshed out before the next vote. Examples of what might be included:

  • Chain (e.g. Ethereum)
  • Liquidity / Trading volume (e.g. sales per week)
  • Security (e.g. project ownership and governance, audited contracts)
  • Asset decentralization (e.g. coded into contract → IPFS → hosted on AWS)
  • Qualitative (value proposition / utility, team strength, roadmap, execution history, partnerships)

A revision policy will be built into the governance process for the fund.

What is the minimum size of the fund?

The minimum size of the fund has not yet been determined but will depend on a) the revenue model chosen and the ability of the fund to cover its costs and reward contributors, and b) the minimum capital required to purchase a collection of NFTs that meets the market need we’re aiming to satisfy: Exposure to a diverse range of ‘blue chip’ NFTs (many of which currently trade at 10-80 ETH).

In case of a refund who will cover the gas?

While the team has not discussed this in depth, we are considering requiring a small additional contribution (e.g. 0.01 - 0.02 ETH) for each minting transaction, which could be used to fund initial operating expenses and reward organic referrals. If we don’t hit the minimum to launch the product, these funds could be used to facilitate the refund.

What is the appropriate lifecycle for the fund?

The NFT space moves quickly. We imagine the fund’s lifecycle will be a year or less, but this is subject to further research.

Was any thought given to the internal governance of the Curators?

Processes for selecting and removing curators and other team members, making and executing purchasing decisions, and adjusting the investment criteria or other aspects of the fund are being evaluated and will be built into a comprehensive governance approach.

How are we measuring the market opportunity?

The total market cap of the NFT space may be as much as $35B in 2022 and could grow to $80B+ by 2025. There are currently few paths to gain financial exposure for those who are not deeply familiar with the NFT space. As the market evolves and products like Coinbase’s NFT marketplace are launched, we anticipate more interest in NFTs from buyers who prefer a lower-risk, easier-to-manage experience than purchasing individual NFTs. While the size of this market is difficult to estimate, we believe it will be significant.

How’s the competition? How do we plan to do better?

Several competitors have recently announced or launched products to address this market need, but none appears to have a meaningful share of the overall NFT market. Some, including the Bitwise NFT Index fund, are only available to accredited investors. On the DeFi side, products like NFTX,, and synths offer fractional exposure to high-value NFTs, but most products rely on complex and sometimes unpredictable/untested protocols.

In addition to being among the first movers, we are building a fund that is decentralized, transparent, community-built, and therefore more attractive to the Web3 world, yet safe and straightforward enough to remain attractive to the TradFi community.

Next Steps/Closing Notes

While the team recognizes that this model has changed significantly from the original proposal, we believe that it is important to get a product released to capture the growing interest in the PFP sector from investors who would like to diversify their options. We expect that the DAO will have questions, but we believe that this method of construction is the best possible in the short term. Since this method has a built-in end date, it allows for reevaluation in the future as the technology to power other solutions is developed.

If this proposal is approved, next steps would be to:

  • Define the technology and UX to be used, and establish a product development roadmap and timeline
  • Establish revenue mechanisms and incentives for the DAO, technology contributors, marketing/BD, and the administration and curation team
  • Obtain legal input on the model to ensure acceptable liability for PieDAO and the administration/curation group
  • Create the criteria for selection of NFTs, valuation methodology, and other guidelines and policies according to which the administration team will operate


PFP Index Discussion in Discord

NFT Index Creation Community Poll
  • Yes
  • No
  • More Info Needed

0 voters


Hi All –

The team has compiled and discussed the feedback we received on the first poll and incorporated it into an updated proposal that will be posted separately shortly.

One of the suggestions from @alexintosh above – and that had also been discussed by the team a few times while developing this proposal – was to consider expanding to NFTs that might not necessarily be intended for use as a profile picture.

We discussed this in depth and think relaxing the PFP-only criterion is the right move, so we’ve added language to the new proposal and adjusted the working name of the project to reflect this. There are a few reasons, but main one is really simple: The space has evolved in a way that the distinction between art that can vs. cannot be used as PFP is not necessarily a major driver of value or investment rationale for many of the best-known and most valuable projects.

Take, for example, Veefriends vs. Proof Collective. The exceptionally high floor price (15-40 ETH) of each project comes not from the art but from the access each NFT grants to the project’s influential founder and exclusive community. The former can be used as a PFP while the latter can’t. Should we exclude Proof as an option but include Veefriends because of this? Should we exclude both because they’re really ‘access’ projects vs. PFPs? Similar questions come up for blue chip art-based projects that aren’t necessarily PFPs, e.g. ArtBlocks.

This change doesn’t mean that the we believe every kind of NFT should be fair game for the index or that the associated product will be called $NFT. This is just to give us more latitude as we work toward defining clear inclusion criteria for the index.

The core purpose is still to provide diversified exposure to valuable projects in the space without overlapping with existing PieDAO projects. @jnova and @naan have started some discussion in the Discord pfp channel to narrow and/or better define this. Would love thoughts and engagement here from folks who are interested.

(This is also posted in the comments for the original PFP proposal.)


thanks for putting this together @Hamball and @naan
I’d love to see this happening :star_struck:


You rock @Hamball and @naan ;
Can’t wait to see it moving forward ! :facepunch:


Go :radio_button:


this should be NFT, not PFP

1 Like


This is a fantastic proposal. I voted yes on the Snapshot. I wanted to share some background info on Revest Finance’s FNFT protocol and cashflow management tools. I’m not directly affiliated with Revest, but full-disclosure, the family office fund that i manage is invested in the Revest token & using their conditional NFT ecosystem for some interesting use-cases.

Cashflow Management

Makes it easy for DAOs and others to spread the results of lucrative trades out over periods of time, bringing new flexibility to treasury management and asset management. With the ever-volatile and illiquid nature of NFT trading, investment strategies around NFT’s can often feel closer to VC strategies, with a dozen investments yielding 1 20x winner. The FNFT conditional lockups can be used to structure a basket of NFT’s so that when there is a winner, the benefits can be distributed through structured instruments that smooth the volatility.

Use Case Examples
The following examples demonstrate a variety of different applications of Revest Finance’s FNFT in the wild.

NFT Garage & SpiritSwap

NFTGarage will directly utilize Revest’s time-locked FNFTs to facilitate the sale and minting of NFTs through an LP-bonding system.

NFT Lockers

  • Intuitive lock-ups for arbitrary ERC721’s, no matter what network you’re on
  • Arbitrary ERC20 token distributions to any ERC721 staked into the Revest NFT Locker
  • Ability to view your NFT from within the FNFT itself
  • Ability to transfer the FNFT throughout lockup without impacting the price of the underlying asset
  • Dynamic alerts to when rewards are claimable, and easy claiming through the FNFT
  • Secure custody maintained within the Revest NFT Locker throughout the lockup period


There’s early talk about contributing towards the creation of the first adaptors for ERC4626, the vault standard for smart contracts, which is something near-and-dear to the PieDAO ecosystem.

Revest Finance is in the early stages of some pretty ambitious work, and it could be the ideal time to organize a conversation to see if there is the potential to collaborate as the NFT Index Creation is still in it’s creative stages. If anyone is interested in pursuing this, give me a shout:
Twitter: @jonnydubowsky
or just leave a comment with how to connect to you.

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@Hamball the vote has passed :star_struck:



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Will echo @BVB and say woohooooo!


Personally, I do not like PFP but if the fund would gear towards utility NFT, especially the fNFT (financial NFTS), I would invest. Revest just got hacked and there is a decent risk in there though.

1 Like

Hey Peddy !

Welcome to the forum and thanks for your input !

If you would be interested to invest your time in the NFT project, feel free to reach out either here or in discord !

See you around