Best practices that we have seen work with the most successful Squads.
Before making your first purchase, you may want to agree on a few principles upfront. This will align your members around a shared philosophy, and can reduce the risk of individual members wanting to quit early on in the Squad's lifecyle. A few things to consider:
- A shared mission: Why are you forming a Squad? Do you want to support a specific cause? Do you only want to flip one NFT as a team? Communicate this clearly to your prospective members.
- Return-on-investment (ROI) goals: Do you care about making profits? What ROI %, if any, do you want to achieve before considering to sell your investments?
- Time horizon: How long do you want to run your Squad before disbanding?
- Exit strategy: At what point would you sell all of your assets and redistribute funds to members?
While the activation of your Squad is an exciting moment, new members really start to join and get engaged after your first investment opportunity has been defined. Some Squads also purchase multiple NFTs right off the bat.
To purchase an NFT, you obviously need funds to buy it. You can raise funds from your friend group through dedicated funding rounds. Sharing an open funding round with your Squad to deposit into can already create momentum an engagement in itself.
If you have aligned on a specific NFT, you can put up this NFT as a purchase proposal and share the proposal page in your group chat. It's useful to open a funding round before you send out this proposal, as the purchase proposal page will direct members to an open funding round in case the purchase is not sufficiently funded yet and a funding round is open.
The contributors will become members of the Squad and receive their respective equity stakes after you close the funding round.
Particularly for large community Squads of 20+ members, we recommend to keep the number of Signing Members relatively low (below ~15 people), so that not too many members have access to operating the funds, and you can keep the signer threshold relatively low as well. Members who's role is mostly to contribute capital to the Squad should be assigned the Non-Signing Member role. They still are assigned an equity ownership stake if they contributed to the fund.
Ahead of any purchases, we recommend that you agree what the requirements are for a specific investment to be made. The most important element to agree on is how many members have to agree before a buy or sell transaction is made.
Lower thresholds typically work better for operating your Squad than higher ones. While it may seem intuitive to have more than 50% of all members vote on every transaction (e.g. setting up a 17-of-30 multisig), this will significantly reduce the execution speed of your Squad which can be disadvantageous particularly in NFT markets where assets are sniped quickly.
Discussing investment opportunities and making decisions typically happen off-platform on your Squad's messaging thread. Popular off platform decision making mechanism among successful Squads are:
Our voting mechanisms are flexible and can be customized to your Squad’s preferences, so ultimately each Squad should do what works best for them.
Squads are groups of friends and as well as larger communities, and they are inherently social. Squad members will be discussing various NFT investment opportunities, such as buys, sells, mints and many more. It is important that you provide a platform for your Squad to effectively communicate with each other. Some options for how you can communicate with your Squad to ensure everyone is in the loop:
- 1.Create a Discord server: Discord is the go-to-way for web3 communities to chat, work, and build together. Many Squads are already using Discord as their home base; we automatically set up all Squads with a private Discord server within our larger Prysm Discord, but we recommend that you create your own as well.
- 2.Create a Telegram group: Telegram is a smaller group-chat version of Discord, enabling centralized conversations for each Squad as well as simple voting, event management, etc. You can use Telegram with your Squad or a similar app that has the ability to create group chats.
- 3.Create a Discourse: Discourse, or other equivalent forum software, allows for longer-form conversations within a community. You can use Discourse together with your Squad's existing group chat and/or Discord server, or completely independently.