With the rising price of crypto over the past few months, DXdao has found itself holding a significant amount of assets. While we’re working toward more transparency around the DXdao treasury, we also have to think about allocating our capital efficiently - rather than just having it sit in our treasury. With the surge of DeFi protocols over the past year, there are a number of opportunities for DXdao to yield on its assets. The Treasury Diversification Proposal V2 authorizes DXdao to yield on a subset of its assets.
DXyield is essentially a multi-objective optimization problem - where we want to maximize yields, safety and retain diversification. Yields are easy to quantify, safety of protocols and diversification are somewhat more subjective. Total funds in a protocol can serve as an indication to the protocol’s safety.
- 5M USD Stablecoins
- 1000 ETH
The treasury currently holds the following stablecoins:
- $1.8M DAI
- $2.1M USDC
- $0.9M sUSD
- $0.8M USDT
with another $2.1M already authorized to be converted into stables. Which will result in a total of ~$8M in stablecoins (this excludes $1.4M provided as LP to Swapr).
Compound is one of the more established DeFi protocols, currently holding $12.5B in assets.
30 day average APY:
Aave currently holds around $16.2B in assets.
30 day average APY:
yearn vaults exist for all stable coins held by DXdao.
Net APY (as displayed on yearn.finance):
Proposed execution plan
The following execution plan was devised with the following assumptions:
- Diversification - we don’t want to deposit all our capital into one protocol.
- Safety - we are more comfortable with depositing larger amounts into established protocols.
- Yields - we want to maximise yields while respecting the two points above.
The following proposal allocates the $5M funds as follows: $2M in Compound, $2M in Aave, $1M in yearn.
|Nonce||Protocol||Stablecoin||Amount||APY 30D AVG|
*as protocols are used for the first time, we will use a test transaction to ensure everything works correctly.
Assuming rates and all the rest stay equal, the allocation above with the current 30D AVG APY rates should yield ~$56k a month (excluding the 100ETH in yearn). Which already covers a significant portion of our monthly burn rate.
The execution plan above requires, and thus depends on, the Multicall installation on mainnet and a relayer to interact directly with the yielding protocols.
Funds allocated to DXyield should be allocated with a long-term position in mind. Whereby, we should attempt to minimize withdrawals from our positions to not only avoid network costs, but mainly to compound our positions.
If anyone in the community has suggestions for DXdao yielding and/or any feedback, please feel free to share them in this thread or drop me a DM on keybase. As a general rule protocols should be open-source, decentralized, and well audited. If we find reputable new DeFi protocols, we can include those in future Treasury Proposals.