[DRAFT] Treasury Diversification Authorization Program - v2
Following the ongoing success of the first Treasury Diversification Authorization Program according to the Treasury Diversification Authorization Proposal executed Jan 23, 2021, DXdao is on it’s way to a more diversified treasury.
So far, you can find a summary here: https://gateway.pinata.cloud/ipfs/QmfZdBNMtEPteG7JuTqxbxg4Zo4o4veWcenwoJs6PrsPZC
Currently $2m of USD stables (mainnet)
Proposals in process for $1m more. (mainnet)
Another $450k of USD stables on xDai.
Total of $3.45m of USD stables
There remains a need to continue to diversify DXdao’s treasury into USD stable tokens and Yield earning USD stable tokens. This would continue to help secure a runway for DXdao to achieve its goals.
The proposal outlines a plan for DXdao that is split up into three objectives:
- Acquire another $5m of USD-stable assets, using the three methods proposed below
- Of all the USD assets DXdao hold, put $4m of these USD-stable assets into yield-earning protocols (this can be from existing and newly acquired holdings)
- Explore ETH yield and other yield opportunities with up to 1,000 ETH - This can be ETH2 staking or ETH lending or ETH vaults.
The $5m additional USD-stable assets would currently be an additional about ~10% of DXdao’s treasury, maintaining large exposure to ETH price risk.
DXyield: DXdao will be seeking yield with its USD stable tokens.
This proposal authorizes use of Compound, Aave and Yearn protocols.
The first yield earning protocol for DXdao would likely be Compound protocol followed by Aave and/or Yearn.
Any other community suggestions would be welcomed via separate investment memo and Proposal.
The breakdown of the stablecoins shall be slightly adjusted to target 40% DAI, 30% USDC, 20% sUSD, and 10% USDT. In dollar amounts that is:
For reference, you can find some yield reference rates here: Crypto Lending Rates - Earn Crypto Interest by DeFi Lending
There is currently no defined plan to hold non-USD based stable assets, but this topic should be looked into and addressed via alternative forum post and proposal.
Again the most trustless method for DXdao to rebalance its treasury is to use the Gnosis Protocol Relayer that DXdao will soon be connected to via the Multicall Scheme. This should eventually be the primary, and perhaps only, way in which DXdao rebalances its treasury. However, the multi-call proposal will take a couple weeks to pass and then each relayer proposal will take roughly one additional week and also it would make sense to ramp up the size of the relayer trades somewhat gradually. Therefore, it could take more than a couple months to move a significant portion of the treasury into stablecoins by using the Gnosis Protocol Relayer alone. With ETH nearing its all time highs, it is important for DXdao to accelerate the treasury diversification process. This proposal authorizes diversification through the following 3 means:
- Gnosis Protocol Relayer
When the Multicall scheme is installed, the Gnosis Protocol Relayer will become available for use. While it will make sense for DXdao to start small with this newly deployed system, this method is the most trustless, and this authorization proposal places no limits on the amount traded via the Gnosis Protocol Relayer towards the listed conversion target of $5M.
- DXdao Developer MultiSig
This proposal authorizes any amount towards the listed conversion target of $5M to be traded via trusted multisig, granted that no more than 500 ETH is transferred to a trusted intermediary in a 2 day period, that the multisig executes trades within one day of receiving each disbursement, and that the multisig currently requires signatures of at least 3 of 7 addresses, owned by distinct REP holders with greater than 1% REP that have verified ownership of their multisig member address by signing a message with the multisig member address and including this message in a Keybase saltpack signed message along with the address that holds their REP and presenting this verification in an alchemy proposal (or the same REP wallet). Note that some REP holding addresses are Gnosis Safes which unfortunately lack the ability to sign messages and also can’t be members of the multisig, and therefore, this verification process relies on keybase profile identities.
- “Member Balancer” Trading
The “Member Balancer” approach incentivizes third parties to send stablecoins to the treasury and ask for ETH in return. This allows DXdao to diversify its treasury without having to trust an intermediary, but does require the third parties to trust DXdao and for DXdao to provide some incentive. This proposal authorizes that 1.01 times an amount of ETH may be requested via alchemy proposal by a third party granted that they have traded that amount of ETH for stablecoins on a highly liquid DEX and transferred the stablecoins to DXdao no earlier than 2 hours before the proposal. If the proposer is not trading ETH for said stablecoins, for example because they already are holding the stablecoins, they may use the fair market value of ETH as reported by Coingecko at the time of request granted that the transfer of stablecoins has been made no earlier than 2 hours before the proposal. Furthermore, this proposal limits the amount that may be traded via the “Member Balancer” approach to $2M and requires that a minimum size trade per proposal should be 30 ETH.
Thoughts and Feedback welcome.