DXdao Treasury Management Tool - “Member Balancer”
- Introducing an new idea for a tool that DXdao can use to help manage its treasury
- It’s a simple, self-reliant, decentralized method for maintaining a target balance or ratio within the treasury.
- It’s possible to implement today
At the very least, I think the DXdao community agrees that it would be good for DXdao Treasury to hold an amount of USD-stable tokens as “Working Capital” in order to give Proposers the option to request payment in something other than ETH.
Simplest option would be DAI. More advanced options could be Chai, or cDAI, or yDAI
Currently, DXdao is working on the technical ability for DXdao to interact with Mesa and Swapr/Uniswap, etc.
USD-stable tokens will also be a part of the strategy around providing liquidity to Swapr.
So it will be a good tool to have this ability to purchase/sell USD-stable tokens in larger sizes (which is already being worked on and will be available soon).
In addition to that, DXdao may have the desire to have a certain %age of its treasury in a certain token. This could be a Target Ratio of the Treasury (ex 5% of Treasury in DAI), or it could be a Target amount (always ~200k of DAI in Treasury).
Once DXdao comes up with a Target (say 200k DAI at all times), how can DXdao maintain this Target in an easy, efficient way? As people propose to be paid in DAI, and diminish the DAI holdings, how do we keep it close to 200k DAI?
I propose to use what is called “Member Balancer” - Leverage the DXdao community and incentivize them to always maintain the “Target”.
"Member Balancer" Benefits to DXdao:
- Immediacy: DXdao gets DAI immediately (faster than one Bitcoin block)
- Radical Self-reliance
- Communal Effort
- Trustless - DXdao does not need to trust anyone
- Fully Decentralized - NO use of Multisig wallet
- Smart risk management
- DXdao risk is distributed away
- DXdao only pays a higher “fee/discount” when the actual holdings are far away from Target
- DXdao participation improved
How it works - Example: Target 200k DAI at all times
At all times, interested DXdao community members are monitoring the DAI holdings of DXdao. If the holdings drop below the “Target” amount, a Member can purchase ETH from DXdao at a discount to market price. (The Discount increases the further away Actual is from Target). The member sends DAI directly to DXdao and at the same time submits a proposal for the correct amount of ETH.
No development work is necessary. This “Tool” can be implemented TODAY.
You can find a “Calculator” here that helps the participant determine the Discount at which she can purchase ETH from DXdao in return for immediate DAI.
- The proposal period leaves the participant with price market risk during the period. This is part of the reason for the discount to market price.
- The parameters may need to be adjusted to increase or decrease incentive.
We can easily try this idea out on a small scale and see how it works. If ETH price is higher, there is a chance that participants may not want to purchase ETh from DXdao.
However, if there are people that are already looking to purchase ETH, this would be a great way to do it, especially if they are a long term holder.
Participants can also hedge themselves if they choose.
Would love to hear any feedback/thoughts/improvements?