karpatkey-DXdao Treasury Guild

DXdao Proposal: karpatkey DXdao Treasury Guild

TL;DR Slideshow


In June 2022, we posted a proposal for DXdao to delegate its treasury management to karpatkeyDAO in this forum, but the community expressed its preference to have a more decentralised approach, in which trusted signers from DXdao weren’t necessary.

Since we are now technically able to cater for DXDao’s needs in terms of decentralisation, transparency and security, we are posting this new proposal to allow us to assist DXdao in the development of its treasury, without the need to appoint trusted DXdao signers.

The execution would take place transparently and completely on-chain through a trust-minimised non-custodial solution combining Safe and Zodiac’s extensively battle-tested technology. These tools would allow us to only use previously authorised delegated protocols by a majority of DXdao holders via DXvote.

We also propose coordinating the constitution of a Treasury Guild, which will deliver ongoing support to operating and strategic financial needs. As Guilds are developed further, some trustless management of assets could be done directly from the Guild, with karpatkey available to provide feedback to the DXgov team with requirements.

Since last June —when we posted our proposal— we have been unanimously designated to create BalancerDAO’s Treasury Core Unit. Also, we have started working with CoW DAO to create their Core Treasury Team, and won the ENS endowment proposal Snapshot with DXdao’s support expressed through caneyfork.eth’s vote, positioning karpatkey as the DAO of choice to develop treasuries in the DeFi ecosystem.


After the successful execution of the Treasury Diversification Authorization Program and the Treasury Diversification Authorization Proposal executed Jan 23, 2021, DXdao’s treasury currently has a significant level of diversification in both stablecoins as well as across LSDs.

However, the majority of its funds are liquid and therefore not obtaining any yield. This results in a considerable cost of opportunity, since adequate treasury management could achieve sustainable treasury growth that would increase DXdao’s reach and breadth, while ensuring sufficient liquid funds to face the DAO’s obligations at all times.

This proposal is aligned with the already executed Signal Proposal: Treasury Diversification Authorization Program - v2, and suggests that the management of DXdao’s treasury be delegated to karpatkey DAO.

The benefit of such delegation would allow DXdao to focus on its core business and priorities while its treasury size increases steadily, increasing the DAO’s potential and capability.
The treasury goals are to fund the development of DXdao products, new ventures and boost DXD’s value proposition. The strategy would be tailored to ensure that the following priorities (outlined in DXdao’s Priorities Board) are sufficiently funded in a timely manner:

  • Governance 2.0
  • New DXD Token Model implementation
  • Flagship product development
  • DAVI (internal and external)
  • Carrot branding & go-to market strategy
  • Swapr (front-end, expansion, ecorouter improvement)
  • Recruiting
  • Community outreach
  • Financial reporting
  • DXgov branding & go-to market strategy, UX and expansion

Other upcoming priorities and contingent expenses would be contemplated as well by having positions which can be disassembled on a short notice for unexpected liquidity needs.

After this proposal is approved, we will source, recruit, hire and train contributors to work in karpatkey’s team and DXdao’s Treasury Guild under our guidance.

The goals of the Treasury Guild are the following:

  • Design and implement an efficient and robust treasury development system
  • Identify the best economic opportunities for the treasury tokens
  • Facilitate DXD liquidity in line with the new DXD token model
  • Facilitate DXD redemption on the open market in line with new DXD model
  • Explore solutions for DXD inverse bonds
  • Grow activity on Swapr
  • Collaborate in finance-related matters with other working groups such as the DXD Token Working Group

To align with DXdao’s vision and ethos, and increase transparency with DXD token holders, we propose that information about how investments are managed is made available to the DXdao community, publishing each transaction in Discord immediately after its execution and posting a Weekly Treasury Report in the DXdao forum. Treasury management would be handled in a completely transparent way, positively impacting DXdao’s reputation and trustworthiness.

Risk Management

At karpatkey DAO, every decision and action taken ponders risk exposure. We go above and beyond standard risk assessment protocols, and we have developed a multilevel approach to curate yield strategies, assess protocols, and carry out transactions safely.

This approach includes the management of different risk factors and their corresponding prevention and mitigation measures, which vary according to the applied strategy. Here are some examples of what we monitor:

Protocols' category Risks Risk parameter Prevention & mitigation actions
Lending and Collateralized Positions (CPs) Liquidation Collateral Ratio (CR) Threshold settings for each strategy to take action or to trigger the emergency plan. CR tracking. Early alerts. Anti-liquidation / position-disassembler protection bots. Execution of CRs corrections with sufficient frequency (daily manual CR correction).
N/A Manipulation attack Self executed tx proposal Alerts settings on new proposals. Forum monitoring
Staking, Lending & CPs, AMM, Yield Agg., liquidity bridges Rules change Approved proposals with new detrimental rules Forums checking and new proposals tracking, analysis on protocols' decentralisation, and karpatkey's decision on position disassembling.
Staking, Lending & CPs, AMM, Yield Agg., liquidity bridges Rules change Emergency multisig activated Alerts on proposals set-up and confirmations in emergency multisig contract.
Lending and CPs Bad debt Value of loans/value of collateral Ratio tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
Lending and CPs Bad debt Collateral Ratio Distribution Distribution tracking across protocols.

Disassemble position / Activation of disassembler bot if the threshold is met.

Staking, Lending & CPs, AMM, Yield Agg., liquidity bridges Hacks, exploits Protocols' security internal assessment Positions' size capped depending on the assessment.
Poor diversification Positions' relative size vs total portfolio Weekly review of optimum volumes: portfolio’s diversification optimisation.

Alpha research on robust opportunities.

Identification of new strategies to be deployed.

Staking, Lending & CPs, AMM, Yield Agg., liquidity bridges Bad debt / low fees Net Liquidity Flows Netflows tracker. Whales activity tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
Lending and CPs Unavailability of funds Supplied asset utilisation ratio Tracking of supplied asset utilisation ratio vs. lent amount. Alarm settings. Threshold settings. Withdraw lent assets when threshold is met.

Mitigation actions: withdraw available funds to push interest rate higher and wait for liquidations or debt repayment.

Lending and CPs Bad debt Open Liquidations Open liquidations tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
Staking, Lending & CPs, AMM, Yield Agg., liquidity bridges Stablecoin Depeg risk Price deviation vs. target Main pools' composition balance tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
Liquidity Bridges Depeg risk 1) Bridges' pool's composition and 2) amount of tokens locked in the bridge vs. token derivatives available in all bridges' pools Risk parameters tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
AMM, Liquidity Bridges Unpaired token, high price impact if keeping initial composition, low yield Liquidity balance. Slippage. Pool's balance tracker. Swap/AMMs slippage tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
ETH Liquid Staking Derivative Low liquidity at the time of exiting the position Liquidity balance Pool's balance tracker. Swap/AMMs slippage tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
ETH Liquid Staking, Lending & CPs, AMM, Yield Agg. Price deviation Derivative's exit price Price tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
AMM, Yield Agg. Loss of funds Impermanent loss at the time of exiting the position Identification of profitable and low IL pools (assessment of assets’ prices correlation evolution). Accurate IL tracking. Threshold settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.
Staking, Lending & CPs, AMM, Yield Agg. Bad debt / higher exit fees or low fees received Funds concentration Funds distribution tracker. Thresholds settings. Alarms settings. Disassemble position / Activation of disassembler bot if the threshold is met.


The Treasury Guild will post a weekly treasury development report on the DXdao forum and assist in identifying data elements upon request from the DXdao community. Also, the Treasury Guild would review data reported and assist in performing analytics and quality reviews to confirm the accuracy of the information.

The following metrics would be included:

  • Portfolio Summary: shows 1) the current holdings in stablecoin and ETH equivalent, considering both the allocation by blockchain and the allocation of the most relevant assets, 2) the share of funds allocated to each strategy/goal that are of interest to DXdao (i.e. farming, staking, available funds for x purpose, etc), and 3) purpose and brief summary of the last strategy deployed for the corresponding period.
  • Revenues: shows the performance of the portfolio strategy, displaying the current APR, annual revenues, capital utilisation, and past performance.
  • Positions: shows the strategy implemented for the considered time period, explaining the type of investments, protocols, underlying assets, expected APR, and expected revenues.
  • Loans Management: shows the loan strategy to quickly assess the health status of the active loans, considering the borrowed assets and funds, the lent assets and funds, the collateral ratio, and the minimum (liquidation) collateral ratio.
  • Portfolio Details: shows the composition of the portfolio by type of asset.
  • Improvement Proposals: shows the list of executed proposals and a summary of their corresponding weight.

Past Performance

karpatkey is a DeFi-native DAO specialising in professional treasury development through industry-leading research and best-in-class tooling. We continuously evolve to maximise efficiency, manage risk, and increase security.

We have had a remarkable performance with Zodiac, Gnosis Ltd., and Gnosis DAO’s treasury portfolios, sustainably increasing their size, profitability, and diversification since our inception in September 2020. We have executed over 3,500 transactions related to DAO treasuries, and have evolved to cater for the specific needs of DAOs. Our organisational structure can be found in this proposal’s Annex.

The appointment of karpatkey DAO as Gnosis’ treasury development consultant has resulted in a consistent revenue stream for Gnosis, increasing its treasury size by circa $1.5M a week while reducing risk through diversification (YTD tracked since May 2021, current ncAUM as of 24-Jan-2023 is ~$275M). At the top of the bull market, our NAUM raised to circa $1B. Sample reports have been included in the Annex. We share them on Twitter every week.

The chart below shows our past performance managing the treasury of our primary user, GnosisDAO, when the main goal was to obtain a sustainable growth of funds before we shifted the focus to maximising the development of the Gnosis Chain.

Gnosisdao’s yield assets are valued at more than half of all other DAO yield assets put together. Source: Autonolas independent research (link to original report here).


Upon the approval of this proposal, karpatkeyDAO would create 2 Safe multisignature wallets:

  1. The Avatar Safe, owned by DXdao
  2. The Manager Safe, owned by karpatkey, with a 2 out of 5 setup.

karpatkey will deploy Zodiac’s Role Modifier module for the Avatar safe, apply the Manager Role preset outlined by the allocation strategy, and assign the Manager Role to the Manager Safe. DXdao would then transfer to the Avatar safe the funds detailed in the Handled Balance column below:

Asset Network Price Total Balance Total Value Handled Balance Handled Value
DXD Mainnet






ETH Mainnet






DAI Mainnet






USDC Mainnet






LUSD Mainnet






ENS Mainnet






WETH Mainnet













































After the fund transfer is concluded, karpatkey DAO’s Operation Team would be able to start executing the strategy approved by DXdao. It would be technically impossible for karpatkey to execute any transactions which were not previously approved by DXdao.


The core of karpatkey’s non-custodial solution relies on the most battle-tested tooling to manage DAO treasuries: a proxy Management Safe and the Zodiac Roles Modifier.

Safe is the most trusted platform to manage digital assets on Ethereum, currently holding circa $100B in funds. Zodiac is a collection of tools built according to an open standard outlining a composable design philosophy for DAO tooling, developed by Gnosis Guild. Zodiac’s tools can be easily deployed and managed through the Zodiac Safe App. The Roles Modifier is a tool that enforces granular, role-based permissions for attached modules.

Through a rigid and fail-safe allowlisting enforced on the Management Safe by the Roles Modifier, we would be allowed to execute only a constrained set of pre-approved transactions on behalf of DXdao’s Safe flexibly and efficiently, guaranteeing the funds will always remain under DXdao’s custody. Namely, the process of funds allocation starts with karpatkey DAO proposing a delegation on DXvote, which most token holders must approve. Once this happens, the target addresses, function signatures, and calldata for the transactions composing the strategy are allowlisted transparently. The Management Safe is then allowed to execute only this set of approved transactions on behalf of DXdao’s safe. E.g., The Management Safe signers can only carry out the strategy if it abides by the allowlisting that the Zodiac Roles Modifier enforces.

If the Management Safe attempted to execute any other transaction, it would be reverted by the Roles Modifier. No transactions that could compromise DXdao’s custody of the funds will ever be allowlisted, ensuring that DXdao has absolute power to withdraw or transfer funds without our intervention.


  • Swapr: karpatkey commits to making Swapr a core part of its treasury development strategy for DXdao across Gnosis Chain and Ethereum Mainnet. karpatkey will help manage, among others, the following assets (DAI, USDT, USDC, ETH and DXD) and deploy them to the following protocols, among others:
    • Swapr
    • Curve
    • Aave
    • Balancer
    • Uniswap v3


karpatkey DAO will charge the following fees, adjusted to make this proposal self-financing and sustainable in the long term, without hindering DXdao’s growth:

Management fee

A yearly management fee of 0.5% of the NAUM would be charged to finance fixed costs like hiring full-time contributors to DXdao and it would be collected in DAI in monthly instalments.

Management fee = Weekly portfolio balance * 0.5% / 52, converted to DAI

Performance fee

A monthly performance fee of 15% of the yield obtained during the last month would be 100% collected in ETH, and every payment would have a vesting period of 1 year.

The price increase of ETH or any other base tokens would not be considered for the performance fee as it is calculated in traditional finance Hedge funds or Endowments.

Performance fee = (Weekly liquidity mining rewards - trades slippage - deposit/withdrawal fees) * 15%, converted to ETH


DXdao may terminate karpatkey DAO’s engagement under this agreement for any reason by way of Governance Mechanism. karpatkey DAO may terminate this agreement upon four week’s’ notice posted and approved in DXVote. In case the termination is requested by DXdao without at least a 4-week notice, karpatkey DAO will be granted an exit fee equal to the fees collected during the last 2 months, which will be paid in USDC. Regular fees will be collected until the day of termination.

Custody of Funds

karpatkey DAO is not a custodian of funds. karpatkey DAO will only have the capacity to allocate the funds in a manner such that the DXdao authorised signers will have at all times absolute control over them.

karpatkey DAO is not responsible for the loss of funds caused by the existence, identification, and/or exploitation of vulnerabilities through hacks, consensus failures, sophisticated cyber-attacks, denials of service or other security breaches, attacks, or deficiencies with smart contracts or protocols which are not owned by DXdao or karpatkey DAO.

The plans outlined in this proposal are subject to discussion by DXdao and may need to be (re)structured to account for legal, regulatory, or technical developments as well as governance considerations. This document should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in any transactions.

Future Vision

Implementing the solution outlined on this proposal would allow DXdao to allocate its funds with greater efficiency, requiring just one DXVote to approve a broad list of protocol options without granular specification of parameters nor the exact moment when they’d be executed (although the level of detail could be increased according to DXdao’s preference). We would then operate within those boundaries without going through a DAO-wide vote on every trade. This solution would maintain DAO sovereignty over the treasury, and would be an improvement over the set of relayers that DXdao already uses for Swapr liquidity provisioning. With these relayers, treasury movements occur slowly through on-chain proposals and the normal governance process, which makes it difficult to keep up with the pace of the DeFi markets and get the most out of them.


Sample Reports


Past Performance

The following chart displays karpatkey’s 2022 YTD performance, illustrating the accumulated yield and APR:

Organisational Structure

karpatkey DAO is organised in different functional teams, as shown in the following chart. The diagram includes the Treasury Guild members, once fully staffed.


Great to see how Karpatkey has transitioned to a non-custodial setup. Really like the idea of the Treasury Guild which could manage permissions of the Zodiac. Think there’s definitely a lot of opportunity for DXdao to deploy its treasury more - which this proposal seems to address.

Curious to hear thoughts from the community.


Thanks for the draft proposal!

This post comes following DXdao’s recent search for a treasurer as @dlabs tenure winds down and brings up questions about the mission of the treasury, especially in light of the new token model and the push for a flagship product, vision and mission.

To start, it is encouraging to see proposals from entities rather than individual contributors. So far, most contributions to DXdao have come from single-person entities, but it can be more efficient to pay a group of people to execute on a needed task. Karpatkey gains operational efficiencies by providing similar services to multiple DAOs and exists more as a stakeholder than a contributor. This is a path that I intend for Caney Fork to follow in providing governance advisory services.

Goals of treasury management and DXdao’s needs

The treasury was previously focused entirely on product development, but in the new DXD Token Model approved last December, DXdao asserted that “DXD gets its value from DXdao’s treasury”. This contrasts to the DAOs Karpatkey has currently engaged, where the treasury KK is managing for Gnosis, Balancer and soon ENS, is there to support protocol development. The important difference is a change to the treasury makeup directly impacts the price of DXD, so what decisions should be made by DXdao and what could be made by a treasury guild? Presumably, a treasury guild would focus on operational execution and deployment, not on asset allocation.

To be more specific, would the treasury guild oversee and execute the draft proposal GEN OTC offer to DXdao? Or would it be responsible for raising or lowering the liquidity weight ratio for SWPR & ENS? For both of these, a treasury guild would drive the conversation but ultimately, DXdao would vote on these important issues directly.

Additionally, a treasury guild/manager should also be focused on the expenses, budgeting and financial projections for DXdao and its products. In the interviews we’ve done with individual treasury manager candidates, this has been a key value add.

So broadly speaking, we can say a DXdao treasury guild/manager should responsible for:

  1. Provide insight & analysis to DXdao on treasury allocation changes
  2. Execute on investment decisions made by DXdao
  3. Accounting and financial projections

Flagship product & dogfooding DAVI with the treasury

The new DXD token model was approved by REP holders in order to create a sustainable way of fulfilling DXdao’s mission to enable community freedom and further decentralization. While the treasury pays for operations and development to further this mission, the way the treasury is deployed on-chain can also further this mission and support its products.

This is already the case today with Swapr. DXdao is ~43% of the TVL in Swapr. DXdao could probably earn a higher yield elsewhere, but the bigger benefit is to Swapr the product. This was a strategic decision by DXdao to dogfood Swapr and is crucial to where Swapr is today.

There is another opportunity for DXdao to dogfood DAVI and its governance products. This is already occurring with the shift to guilds, which has provided great product feedback to DXgov. The Governance 2.0 system is being built for DXdao, but the goal is a system (and a set of contracts) that can be used by other DAOs. DXdao is also working on a flagship product and vision, where products and services are connected to a core governance product (DAVI/Gov 2.0/Guilds). To me, the most important piece of DAO tooling are treasury management tools. It would be a huge competitive advantage for DAVI to offer trustless treasury management solutions automatically integrated into the core architecture.

DXdao has and should continue to pioneer innovations in the DAO treasury space. It has been the leader in LPing by a DAO, buying back its own token in a sovereign way and the first DAO to use Cowswap. Using the SAFE architecture as outlined above, would be a step back from where DXdao’s sovereign treasury management has been, but more importantly, this would impede the ability of DXdao to dogfood new treasury management tools that integrate into Davi and DXdao’s Gov 2.0 system.

So a DXdao treasury guild should not only execute on the three responsibilities listed above, but also operate in line with DXdao’s flagship product and vision - this means executing on its responsibilities through DXdao’s own governance platform, not through a competing platform.

Why does this proposal create a SAFE and require authorized signers?

Costs & fee structure

The Operations Guild 1H2023 budget approved a Level 5 contributor contingency cost for an individual treasury manager. This pro-rates to $84k in USD a year, plus $60k in vested DXD (3 years, 1 year cliff). If the right individual/entity was found, a Level 8 compensation ($108k USD& $114k DXD) would be justified.

A quick snapshot of the fees in this proposal ($41m in NAUM) would be $208k for the 0.5% management fee, plus the performance fee (15% of earned yield). While the absolute numbers here are not that far off, especially if there is a team building out the treasury guild, my concern is on the use of a management fee structure. A management fee is used in traditional finance to pay the operational costs of deploying capital, but it does not make sense for an on-chain treasury manager that is aiming to be autonomous and automate as much as possible.

To give an example, if ETH doubles in price (:crossed_fingers:), the treasury as a whole would increase 66% as it is ⅔ ETH. Since DXD is tied to the value of the treasury, its price would also increase 66%. This price movement alone would translate into a more than 55% increase in KK’s management fee to $326k, but this growth in assets under management would be from capital appreciation thanks to previous allocation decisions from DXD & REP holders, not Karpatkey-led yield generation. This would mean a 0.3% lower DXD price than if there was a flat fee of $208k. A DXdao treasury manager should be rewarded for asset deployment, not asset allocation.

DXdao has an existing way to incentivize alignment with treasury growth: DXD compensation.

As said above, the proposed $$ figure is reasonable given the scope, but this should consist of a fee structure that does not realize gains from unrelated asset appreciation as well as including compensation with vested DXD, or a fee structure that is better benchmarked against DXdao’s existing treasury makeup.

Deployment strategies

The proposal talks a lot about the risk management capabilities of Karpatkey, but it did not go into detail on what the potential strategies would be. Karpatkey suggested five strategies to ENS in its Endaoment initiation post last month, and those seem to be exactly what DXdao needs from its treasury management.

I took the strategies (projected APR) from Karpatkey’s ENS post and filled in DXdao’s treasury numbers (allowing for 2500 ETH & $1m stablecoin liquid buffer) and came up with this:

# Protocol Assets Strategy DXdao allocation Proj. APR Proj. Rev
1 Compound v2 DAI USD - neutral $2,928,364 2.02% $59,153
2 Compound v2 USDC USD - neutral $1,699,646 2.04% $34,673
3 Aura Finance wstETH - WETH ETH - neutral $2,386,833 10.21% $243,696
4 Curve stETH - ETH ETH - neutral $2,386,833 6.37% $152,041
5 Stakewise/ Uniswap v3 sETH2 - ETH ETH - neutral $1,193,416 15.81% $188,679
Total $10,595,091 6.59% $678,242

Spreadsheet with more info.

Are these the types of strategies and deployment DXdao could expect from the proposed treasury guild? How would KK go about selecting strategies and getting DXdao’s approval?

Reporting, advisory and partner advocacy

Outside of the on-chain management it does, I’ve witnessed firsthand the tremendous value that Karpatkey’s reporting and advisory work for Gnosis DAO and ENS DAO have added. Their weekly farming reports for Gnosis are legendary and I salivate at the idea of getting a similar year end review of DXdao as they just did for Gnosis. Additional context and research would aid DXdao in making more informed decisions. Furthermore, Karpatkey could be a key ally in advocating for DXdao across DeFi and other DAOs. This could be beneficial to Swapr, especially on Gnosis Chain, and open up more on-chain opportunities for DXD.

Similarly, there will be more and more DeFi products in the coming years and DXdao could benefit from Karpatkey’s expertise in leading the due diligence process in evaluating new protocols and chains. I’m also encouraged by Karpatkey’s DAO-native approach. It already has experience connecting disparate stakeholders and winning a huge vote (the ENS Endaoment). In my opinion, these reporting, advisory and partner advocacy services are the real value add of the Karpatkey, rather than operational execution of on-chain investment strategies, which DXdao should strive to automate as much as possible.

Parting thoughts

Wow - sorry for the long post - tyfr (thank you for reading!), but a lot of interesting ideas and unanswered questions this brings up about the treasury and how it can be used to further DXdao’s mission. In addition to Karpatkey’s proposal above, I’m meeting with another on-chain asset manager Avantgarde next week, and the ContributorX squad has facilitated four individual interviews and are meeting this week to discuss the candidates.


from my understanding the Avatar SAFE could be owned by a Guild i.e. Treasury Guild itself? So there wouldn’t be any trusted signers from DXdao with that setup.

Would be cool to do some treasury management directly from Guilds too - but I believe there are a few shortcomings which restrict what is possible to do:

  • Proposal duration is x days, i.e. if set to 3 a proposal will be executable after 3 days even if it has 100% of votes in favour at any point in time.
  • Compared with SAFE every action is on-chain: proposal creation, votes, proposal execution. On GC this is negligible - but could add up to significant gas costs on mainnet.
  • Not sure I’d be personally comfortable depositing $xxM into Guilds?
  • Not sure if Guilds can have whitelisted contracts they can interact with, or if it’s just everything by default?

I think a Guild controlling a Zodiac modified Safe is actually a cool way to use Safe (?). It looks like DXgov itself is also working on a ZodiacGuild - although I don’t know what that is exactly and if it’s related to Safe Zodiac at all.

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  • We’re discussing a guild with >50% instant execution, which would be very simple
  • Guilds are whitelisted via the permission registry and can set limits on ERC20 and native asset transfer values per proposal

The Zodiac Guild executes proposals through a safe as the avatar which I guess is what you are describing? In this case, really it is a guild, the main benefits are just an easier onboarding for existing safes.

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Hi @Powers,

Thank you for taking the time to put together such a comprehensive reply! I’ll do my best to address every one of your points:

The proposed Treasury Guild was designed to be comprised of both elements from DXdao and karpatkey DAO. This configuration allows it to be supported by the multiple functional teams of the karpatkey DAO and benefit from its resulting operational/technical scale, while promoting depth of knowledge and cultural alignment with the rest of the DXdao community.

The decision responsibility would depend on the scope. Any non-custodial treasury execution using Zodiac Roles Module’s presets approved by the DXdao community would be carried out by the Treasury Guild, as per our standard framework. The rest of the decisions would have to be put up for community voting.

Every karpatkey engagement has its own context and we always align our activities with the DAO’s mission. In this case, we acknowledge that the price of DXD is directly impacted by the performance of the treasury—so besides operational execution and deployment—we’ll definitely leverage our network and infrastructure to optimise for a better risk-adjusted asset allocation, resulting in better capital returns for the DXdao’s treasury.

Yes, DXdao would keep voting directly on those issues. The Treasury Guild would publish on DXdao’s forum a general strategy proposal to get feedback from the community. Once any necessary adjustments have been applied, the strategy would be posted to DXvote, and would begin the execution process upon its approval. A proposed weight ratio would be included, together with the rationale behind it. DXdao’s vote would always be a requirement to ensure that the Treasury Guild abides by DXdao’s decisions.

The current wallet address being used by DXdao for funding purposes would be included in our Zodiac Roles Module preset. This would allow the Treasury Guild to fund this account upon any ad-hoc funding requirements and let DXdao carry out its current funding process.

Just to clarify, the accounting and financial projections are not included in the current proposal—we could work on another one in the future contemplating them.

Regarding budgeting activity, the Treasury Guild would need to analyse the budgets that DXdao has put together before being able to draft a strategy, taking into consideration liquidity needs and forecasted expenses to face projected financial obligations.

It would certainly provide insight & analysis to DXdao on treasury allocation changes and execute on investment decisions made by DXdao. Flagship product & dogfooding DAVI would definitely receive sufficient token allocation from the treasury.

I agree, the goal of managing a DAO treasury fund goes way beyond the act of optimising for return on investments. It mainly involves supporting the DAO in fulfilling its mission—which requires a deep understanding of the organization’s day-to-day activities. Your point about Swapr is a good example of this.

I think it’s very healthy for the industry to have a wider range of treasury management and governance solutions that can be used by any DAO. However, we’d begin using the battle-tested non-custodial treasury execution infrastructure that we currently rely upon, since we would be held responsible for its proper functioning (which is why we had it audited several times).

DXdao’s treasury guild would always act in the best interest of the DAO, fostering the development of its flagship product in alignment with its vision. This includes using DXdao’s governance platform or any other DAO tool developed by the community, as long as it doesn’t require any additional development investment from our team.

This is a technical requirement of the Zodiac Roles Modifier. Alternatively—DXdao could set up a scheme or Guild that directly owns (and is able to interact with) the Avatar Safe—thereby nor requiring any authorised signers from DXdao but being able to manage the Safe through regular DXdao governance channels. Again, it’s worth mentioning that the technical effort would need to be carried out by DXdao.

Just for the record, our costs do grow proportionally to the AUM. Bigger fund sizes demand more strategies and entail excess risk—especially when deployed in low liquidity markets e.g. Swapr—which requires more resources from our Risk Management team.

Our Management Fee is designed to cover our expenses in every engagement. In this case, it should support our FT contributor and the 2 additional FTEs, as well as the pro-rata costs of the Tech and Risk Management teams for deploying and maintaining the infrastructure.

As you can tell by the existing labour market, $208k won’t do it. We see this initiative more as a long-term investment, hoping that we’ll make up for our losses once the market rallies.

Now, we can always lock-in the risk of a future price increase by offering you a fixed Management Fee. In this case, we can propose 390k DAI per year paid in monthly instalments and add budgeting, reporting, and business development services to our proposal.

Overall, there are now two options:

Option 1 — Treasury Management Services and Reporting:

  • A Management Fee of 0.5% of the NAUM collected in DAI in monthly instalments (Weekly portfolio balance * 0.5% / 52, converted to DAI); and
  • A Performance Fee of 15% of the yield obtained during the last month collected in ETH (weekly liquidity mining rewards - trades slippage - deposit / withdrawal fees) * 15%, converted to ETH)

Option 2 — Treasury Management Services, Reporting, Accounting, Budgeting, and Business Development:

  • A Management Fee of 390k DAI per year paid in monthly instalments;
  • A Performance Fee of 15% of the yield obtained during the last month collected in ETH (weekly liquidity mining rewards - trades slippage - deposit / withdrawal fees) * 15%, converted to ETH)

Our Research & Strategy team would work directly with the Treasury Guild to design a treasury allocation strategy from scratch upon the approval of our proposal, and we would post it on a separate proposal to discuss it collectively and request the DAO’s approval (example).

Once approved, our Tech team would configure the presets of the Zodiac Roles Modifier that would allow us to operate within the boundaries of the strategy voted upon by DXdao. This would provide us with significant flexibility to carry out granular strategies and get the most out of your funds, applying as many adjustments as needed to optimise the yield and minimising risk, while still abiding by the general approved strategy and without requiring subsequent voting from DXdao.

We aim to establish a long term partnership with DXdao, so we will always provide you with our advice and cooperate to the best of our ability to make DXdao’s products a success.

Since an essential part of our job would be to increase the price of DXD, we’d partner with DXdao evaluating new protocols and chains, providing you with our advice on treasury allocation.

As mentioned above, we’d be happy to add reporting, advisory, and partner advocacy services into the package.

We would add value in the following:

On-chain non-custodial execution is also a resource-intensive activity and IMO shouldn’t be overlooked. The Zodiac Roles Modifier allows for an active treasury strategy to be put in place, ensuring capital efficiency while minimising risk exposure. In 2022 alone, we conducted 1970 transactions on behalf of GnosisDAO (Mainnet/Gnosis Chain). Most of them derived from GIP executions, portfolio diversification, strategic allocations, bridging, yield-improvements, and CR adjustments.

Attempting to automate all this activity sounds attractive, but we should be mindful that the DAO’s capital is at stake. Even though decisions at karpatkey are increasingly supported by technology (which in itself requires significant development investment), in the end, there’s always a person calling the shots. There’s always going to be someone researching new protocols, developing and maintaining risk models, and conducting emergency execution meetings in the most volatile periods.


re-posting from other thread:


Given that the treasury role described by KPK goes far beyond just regular treasury functions and would impact the products directly too i.e. Swapr (liquidity positions / partnership / bizdev) and DXgov (DAVI / Treasury Guild / partnership / bizdev) I think a temp check / signal proposal (with all options: KPK, Avantgade, Individual, Combination(?)) definitely makes sense here. Perhaps a DXD snapshot and a REP signal proposal on GC (or esp computer for multiple choice)?

I think there’s a lot of value to be gained by DXdao working with KPK, which goes beyond the pure treasury yield - particularly when looking at the DAOs they already work with.

$390k is equivalent to 1.75 FT DXdao contributors at the highest level. I think and would expect KPK to deliver beyond that value. Overall I deem there to be little to no risk to explore this opportunity, as the funds are non-custodial and DXdao can back out anytime - with KPK having to deliver true value to maintain the relationship.