Proposal to Stake ETH with DXdao Treasury Funds

Overview

DXdao currently holds over 12k ETH in its treasury. Staking ETH gives DXdao an opportunity to help secure the Beacon Chain while retaining exposure to ETH and also receiving a reward for the staking.

Three proposed liquid staking options:

  • Lido
  • Stakewise
  • RocketPool
Lido Stakewise RocketPool
Token stETH sETH2 rETH
APY 4.9% 4.86% 4.77%
Fees 10% 10% 5-20%
Total ETH staked 1.4M 26k 2.6k
Suggested stake 50% 30% 20%

Lido is clearly the most established option, with over 1.4 Million Ether staked through the platform. Which also makes it easily acquirable through platforms such as Curve, Uniswap etc.

Stakewise, unlike the other options, uses a dual token model with a separate token for the staked ETH and the reward ETH. This, eventually allows to restake the reward tokens. See more: https://docs.stakewise.io/tokens

While just recently released, RocketPool is a very promising staking option as it aims to be fully decentralized. While the protocol is very “new” on mainnet, it has gone through extensive testing on testnets and has been audited by top-tier auditors. Allocating some ETH to RocketPool would also signal DXdao’s support for decentralized products.

Proposal

This proposal suggests deploying an initial amount of ETH, distributed between the three liquid staking options mentioned, with the following breakdown:

  • 50% on Lido for stETH
  • 30% on Stakewise for sETH2
  • 20% on RocketPool for rETH

For the purposes of staking the ETH, the DAO will rely upon the Multi-Sig 0x5F239a6671BC6d2bAEf6D7Cd892296e678810882, which has already handled all treasury diversification proposals as well as bridging funds to different bases. Once the given tokens are acquired the MS shall return those funds to the mainnet DXdao treasury.

This proposal also authorizes the MS to handle up to 500 ETH in one transaction for the purpose of staking it.

Acquiring the staked assets

Due to limitations on the tech-side and with an interest to move forward with the proposal in the near future, if it passes, the most pragmatic solution is to make use of the dev multi-sig.

Below are a set of ways we could acquire the assets, by either trading ETH for them or minting new tokens.

stETH:

  • Available on Curve ETH/stETH
  • Has Gnosis Safe integration

sETH2:

  • Has Gnosis Safe integration

rETH:

  • Wallet Connect / Gnosis Safe

More info

https://docs.lido.fi/
https://docs.stakewise.io/
https://docs.rocketpool.net/

Risks

Transfer of these funds relies on the Dev multi-sig. Moreover, the staking platforms themselves present risks.

Feedback

Please feel free to share your thoughts and/or suggestions in this thread.

Should DXdao stake ETH with funds from the Treasury?

  • Yes, let’s stake!
  • No.

0 voters

What should the initial amount of ETH be to be staked?

  • 500
  • 1000
  • 1500

0 voters

10 Likes

Proposal to Stake 1000 ETH with DXdao Treasury Funds

Overview

DXdao currently holds over 12k ETH in its treasury. Staking ETH gives DXdao an opportunity to help secure the Beacon Chain while retaining exposure to ETH and also receiving a reward for the staking.

Three proposed liquid staking options:

  • Lido
  • Stakewise
  • RocketPool
Lido Stakewise RocketPool
Token stETH sETH2 rETH
APY 4.9% 4.86% 4.77%
Fees 10% 10% 5-20%
Total ETH staked 1.4M 26k 2.6k
Suggested stake 50% 30% 20%

Lido is clearly the most established option, with over 1.4 Million Ether staked through the platform. Which also makes it easily available on platforms such as Curve, Uniswap etc.

Stakewise uses a dual token model, with a separate token for the staked eth and the reward eth. This, eventually allows restaking the reward tokens. See more: https://docs.stakewise.io/tokens

While just recently released, RocketPool is a very promising staking option as it aims to be fully decentralized. While the protocol is very “new” on mainnet, it has gone through extensive testing on testnets and has been audited by top-tier auditors. Allocating some ETH to RocketPool would also signal DXdao’s support for decentralized products.

Proposal

This proposal suggests deploying an initial amount of ETH, distributed between the three liquid staking options mentioned, with the following breakdown:

  • 500 ETH on Lido for stETH
  • 300 ETH on Stakewise for sETH2
  • 200 ETH on RocketPool for rETH

For the purposes of staking the ETH, the DAO will rely upon the Multi-Sig 0x5F239a6671BC6d2bAEf6D7Cd892296e678810882, which has already handled all treasury diversification proposals as well as bridging funds to different bases. Once the given tokens are acquired the MS shall return those funds to the mainnet DXdao treasury.

This proposal also authorizes the MS to handle up to 500ETH in one transaction for the purpose of staking it.

Acquiring the staked assets

Due to limitations on the tech-side and with an interest to move forward in the near future, if the proposal passes, the most pragmatic solution is to make use of the dev multi-sig.

Below are a set of ways we could acquire the assets, by either trading ETH for them or minting new tokens.

stETH:

  • Available on Curve ETH/stETH
  • Has Gnosis Safe integration

sETH2:

  • Has Gnosis Safe integration

rETH:

  • Wallet Connect / Gnosis Safe

More info

https://docs.lido.fi/

https://docs.stakewise.io/

https://docs.rocketpool.net/

Risks

Transfer of these funds relies on the Dev multi-sig. Moreover, the staking platforms themselves present risks.

5 Likes

I have been thinking more about the security of DXdao, especially as the majority of governance has moved away from Mainnet.

DXdao governance is largely as strong as the attention that the governors are paying to the DAO, and currently, this is “not very high” specific to mainnet.

Another way to help diversify this risk is via smart treasury management.

An added benefit to diversifying DXdao’s ETH into different staked ETH holdings is that it splits up the ETH holdings into different ETH-based tokens.

From a security perspective, I think this makes DXdao stronger. Currently, one malicious proposal could drain the entire ETH holdings of DXdao.

With the ~12k ETH spread between, say, 4 individual assets, I believe that an attacker would have to have proposal for each asset individually, making an attack far more visible.

This proposal is DXdao’s first movement with 1,000 ETH but if successful, I believe we should move quickly towards a portfolio of:

3,000 ETH
3,000 stETH
3,000 sETH2
3,000 rETH

Happy to discuss and help push this plan forward.

6 Likes

Definitely agree with you that 1000 ETH is to “dip our toes in the water”.

But I’m not quite sure if it helps in your scenario. A malicious proposal (under the funding and voting power scheme) can, just as any proposal under the scheme, do three total actions:

  • Withdraw native token (ETH)
  • Withdraw one ERC20 token (any of the staked ETH)
  • Mint REP

So if we were to be unable to detect a malicious proposal, they could withdraw all ETH and all of one staked ETH token. Moreover, and most importantly, they could mint themselves as much REP as they wish. So the DAO would in effect be completely breached anyway.

2 Likes

Draining the entire DAO funds would be indeed more difficult in the scheme/proposal level, and you will likely need to do multiple proposals. But here we are talking about staking using a gnosis multisig, so the gnosis multisig would be the “holder” of it.

Maybe it would be better to have a stronger multisig with more signatures needed to execute this operations with lot of funds and use a more secure multisig?

In the future it would be great to replace all this operations with ERC20Guilds.

1 Like

Yes - but just to clarify, the dev multi-sig will be used to acquire staked ETH, but it won’t hold the ETH. The staked ETH is represented by an ERC20 token and those will be sent to the treasury once they are acquired by the dev multi-sig.

6 Likes

Thanks, this is a great proposal.

However one question.

So why are we only allocating 20% of the ETH towards RocketPool and 80% towards more centralized solutions? Isn’t decentralization really at the core of DXdao?

I personally think we should try to support those decentralized solutions where possible, because they, as DXdao is well aware of, operate with both hands tied behind their back and need every support they can get.

8 Likes

IIRC, RocketPool was launched on mainnet a couple of days before this forum post was posted.

The current distribution was more weighted on TVL of the given platforms. Yet RocketPool was included exactly for the reasons you list.

Given that this proposal has already passed on xDai, I would suggest moving ahead with current targets. However, we can rebalance % allocation in the next staking proposal.

9 Likes