In order to secure runway for DXdao operations, a portion of DXdao treasury ETH must be converted into less volatile assets. The current burn rate is about $125K in ETH per month. This proposal is to authorize the conversion from ETH to stablecoins of 2 years worth of runway at a $125K per month burn rate, which is equivalent to $3M. $3M is an initial target and the target may be increased or decreased in the future. The breakdown of the stablecoins shall be 30% DAI, 30% USDC, 20% sUSD, and 20% USDT. In dollar amounts that is:
- 900,000 DAI
- 900,000 USDC
- 600,000 sUSD
- 600,000 USDT
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:
1. 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 $3M.
2. DXdao Developer MultiSig
This proposal authorizes any amount towards the listed conversion target of $3M to be traded via trusted multisig, granted that no more than 100 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 requires signatures of at least 3 of at least 5 addresses, owned by distinct REP holders with greater than 0.5% REP that have verified ownership of their multisig 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. 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.
3. “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 $1M and requires that a minimum size trade per proposal should be 20 ETH.