Looking at DXdao Expenses from January to July 2021, DXdao had a monthly burn rate of roughly $179,657. With DXdao still looking to hire some developers, we can assume a monthly burn-rate around the $200,000 mark - $2.4M / year. Whereby, the current treasury stable reserves would cover roughly ~3 years of runway.
With the unpredictability of the crypto market, having a longer runway in stablecoins provides long-term security to the DAO in case of large market movements. Moreover, at the time of writing ETH is back above the $3k mark - which allows us to sell off less ETH to reach the aforementioned runway.
Runway projections (at $200k / monthly burn rate):
|3 years||5 years||8 years||10 years|
This proposal authorizes moving a further $5M into stablecoins - allowing DXdao to reach the 5 year secured runway amount. Once executed, the DXdao would hold around $12M in stables, which still would represent just 20% of the DXdao treasury on mainnet (at ETH price of $3,167).
Allocation of Stables
This proposal also authorizes the acquisition of new stablecoins. Namely, RAI from Reflexer Labs and LUSD from Liquity. While the stables DXdao currently holds are often referred to as “stablecoins”, they really are USD-pegged coins. RAI on the other hand is a true stablecoin. LUSD is a USD-pegged coin with a low collateral ratio of only 110%.
60% RAI $3M
20% LUSD $1M
10% DAI $0.5M
10% USDC $0.5M
Methods of acquiring stables
- DXdao Developer MultiSig
This proposal authorizes any amount towards the listed conversion target of $5M to be traded via the DXdao Dev multisig, granted that no more than 250 ETH is transferred to the DXdao Dev multisig 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.