DXdao’s treasury has grown considerably in dollar terms thanks to the appreciation of ETH. It’s current breakdown is:
| Asset | Amount | $$$ Amount | % of Treasury |
|---|---|---|---|
| ETH | 21,280.81 | $21,578,532.66 | 80.42% |
| DXD | 20,283.06 | $3,846,729.19 | 14.34% |
| DMG | 3,750,000 | $1,312,908.35 | 4.89% |
| PNK | 500,000 | $62,665.00 | 0.23% |
| GEN | 121,456.49 | $16,781.89 | 0.06% |
| OWL | 10,000 | $10,565.43 | 0.04% |
| PAN | 50,000 | $4,111.95 | 0.02% |
| Total | $26,832,294.47 |
The ETH was raised from the bonding curve and is supposed to fund development of DXdao products. Revenue from these products is to be sent to the bonding curve to support the price of DXD. While a proposal passed to halt the bonding curve, DXD will remain the liquid value of DXdao. Ultimately, DXdao’s treasury should be used to drive DXD price.
There have been discussion on calls and in the #Treasury keybase channel on treasury diversification, and now that the the Multi-call scheme is done, we are now able to execute on changes to the Treasury make up.
In general, I see four goals:
- Support DXdao products
- Stablecoins to pay contributors
- Diversification away from ETH
- Earn yield on idle assets
For DXdao products, the immediate focus is on Swapr, but we should consider treasury use in Omen. For Swapr, the latest community discussions have an initial $1m in liquidity across ETH/Dai($250k), ETH/USDT ($250k), ETH/USDC ($250k), ETH/DMG ($200k), and ETH/PNK ($50k). I think this is a good first step for Swapr’s initial liquidity stage. Given ETH’s appreciation, a goal of $2m in Swapr liquidity by the end of Q1 seems about right.
Several contributors have voiced concerns about receiving payment for work in ETH. It causes unnecessary stress and also creates confusion on how to price ETH compensation. I think it makes sense to put 18 months of runway (at current monthly burn ~$120k) in stablecoins. This ~$2m would ensure development funding without worrying about the price of ETH. Most of this could be placed into a lending protocol to earn yield, with workers potentially being paid in the yield-bearing asset itself.
Diversification away from ETH. I love ETH and Ethereum is DXdao’s home, but the treasury could diversify into other assets. I see three possibilities 1. Tokenized BTC on Ethereum 2. Crypto Indices 3. Synthetic Assets.
In the short-term, #1 seems the most logical. Bitcoin is the OG and its currency properties are different than ETH’s and a good compliment. #2 & #3 seem interesting but perhaps a little early. It could be interesting to purchase the DeFi Pulse Index token or something else. IMO, if the treasury allocated to Crypto Indices or Synthetic Assets, it would be to support a trading market on Swapr. I also think it’s an opportunity to explore UMA’s developer mining or what YAM is doing with the uGAS token and ‘Degen Finance’.
In terms of BTC exposure, the community is leaning towards tBTC, which is the only trust-minimized, non-custodial BTC token on Ethereum. I think we should allocate $2m to tBTC, which would be a little less than 10% of the treasury. And I think half of this ($1m) should be put into a 50/50 ETH/tBTC Swapr pool.
“Earning an idle yield on assets” is also called ‘yield farming’ by the cool kids these days, but it also includes the greatest yield generating opportunity of them all: ETH2.0 staking. Even with diversification and investment in DXdao products, the treasury still could hold ~$10-15m in ETH. This is important to the long-term health of DXdao as it seeks to expand into new product areas and potentially new blockchains/L2’s, but it can grow in size until it’s deployed.
There will need to be more discussion in the community and potentially more risk assessment if DXdao puts its precious ETH into another smart contract. Are there opportunities we could be taking advantage of that are safe and secure? Should we partner with anyone?
Implementing the above allocations, we would get something like this:
| Diversification moves away from ETH | |
|---|---|
| Stablecoins for worker payment | $2,160,000 |
| tBTC allocation | $2,000,000 |
| Swapr stablecoins | $375,000 |
| Treasury makeup (potential) | |||
|---|---|---|---|
| Location | Asset | Amount | Notes |
| Treasury | DXD | $3,846,729.19 | 100k vesting over 3 years |
| Treasury | DMG | $1,212,908.35 | minus allocation to Swapr liquidity |
| Treasury | ETH | $15,543,532.66 | could earn yield? |
| Treasury | tBTC | $1,000,000 | could earn yield? |
| Treasury | Stablecoin | $540,000 | |
| Interest earning account | Stablecoin | $1,620,000 | yearn, compound or aave? |
| Swapr | ETH | $1,500,000 | 50/50 with Dai, USDC, USDT, PNK & DMG,+tBTC |
| Swapr | Stablecoin | $375,000 | Dai, USDC & USDT |
| Swapr | tBTC | $1,000,000 | |
| Swapr | DMG | $100,000 | |
| Swapr | PNK | $25,000 | |
| Treasury | Others | $69,124.27 | PNK,GEN,OWL, PAN |
| Total | $26,832,294.47 |
| Asset Allocation | ||
|---|---|---|
| Asset | Amount | % |
| ETH | $17,043,532.66 | 63.5% |
| DXD | $3,846,729.19 | 14.3% |
| tBTC | $2,000,000 | 7.5% |
| Stablecoin | $2,535,000 | 9.4% |
| DMG | $1,312,908 | 4.9% |
| Others | $94,124 | 0.4% |
| Total | $26,832,294.47 |
These are just initial thoughts. Feedback & suggestions needed. These would just be the first steps to strategic use of the treasury and excited to see what else (particularly for Omen and Layer 2 liquidity).
You can play around with the spreadsheet here:
Securing ~2 years of runway with stablecoins makes total sense to me
I don’t get the point of allocating funds to tBTC. Not worth the risk. I’d rather stay exposed to ETH or, maybe even better, deposit some ETH as collateral to generate $2M DAI and lend those. The lending rate of DAI is usually high (just checked: 23% on AAVE now). That alone could contribute $250K~$500K annual revenues.