[DISCUSSION] BitDAO Treasury Diversification

Proposal Title: BitDAO Treasury Diversification Initiative
Author: 50
Date: 30th Aug 2022

This initiative seeks to provide passive income to the DAO by deploying idle assets to various yield-bearing protocols across the Ethereum ecosystem. Only positions with the highest degree of security have been chosen - meaning no pools that harbour risk of impermanent loss, no leverage and a strict ‘no trading’ policy. The positions constitute 33%Eth, 33%DeFi and 34% stablecoin exposure to ensure the DAO can survive a prolonged bear market while taking as little damage to the treasury as possible.

The upgrade to treasury positions will aim to generate between 8-10%APR year over year (not including potential asset appreciation) with which the DAO can continue to pay salaries and accumulate liquidity with which the next generation of web3 projects can be funded.
Minimum est. yearly revenue: $50-80m
Not including potential price appreciation of underlying assets

The change in positions can be completed over the course of a few weeks, or possibly less depending on multi-sig signer availability.

Person(s) involved: Multi-sig team, 50

Milestones are as follows;

  1. Treasury positions are updated, aiming for 85%+ of total farmable assets actively earning yield.
    ETA: 1 month
  2. The project will be considered a success if, for a period of 3 months, treasury positions consistently provide yield greater than that which could be accrued by depositing all funds to Aave (~1%).

Specifications:

  1. Timeline:
    1 month initial diversification push, followed by active maintenance.
  2. Budget:
    8kUSDC per month for three months which, if after three months the initiative is considered a success, changes to a standard annual streaming fee of 195 basis points OR a 20% fee on the alpha generated above benchmark.
  3. Source Documentation:
    Full list of positions and risk profiles:
    BitDAO Treasury Proposal - Google Docs
  4. Misc. Details:
    Accrued yield will be harvested at monthly intervals, and either compounded or market sold to cover salaries/fund projects, etc.
    A monthly treasury report will be drawn up highlighting the performance of treasury positions over the previous 31 days in such a way that all the community can intuitively understand the details and implications, regardless of their level of prior knowledge.
    An emergency telegram group will be set up containing all multi-sig signers. In the case of any security threat, all members will immediately be alerted and funds can be safely removed.

If the project is accepted, the first step will be to organise a multi-sig signing party where signers put the aforementioned allocations into effect.

About the author…
The proposals author has studied finance and economics rigorously for many years, first falling in love with traditional markets and then falling down the crypto/DeFi rabbit hole a few years ago and becoming enthralled at the possibility of a truly global, fair economic system. Having studied DAO treasury management extensively and actively contributing to a number of smaller DAOs in a treasury management role, it is the belief of the author that the BitDAO treasury can become a machine that can fund DAO operations in perpetuity and go on to be the bedrock for a new wave of innovative DeFi projects.

Please share any thoughts below, constructive discourse is always appreciated!


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47 Likes

50 people involved? Seems like a lot. Got any more info on that?

What type of positions that are super secure and do not have the risk of impermanent loss give 8-10% APR these days?

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Just had a look at the detailed proposal, thank you! Wanted to share this link as an opportunity for the DAO as well.

If ETH is staked into Rocket Pool or Lido, the DAO could use their rETH or stETH as collateral and borrow against this on PWN.xyz > A peer to peer lending protocol with no liquidations until the loan expires.

The other opportunity is using some of the treasury’s native tokens, BIT to use as collateral and issue a bond, see the link below.

7 Likes

Yep, sorry for the confusion here
50 is my personal online alias (it was originally 50 shades of gwei, but the joke was less funny the 200th time). At present the Initiative will involve myself (50) and the relevant multi-sig signers.

Note: Given the size of the treasury in question, a larger team would be a reasonable idea - on that note I am certainly open to sourcing some asset management talent to help out.

Re: ‘how do you get that yield’, the short version is what I call second order interest opportunities - which is essentially just platforms such as Convex + Idle where you earn gauge rewards on top of the initial yield bearing asset. Example: stETH on Convex. You get the base rewards from stETH (4%) and then additional CRV+CVX rewards (low single digit %) which adds up to the target range.

Any more questions feel free to ask!

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4 Likes

how will the trade execution be managed? i.e., what dex will the swaps be routed through