[ARCHIVED] Proposal to Lend/Stake Treasury Assets

General Archive
1

Recent discussions surrounding treasury management have garnered decent support (for example). Below I propose a simple framework to get the ball rolling and help provide further growth to the DAO treasury.

BitDAO is in a fortunate position, with a significant amount of assets under management. Let’s leverage this position to help grow the treasury and ultimately increase our ability to support the builders of our decentralised economy.

Treasury

Below is an entry-level, low-risk treasury management plan which minimises risks through diversified, quality investments across ETH, USDC and USDT. This plan will provide a solid foundation for the DAO to build upon and ultimately create a complete treasury management framework over time.

Initial Treasury Deployment Plan

Deposit X% of USDC, split equally between Compound Finance and Aave Finance, earning 2.16% and 2.35% respectively (+0.86% in COMP, +0.41% in AAVE).

Deposit X% of USDT, split equally between Compound Finance and Aave Finance, earning 1.68% and 1.73% respectively (+0.36% in COMP, +0.32% in AAVE).

Stake X% of ETH, split equally between Lido and StakeWise, earning 4.7% and 5.0% respectively.

Notes on the above:

  • Aave and Compound have seen a drop in the utilisation rate for stablecoins given market conditions over the past 2 weeks. This has led to a drop in deposit yields which should be expected to increase once market sentiment/borrowing picks up. USDC averaged a deposit rate of 3% on Compound (ref) and USDT averaged 2.8% on Aave over the past 3 months (ref), for example.
  • ETH staking yield is expected to increase following the Merge and reports suggest a stabilisation around ~10% in the medium term. Both platforms are liquid staking platforms, meaning capital is not locked should it be needed before validator withdrawals are enabled.
  • Emphasis on splitting risk across platforms.

Example returns using current APRs

Primary returns:

Breakdown
Breakdown868×105 26.6 KB

Secondary rewards from COMP and AAVE:

Breakdown2

Notes on above returns:

  • 70% of total returns are directly correlated to the spot ETH price, currently $2,400.
  • Improved staking/lending yields over time would effectively double the total returns, all else equal.

Protocols mentioned:

Compound - compound.finance
Aave - aave.com
Lido - lido.fi
StakeWise - stakewise.io

Temperature Check Poll

Would you like to see this proposal go to vote?
  • Yes, utilising 10% of treasury assets in the deployment plan
  • Yes, utilising 25% of treasury assets in the deployment plan
  • No, we should look at an alternative strategy for treasury management

0 voters

2 Likes
2

Funds at this stage should be mainly used for facility construction

3

I agree that the main priority of the DAO should be identifying oportunities and investing in the growth of the ecosystem. It has already committed capital to some fantastic projects.

The fact of the matter remains though - the DAO has a tremendous amount of assets that are sitting dormant. The benefits of investing are well documented and I beleive that if the DAO can start earning interest on its assets sooner rather than later, it will be in a much stronger position further down the line. Should the DAO need to access the capital for investments in the meantime, then it can do, hence the reason I have chosen the above protocols to invest in.

2 Likes
4

I vote YES for this idea, as the treasury has a tremendous amount of assets that should be utilized to create some cash flow and feedback to the treasury to create a positive cycle.

It shall be a promising proposal!

5

That’s a good idea !

7

i agree with using a percentage of ETH in treasury control in such a way but do not agree with the lending of stables for such low yields. the opportunity cost is high and there is no need to rush putting 25% of assets to work, a slow drip of 1-3% at a time seems more appropriate

8

I personally think 25% is too much. Even if asset utilization in this regard should be considered, it should not exceed 10%

9

Using the income from DEX to accumulate bitdao would be a very good idea

10

I recently joined the community and trying to understand how developed it is.

I do agree with @sheng that funds should be used for facility construction. Anyways, considering BitDAO is still in a very early stage of community development, we could be using these assets to earn while basic community stuff is not in place.

I do support the initiative of lending 25% of the assets.

11

That’s an interesting proposal, bringing more revenue from the assets in treasury.