DAO money printer go brrr?

Hey all,

There was a good bit of discussion back in March about generating some yield on the DAO treasury funds. Those discussions seem to have fizzled out. Here’s the prior discussions for anyone interested:

Stake the treasury>

The DAO treasury gets a cut of all Curve fees and all baazaar fees, and has grown into several million dollars worth of GHST and Dai. These funds are sitting completely neglected. In my mind, that’s irresponsible stewardship on our part. I propose that we take the first step towards becoming an active DAO by generating yield on our funds.

For the GHST, I propose that we stake in the FRENS single staking contract. This is risk free, and will start generating a significant amount of FRENS. Of course, we don’t have to use them if people are worried about diluting our own FRENS/raffle tickets, but by generating FRENS we’ll have options in the future to do airdrops/giveaways to promote Aavegotchi through the polygon community.

For the Dai, I propose we put the funds into the Curve Aave pool, which generates yield on stablecoin assets. From an IL perspective, this is mostly risk free since it’s just stablecoins, and Curve has established itself as a pretty safe protocol over the last several years.

Finally, I also wanted to open the discussion (although this may be a future project) that we create a Treasury multisig committee similar to the FRENS committee that’s being set up. The DAO shouldn’t have to go to Pixelcraft every time it wants to spend money on something. Giving a bunch of trusted community members multisig control over the DAO treasury is one of the next steps to becoming a fully fledged DAO.

Thoughts?

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Current treasury holdings: Dai = ~ 923k (on mainnet), GHST = ~ 526k

So we’d be generating nearly 50k Dai/year (assuming 5% yield on Curve pool on 1m Dai), and 526k FRENS/day

Yeah Curve sounds nice, but I’m still worried about the bear market. I’m into ETFs or even better shorting BTC and altcoins during the bear market. Shorting ICP a few months ago would had been delicious.
Or shorting Tesla stocks right now. Could had even invested in Axie Infinity scholarships 4 months ago.
Also we’re a pretty vanilla DAO so far. Stuff like making the wearables and gotchis count as voting power was the only “grand” decision we’ve done so far when it was natural for it to be there since day 1.

Thanks for the response ser! Just to clarify — would you rather the DAO use its funds to short altcoins?

And re: curve I don’t quite comprehend what the bear market concern is you mention. I’m proposing we put our Dai into Curve’s stablecoin pool, so there’s not really any risk from a bear market.

Cheers!

During a bear market the yields are extremely low due to no volume, even on stablecoins and gold-backed crypto. I don’t mean 0.5% low, more like 0.03% APY low.

I agree utilizing the treasury funds in a conservative way makes sense. Even if yields on stables drop, at least the assets are productive. Though there are platforms like Convex that could boost that yield, the more tried and true options (Curve, Aave) would probably be best for something like the treasury imo.

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Oh sure, but there’s not a substantial risk to losing DAO funds. Right now those funds are earning 0%, so anything is an improvement

I like the idea of using the funds with partnering projects to support the whole ecosystem. As a way of diversifying the asset classes could LP tokens on uniswap and dinoswap be a good investent? What about Unicly aastronauts tokens? or Comenth MUST tokens or the ghst/must pair lp tokens?
If lp tokens are too much of a risk then only some of the assets should go to these high risk investents and majority in stablecoins.

Staking GHST so the DAO can reward players with raffle tickets, wearables, etc. make sense but I would not add exposure to other crypto asset not linked to aavegotchi (Gotchiverse tokens maybe?). I would also have suggested the curve aave USD fund for the DAI. Beside all the advantages mentioned this also serves as an hedge against any particular stable loosing its peg (somewhat). I think we should also discuss what to do with rewards as they will likely be in CRV and MATIC too. A commitee could help with that and signal for liquidity transfer opportunities when favorable.

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Staking the GHST for FRENS makes sense. I don’t know if the protocol allows for transferring of FRENS, but that would create a nice pocket of asset for airdrop and other promotions.

I think staking the DAI for anything that might suffer from impermanent loss is unwise. Putting some of the funds up on lending platforms to earn a yield we could explore, but I would say the platforms need to be fully vetted. I would choose a lower yield for security over a riskier one.

You say the funds earning 0% are doing nothing, but I disagree. That bank of money shows the project is bankrolled and the GHST tokens have value. The transparency of funds is incredibly attractive to me. I don’t have to go digging to find where the money is and for how much.

I supported this back when we had the Dinoswap discussion, and I still do, but I’d feel more comfortable with creating a treasury council that actively manages it. To do this, and do it right, we’d have to spend time figuring out the best way to do it, implementing it, etc. so I’d only agree if it didn’t take too much time away from development or the team grew more and had no issues implementing everything that came up. So it’s a “yes if…” from me, maybe I need to hear what @Jesse_gldnXross and @coderdan think.

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I think staking the treasury is a great idea, just not for FRENs. Even if we never touch the FRENs (then what’s the point?), it will still inflate FRENs and tickets.

Hence, I find your statement in the snapshot proposal slightly misleading:

DO YOU LIKE YIELD?? If so, vote yes.

Because your proposal would decrease the value of peoples yields.

However, another option would be to put Dai directly into Aave (which would be significantly less yield)

I would happily vote yes for this! And once GHST is added to Aave, we could also do it with the GHST. :sparkling_heart:

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Hi fren! Thanks for responding. Just to clarify, why do you think people’s yield would be diluted if we staked the DAO GHST for FRENS? FRENS as a token has no value and can only be used to buy raffle tickets. If the FRENS were never used, then it wouldn’t impact the price of raffle tickets in the slightest.

Would be great if GHST gets added to Aave, but we’ll cross that bridge when we get there.

Thoughts on adding the Dai to Curve vs Aave? Much better yield on Curve

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I think FRENs have value. For tickets and for whatever they might be used in the future. Maybe they get a use in the REALM, who knows.

Your point about not needing to use the FRENs is too theoretical for me. If we never want to use the FRENs, then we wouldn’t need to generate them in the first place.

Thanks for asking. Generating a huge quantity of FRENs dilutes everyone’s percentage of FRENs in existence. If the DAO decides to make them all into tickets and give them away for free, ticket prices would plummet. And the fear that this COULD happen, might already be enough.

I should have read your proposal more carefully. Turns out I misunderstood that part. I think that sounds like a great idea, and hence I changed my vote to yes.

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I also think that staking the treasury for FRENS is not the way to go. The DAO should not participate in the FRENS economy at all, as I think it’s a huge conflict of interest since the DAO is responsible for the mechanics and design of the FRENS economy in the first place. And I also agree that this would reduce everyone else’s yields. This is simply because there are a fixed number of prizes which a variable number of FRENS are competing for, and knowing that the DAO holds a huge number of FRENS would put rug pull on people’s minds.

I also don’t like the idea of putting the DAI on Curve. Unless I’m misunderstanding the business model of Curve, you are providing liquidity to whatever pool DAI is in. That means that in the event of a lost peg, The DAI would no longer be there. This is a clear risk that is outlined in Curve’s FAQ. I think AAVE is the better option for the DAO’s treasury despite the lower yields. It also fits more with our identity as AAVEgotchis.

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I voted “yes” first, but now I’ve changed to “no” just for now. Some arguments here made me think, and while I’d love to see the treasury invest that money, I’m just not sure about what’s the best way. Pixelcraft will already make FRENS and airdrop tickets, use them for promotions, etc. So on the one hand the same arguments used for the DAO diluting rewards could be used for Pixelcraft, but on the other it could be argued that we would be making things worse than they already are because of that.

For the DAI, the argument of losing peg permanently would also affect us if it was in Aave, but we’d have no impermanent loss and it’s arguably safer. Still, the chances of this to happen are very tiny. I’d feel more inclined to put it into Aave because of this bit of extra safety, but I’d probably be ok with both.

The problem right now is that there is no option to vote “invest only DAI”, so if that’s what I wanted to vote I can’t @noahns . Also, maybe GHST is added to Aave markets soon, so ideally lending both GHST and DAI on Aave is what I’d be most comfortable with. But I’ll keep an eye on this discussion to hear what others say before I make up my mind.

I know this is a well intentioned proposal and at first glance makes a lot of sense, but I’m not a huge fan because I think the risk is not worth the reward. A couple quick comments below.

There is no point in creating them if you don’t plan on using them. If the treasury earns FRENS, then you must assume our FRENS are diluted.

As far as growing the community, if the recent wearable auction is any indication of future drop prices, I doubt we will be growing much. Or at least those looking to drop a 1000 GHST to jump into Aavegotchi, aren’t going to be swayed positively or negatively by a small FREN incentive.

Stable coins are currently in the cross hairs of US regulators. It would be prudent to hold off on doing anything until clarity on what actions they are going to take is received.

I’m not talking about DAI losing peg. If any asset in a pool with DAI loses peg, then all the liquidity in that pool would basically turn into the currency that lost the peg. That means if something were to happen to USDT for example, then arbitrageurs would make sure that you have no DAI to withdraw so you can only withdraw USDT.

I understood @Mori , my point is that this could also happen to the coin you put into Aave, and you’d still have a coin with a lost peg. Basically with any stablecoin this is a risk if you will. But putting it in curve, you’d be subject to a small impermanent loss when they fluctuate, therefore my slight preference for Aave, but I’d probably be ok with both.

Curve is essentially no IL, because they’re all stable coins. It’s really not a consideration, and is definitely offset by the extra yield. The only concern is if we’re ok being exposed to USDT. Honestly, USDT losing its peg is probably a black swan event, and the whole crypto space would be wrecked if that happened.