You’re absolutely correct on this imo, and this would also incentivize more borrowed GHST to farm FRENs which would indirectly inflate FRENs supply. But at this point we have to question what IS okay for the treasury to make yield from? Because any yield that the treasury enters will dilute that yield every time. And if simply depositing GHST to AAVE is considered to be diluting holders, then the options for the role of the treasury seem very limited.
If dilution is going to be a going concern, then all roads point to the treasury simply not generating yield from any major protocols. Not that this is your problem obviously, since the treasury belongs to the community. I guess I’m just trying to point out that it doesn’t seem very clear to me what the community has in mind for the treasury. If it’s nothing, so be it. Or maybe the role of the treasury is to manage the spending of DAO funds. But as long as dilution is an issue, yield simply can’t be generated effectively by the treasury.
Absolutely no treasury farming of frens, but yes, we should be staking as much as we can, preferably for yields in matic, that are used to buy GHST, whenever matic is worth more than ghst.
Proposal is live on Snapshot - Snapshot
This needs to be insured via Nexus or otherwise. Having 80% of treasury in a single protocol without any insurance is too risky for my taste.
And to use 3% of the APR to base these metrics on seems far too high: is there really that much demand to borrow $ghst?
An understandable concern. Note that AAVE deposits are secured by the AAVE staking module on mainnet, so if something goes wrong on the Polygon market there will be mainnet liquidity to cover shortfalls, so I think insurance may be an unnecessary cost.
Actually, the APR should be expected to go much higher. This is because you can post any collateral and borrow GHST and put it to work generating FRENs. Note that this strategy has basically zero risk. The expected APR for FRENs is MUCH higher than 3% right now. This is related to the concern that people have about people borrowing GHST to dilute FRENs.
This is because you can post any collateral and borrow GHST and put it to work generating FRENs.
This adds another incentive to dump Aavegotchi NFTs, exchange them for GHST or some other Aave-supported token to use as collateral. Bad for Aavegotchi, Wearable and Land maxis without GHST or other collateral spare to do this.
This would be a pretty good strategy for gotchivault I guess.
The majority of the Gotchi Vault’s assets under management are the native NFTs themselves. And most users are also asking for the ability to stake their land. Also, the treasury depositing GHST will likely dilute the yield for amGHST used in the vault. Please don’t interpret this proposal as having anything to do with the Vault. It is simply to produce yield for our treasury to invest liberally back into our community, our creators. It’s easier to fund things if you know you have sustainable revenue/yield coming in elsewhere.
Theoretically, GotchiVault could get in on this by selling wearables won at the raffle for GHST using this GHST as collateral and borrowing GHST at cheap rates against it.
Whales are going to make a lot of money out of this for some very minor returns for the treasury. Anyone with collateral will be able to get cheap GHST loans on Aave they can earn 40% returns via GHST staking while depositors get their yield cut. I rather see this 40% return go to the treasury by having treasury stake GHST and sell raffle tickets rather than this value extraction.
If it was a lower % of the treasury I wouldn’t have such a huge concern with this.