As you can see from the title of the topic. I would like to suggest placing a small portion of DAO Treasury into a potentially profitable DeFi strategy.
Amount to place: $500k
Anticipate your questions.
What is this for? And why into these assets?
To start with, the allocation will be placed in the Polygon network. In which all smart contracts of the Aavegotchi project are placed. At the moment DAO Treasury does not generate the yield to repel RF and various investments in the development of the Aavegotchi project. Which in my mind is completely wrong our overall objective is to bring Aavegotchi and DAO Treasury to self-sustainability. By doing so we will attract large investors to the project and increase the rewards within the game. Which again will launch a flywheel to attract new players and investors.
It’s always nice to get a reward of x2-x3 above the current one for RF or other activities (but for it we need to make few DeFi strategies, not only this).
The whole strategy will be built on maximizing profit with minimal risks (as much as possible).
Now to the specifics.
Liquidity will be placed in blue chip protocol - Uniswap v3. Which is already proven by time and reliability of the team repeatedly.
LP pair MATIC\USDC.
Going through each token.
MATIC (aka POL) is the native token of the entire Polygon ecosystem. A solid team, huge investments and a huge number of partnerships makes it no doubt that the token won’t disappear in a couple months. Also, let’s not forget that the ecosystem will be developing even more actively in the near future (Aavegotchi sub-chains, etc.).
USDC - I think most people have no doubts about the reliability of stablecoin either. Moreover, we already hold more than $1m in it in DAO Treasury.
Now the most interesting thing is potential yield:
According to DeFiLlama’s statistics, the average yield is about 40%-50% Fees APY (the yield constantly dances from 15% to 300%).
APY is influenced by several factors: price range, volume, TVL LP.
Only price range and TVL we can influence. Placing 500k should not significantly reduce APY by yield.
-55% to +55% (of course this will reduce the average yield from 40%-50% Fees APY to 20% - 25%), but it will allow us to keep with some reserve price range and not worry that it will go out of bounds and stop generating income.
2 scenarios if the price does go out of the price range:
We will go completely into MATIC (for the last year the minimum price for MATIC was about $0.4). Given that MATIC is a fairly reliable token, there is no criticality (at some point we will just wait for the price range to return or use it in activities).
We will go fully into USDC. This is a positive scenario, because in addition to Fees APY we will get a good return from MAITC growth and growth of our USDC position in LP. The overall APY will be much higher than 25%)
Everything above is not a theoretical calculation but a practical example as I am an analyst in a VC fund. We actively use LPs in our business.
And for example on MATIC\ETH position was made around 10% for 130 days. Annual, as you understand around 30% (I can back it up with screenshots if needed).
I will be happy to answer questions.