DIP063 - Treasury Management Proposal

Governance DIP
#1

Abstract

The vision of dForce Treasury is to enhance the operational efficiency, financial stability, and drive the strategic growth of the dForce network, while committing to maintain open and transparent financial practices. This fosters a culture of trust and accountability, ensuring that community members are well-informed and can contribute to the ecosystem’s governance and decision-making processes.

Asset Management

At dForce, we’ve recognized the critical importance of effectively managing our treasury assets to sustainably drive the long-term growth and prosperity of our ecosystem. Our treasury comprises not only protocol revenues but also includes grants received from various ecosystem foundations, such as the airdrops from Arbitrum and Polygon.

To ensure that we navigate the dynamic landscape of the crypto market with prudence and foresight, we propose a comprehensive approach to treasury management that encapsulates the following key principles:

  1. Strategic Diversification: While we acknowledge the significance of major cryptocurrencies like BTC and ETH, we understand that excessive exposure to any single asset can pose concentration risks. Therefore, we advocate for a balanced portfolio where non-major cryptocurrencies (assets other than top 30 cryptos, plus stablecoins) shall not constitute more than 50% of the total non-DF treasury portfolio. This strategic diversification not only mitigates risk but also enhances our resilience against market volatility.
  2. Financial Stewardship and Sustainability: Our core team is deeply committed to upholding the highest standards of financial stewardship. We recognize that effective treasury management is not solely about short-term gains but rather about fostering the sustainable growth of our ecosystem. As such, every decision pertaining to the treasury will be guided by our unwavering dedication to maximizing the long-term financial soundness and vitality of the DAO.
  3. Efficiency and execution In this rapidly evolving crypto landscape, agility and efficient execution are paramount. To optimize the execution of our treasury management strategies, we will leverage a diverse array of tools and resources available to us. This includes utilizing all available venues, including DEX / CEX / OTC / external traders, market makers, or brokers. By adopting a multifaceted approach, we aim to enhance the efficiency and effectiveness of our treasury operations.
  4. Delegation. The core contributors are fully delegated by the DAO to carry out the execution of treasury management, including but not limited to diversification, liquidity provision etc.

Conclusion

In conclusion, our Treasury Management Proposal represents a holistic and forward-thinking approach to safeguarding and optimizing the treasury resources of dForce.

1 Like
#2

Hi @MGGYY, Pete here from Origin Protocol, and author of the OUSD proposal submitted to the forum last year. I would like to suggest OUSD as an option for #1 Strategic Diversification.

OUSD is an ERC20 stablecoin that generates yield while sitting in your wallet. Backed 1:1 by USDC, DAI, and USDT at all times; holders can go in and out of OUSD as they please. Yield is paid out daily and automatically (sometimes multiple times per day) though a positive rebase in the form of additional OUSD, proportional to the amount of OUSD held. OUSD yield, currently ~11.50% APY, comes from a combination of:

  1. Lending collateral to Aave, Compound, Morpho, Curve, and Convex
  2. Reward tokens (AAVE, COMP, CRV, and CVX) are automatically claimed and converted to stablecoin
  3. A 25bip exit fee is charged to those who choose to exit OUSD via the dapp (completely avoidable if using DEX or CEX), this fee goes back to OUSD holders
  4. OUSD sitting in non-upgradable contracts (more than half the OUSD in existence) does not rebase, instead the interest generated from those tokens is provided to those that can rebase

These 4 yield generating functions combined enable OUSD to generate higher yields than lending directly to any single protocol manually. Each week a governance vote is held to determine the best allocation of OUSD collateral between the whitelisted strategies, voted on by OGV holders. OGV is the governance token for OUSD, and any token holder can participate in these votes after staking their OGV for veOGV. OGV holders also have the ability to propose new yield strategies for OUSD.

There is no set emission schedule for OUSD - similar to stETH, OUSD is minted on demand when users lock their stablecoin into the protocol, and burned on demand when users exit OUSD for the collateral stablecoin. OUSD is completely non-custodial, there are no lock-ups, terms, or conditions. Any web3 wallet should be able to support OUSD and its rebasing function, including hardware wallets and multi-sigs. There’s no need to ever again give up the keys to a 3rd party platform, such as Celsius, Blockfi, or FTX, to earn yield.

In early 2022, OUSD reached a market cap $298m, with no issues, and without diminishing the daily rebase payments; OUSD can easily function with scale. Since OUSD is backed 1:1 by its collateral assets at all times, and OUSD and its collateral are stablecoins, OUSD market cap = OUSD supply = OUSD TVL. The current OUSD market cap is ~$8.52m as of April 22 2024, growing each day with each rebase.