Author: Autonomous
Reviewer: Jana Bertram
Abstract:
This proposal outlines a treasury diversification plan for the DAO aimed at strengthening its financial position and fostering sustainable growth. The plan involves reallocating a portion of the treasury into stablecoins and generating yield through safe investment vehicles, facilitated by the Rari Foundation.
Rationale:
Diversifying the DAO’s treasury mitigates exposure to market volatility and enhances financial resilience. By allocating funds into stablecoins and yield-generating strategies, the DAO can optimize returns while minimizing risk, ensuring a solid foundation for future initiatives.
Motivation:
The motivation behind this proposal is to secure the DAO’s financial stability and flexibility. Through strategic diversification and prudent investment, the DAO aims to generate additional income, reduce reliance on volatile assets, and position itself for long-term sustainability.
Steps to Implement:
Foundation Facilitation:
The Rari Foundation will execute treasury diversification on behalf of the DAO using its strategic partnerships.
Stablecoin Allocation:
Swap 10 % of the DAO treasury into stablecoins over the next 12 months, utilizing the Foundation’s OTC partners and on/off-ramp solutions.
Yield Generation:
Invest stablecoins in carefully selected, well-researched yield-generating vehicles to maximize returns while prioritizing security and risk mitigation.
Risk Management:
Conduct thorough due diligence in selecting stablecoins and yield-generating options.
Monitor market conditions and adjust the allocation strategy as needed.
Transparency and Accountability:
Regularly communicate diversification progress and yield generated to the DAO community.
Establish a transparent reporting mechanism for the Foundation’s execution on behalf of the DAO.
Parameters
None of the investments to be locked for more than 12 months
Vehicles used will have no early liquidation fees
Funds can be requested from the DAO if needed
Examples
Treasury diversification is considered a prudent strategy in the ecosystem
Arbitrum 4
Gitcoin 1
Timeline:
Commence the treasury diversification process immediately, with the goal of completing the 10 % stablecoin allocation within the next 12 months.
Budget:
The budget for this proposal includes the costs associated with executing the treasury diversification plan, such as fees for OTC trades and potential investment expenses.
Conclusion:
By entrusting the Rari Foundation to execute this treasury diversification plan, the DAO aims to optimize its financial holdings, reduce risk, and ensure a solid foundation for future initiatives. This strategic approach aligns with the DAO’s commitment to responsible financial management and transparency.
The proposal suggests a treasury diversification plan for a DAO, facilitated by the Rari Foundation, to allocate funds into stablecoins and yield-generating strategies to enhance financial resilience and optimize returns while mitigating risks. The motivation behind the plan is to secure financial stability and flexibility, generate additional income, and reduce volatility. The implementation steps include foundation facilitation, stablecoin allocation, yield generation, risk management, transparency, and accountability. The timeline aims to complete the stablecoin allocation in 12 months while ensuring investments are liquid and risk-optimized.
jengajojo: Thank you for the proposal @ChristineCoffey
ChristineCoffey:
Swap 10% of the DAO treasury into stablecoins over the next 12 months, utilizing the Foundation’s OTC partners and on/off-ramp solutions.
On the day of this post the DAO treasury stands at $15.2M, with roughly (10%) $1.6M in stables. Is the suggestion to further increase the stables exposure to 20%?
The largest expense for the DAO is currently the foundations annual expenses at $1.6M. This gives the current treasury a runway of several years. Having 12 months of reserves in cash is a good strategy and I support this line of thinking.
ChristineCoffey:
The budget for this proposal includes the costs associated with executing the treasury diversification plan, such as fees for OTC trades and potential investment expenses.
It would be in the interest of the DAO to have a clear RoI for these swaps and to see that offchain swaps actually offer a better deal than transparent onchain ones. I’d like to see the final proposal include the exact number of tokens that will be swapped as well as the exact number of tokens that the DAO will receive in return.
ChristineCoffey:
Invest stablecoins in carefully selected, well-researched yield-generating vehicles to maximize returns while prioritizing security and risk mitigation.
I would recommend in leveraging the double digit onchain yields avaliable during the bull market for this.
Other consideration:
I would like to recommend the DAO to engage in providing onchain liquidity for the native token. This not only supports the price, but also allows the DAO to recapture some of its emitted token back from circulating supply. I’d be happy to draft a proposal for this.
In terms of OTC sales, I’d recommend prioritising swapping the native token as opposed to ETH or its derivatives which have seen consistent price appreciation and deep liquidity in the broader market.
Consider swapping a portion of the ETH into a basket of LSTs. This not only assists the diversification agenda, but allows the DAO to earn ETH denominated yield.
Sixty: ChristineCoffey:
Yield Generation:
Invest stablecoins in carefully selected, well-researched yield-generating vehicles to maximize returns while prioritizing security and risk mitigation.
Hey @ChristineCoffey, has there been any research done in terms of the best / most secure yield generation strategies for the RARI treasury? Is the intention to deploy the entire stablecoin allocation in the treasury or only a portion?
Thank you for the proposal @ChristineCoffey
ChristineCoffey:
Swap 10 % of the DAO treasury in…
Thank you for the proposal @ChristineCoffey
ChristineCoffey:
Swap 10 % of the DAO treasury into stablecoins over the next 12 months, utilizing the Foundation’s OTC partners and on/off-ramp solutions.
On the day of this post the DAO treasury stands at $ 15 . 2 M, with roughly ( 10 %) $ 1 . 6 M in stables. Is the suggestion to further increase the stables exposure to 20 %?
The largest expense for the DAO is currently the foundations annual expenses 2 at $ 1 . 6 M. This gives the current treasury a runway of several years. Having 12 months of reserves in cash is a good strategy and I support this line of thinking.
ChristineCoffey:
The budget for this proposal includes the costs associated with executing the treasury diversification plan, such as fees for OTC trades and potential investment expenses.
It would be in the interest of the DAO to have a clear RoI for these swaps and to see that offchain swaps actually offer a better deal than transparent onchain ones. I’d like to see the final proposal include the exact number of tokens that will be swapped as well as the exact number of tokens that the DAO will receive in return.
ChristineCoffey:
Invest stablecoins in carefully selected, well-researched yield-generating vehicles to maximize returns while prioritizing security and risk mitigation.
I would recommend in leveraging the double digit onchain yields avaliable during the bull market for this.
Other consideration:
I would like to recommend the DAO to engage in providing onchain liquidity for the native token. This not only supports the price, but also allows the DAO to recapture some of its emitted token back from circulating supply. I’d be happy to draft a proposal for this.
In terms of OTC sales, I’d recommend prioritising swapping the native token as opposed to ETH or its derivatives which have seen consistent price appreciation and deep liquidity in the broader market.
Consider swapping a portion of the ETH into a basket of LSTs. This not only assists the diversification agenda, but allows the DAO to earn ETH denominated yield.
Jaf: As I’ve stated before, I trust the efforts undertaken by the foundation, and I’m supportive of the overarching strategy outlined here.
Nonetheless, addressing this point raised by @jengajojo would enhance clarity and establish clearer expectations for the DAO.
jengajojo:
It would be in the interest of the DAO to have a clear RoI for these swaps and to see that offchain swaps actually offer a better deal than transparent onchain ones. I’d like to see the final proposal include the exact number of tokens that will be swapped as well as the exact number of tokens that the DAO will receive in return.
insider0x: Agree with Jengajojo about increasing exposure to even 30%
Market is ultimately cyclical and the next opportunity to diversify budget might come in 4 years only. I’d suggest a 4y runway target.
Also question - Should diversification process include opportunity for larger deals with discounts and lock-ups?
WildriRoodt: Thank you for the comments and feedback @jengajojo. Please see below responses:
Yes the plan is to increase stables to 20%. The 10% that was mentioned in the comment related to the Foundation’s Operational budget which is used for operational payments in 2024 and thus is excluded from the above strategy (Thus basically still 10%, but in the updated proposal we will increase the % based on discussions in the community call).
On the exact number of tokens that will be swapped, we will include it in the final proposal and will be a percentage of the DAO treasury. The exact number of tokens to be received will vary depending on the token price, but conservative estimates can be given closer to the time
We are looking into on-chain yield opportunities as per discussions in the call and will give feedback on those.
As I’ve stated before, I trust the efforts undertaken by the foundation, and I’m supportive of the …
As I’ve stated before, I trust the efforts undertaken by the foundation, and I’m supportive of the overarching strategy outlined here.
Nonetheless, addressing this point raised by @jengajojo would enhance clarity and establish clearer expectations for the DAO.
jengajojo:
It would be in the interest of the DAO to have a clear RoI for these swaps and to see that offchain swaps actually offer a better deal than transparent onchain ones. I’d like to see the final proposal include the exact number of tokens that will be swapped as well as the exact number of tokens that the DAO will receive in return.
WildriRoodt: Thank you for your comment @Jaf. We have addressed @jengajojo 's comment and will provide updated information in the updated forum proposal.
Agree with Jengajojo about increasing exposure to even 30 %
Market is ultimately cyclical and the …
Agree with Jengajojo about increasing exposure to even 30 %
Market is ultimately cyclical and the next opportunity to diversify budget might come in 4 years only. I’d suggest a 4 y runway target.
Also question - Should diversification process include opportunity for larger deals with discounts and lock-ups?
bitblondy: insider0x:
Also question - Should diversification process include opportunity for larger deals with discounts and lock-ups?
Also interested in that question.
WildriRoodt: Thank you for the comment and feedback @insider0x . Noted on increasing the exposure of stables and this will be increased in the updated proposal.
The diversification process can definitely include opportunity for larger deals with discounts and lock-ups and each deal will have to be assessed based on the terms of the lockup and discounts. We will include this in the updated version.
Thank you for the questions @Sixty . Research is in progress to get the best and most secure yield generation strategies (like the Franklin Templeton tokenized fund which is offchain) but more information can be presented once this is finalised including on-chain strategies.
The intention will be to deploy most of the stablecoins to the yield generating asset vehicles (for instance 90%). 10% can be kept in stables for emergencies, but the 90% which is included in the vehicles will be able to access within a short period.
@bitblondy , thank you for your comments. On the yield generating, we will only utilize very low risk asset vehicles which also returns a reasonable yield. And the plan is more to diversify into stables to ensure diversification of assets and to also ensure sustainable growth for the next few years.
I fully support this proposal, as I supported it in Arbitrum.
We need to use treasury not only to k…
I fully support this proposal, as I supported it in Arbitrum.
We need to use treasury not only to keep but improve financial stability and flexibility.
The volume of the stabilization fund can be discussed secondly
ChristineCoffey:
Yield Generation:
Invest stablecoins in carefully selected, well-researched …
ChristineCoffey:
Yield Generation:
Invest stablecoins in carefully selected, well-researched yield-generating vehicles to maximize returns while prioritizing security and risk mitigation.
Hey @ChristineCoffey, has there been any research done in terms of the best / most secure yield generation strategies for the RARI treasury? Is the intention to deploy the entire stablecoin allocation in the treasury or only a portion?
Agree with the other comments. As far as I see, there’s currently 97 % RARI in the foundations tre…
Agree with the other comments. As far as I see, there’s currently 97 % RARI in the foundations treasury (DeepDAO 3 ) and (even though it’s in the foundations interest to grow the token), it’s only natural to diversify this.
I would suggest 20 - 30 % stables as well, but not necessarily agree with the yield / DeFi strategy. If the purpose is to stabilize and diversify the funds, it’s not really the goal to put them into high risk assets. Low-yield options are, in turn, negligible.
Maybe there are other tokens besides RARI that are worth to look into, like partner ecosystems.
WinVerse: bitblondy:
Maybe there are other tokens besides RARI that are worth to look into, like partner ecosystems.
I have seen some orgs venture into this but it didn’t go as planned so generally not in support.
However, I would support increasing exposure. Awaiting the updated proposal from @WildriRoodt
insider 0 x:
Also question - Should diversification process include opportunity for larger dea…
insider 0 x:
Also question - Should diversification process include opportunity for larger deals with discounts and lock-ups?
Also interested in that question.
Hey! Jaris referred me to this proposal. I represent DeGate 1 , a ZK-rollup order book DEX, and we…
Hey! Jaris referred me to this proposal. I represent DeGate 1 , a ZK-rollup order book DEX, and we can be a viable option for your treasury diversification needs.
A brief background on DeGate:
Security and Trustlessness: The only active Stage 2 rollup on Ethereum, as reviewed by L 2 Beat, meaning it is the most mature in terms of security and self-custody. L 2 Beat Summary
CEX-experience on a DEX: Fast, low fees, with integrated decentralized trading features such as Limit Orders, Grid Strategy, and DCA. Earning features include Grid Strategy and yield-bearing stablecoin (no lock, free to use for trading).
No fees for Makers and very low fees for Takers. Practically, you pay zero fees—no trading fee nor gas fee—for Maker orders, essentially limit orders.
From my understanding, the Rari Foundation Treasury aims to:
Safely convert 10 % of the DAO treasury into stablecoins with low fees.
Invest stablecoins in safe, yield-generating vehicles balancing return and risk.
Please correct and add if I misunderstood or missed something.
For these purposes, DeGate can assist by
Providing a secure DEX for your treasury token swap to stablecoins. For this, we need to know which tokens you want to swap and the amount. DeGate will be happy to help, including providing sufficient liquidity and market making. You may consider DCA selling as well.
Yield-bearing stablecoin USDM , live on DeGate, passes through the yield from US Treasury bills, approximately 5 % annual interest paid out to its holders through daily rebase. Using USDM on DeGate has no lock-in. You can use it to place limit orders, open grid strategies, or let it stay idle—all generating yields.
Recap of the questions:
From which tokens does the treasury plan to convert to stablecoins?
What is the amount of tokens?
Understanding these two questions will help us elaborate a concrete plan. Thanks!
Thank you for the comments and feedback @jengajojo. Please see below responses:
Yes the plan is t…
Thank you for the comments and feedback @jengajojo. Please see below responses:
Yes the plan is to increase stables to 20 %. The 10 % that was mentioned in the comment related to the Foundation’s Operational budget which is used for operational payments in 2024 and thus is excluded from the above strategy (Thus basically still 10 %, but in the updated proposal we will increase the % based on discussions in the community call).
On the exact number of tokens that will be swapped, we will include it in the final proposal and will be a percentage of the DAO treasury. The exact number of tokens to be received will vary depending on the token price, but conservative estimates can be given closer to the time
We are looking into on-chain yield opportunities as per discussions in the call and will give feedback on those.
Thank you for your comment @Jaf. We have addressed @jengajojo 's comment and will provide updated i…
Thank you for your comment @Jaf. We have addressed @jengajojo 's comment and will provide updated information in the updated forum proposal.
Thank you for the comment and feedback @insider 0 x . Noted on increasing the exposure of stables a…
Thank you for the comment and feedback @insider 0 x . Noted on increasing the exposure of stables and this will be increased in the updated proposal.
The diversification process can definitely include opportunity for larger deals with discounts and lock-ups and each deal will have to be assessed based on the terms of the lockup and discounts. We will include this in the updated version.
Thank you for the questions @Sixty . Research is in progress to get the best and most secure yield generation strategies (like the Franklin Templeton tokenized fund which is offchain) but more information can be presented once this is finalised including on-chain strategies.
The intention will be to deploy most of the stablecoins to the yield generating asset vehicles (for instance 90 %). 10 % can be kept in stables for emergencies, but the 90 % which is included in the vehicles will be able to access within a short period.
@bitblondy , thank you for your comments. On the yield generating, we will only utilize very low risk asset vehicles which also returns a reasonable yield. And the plan is more to diversify into stables to ensure diversification of assets and to also ensure sustainable growth for the next few years.
bitblondy:
Maybe there are other tokens besides RARI that are worth to look into, like partner…
bitblondy:
Maybe there are other tokens besides RARI that are worth to look into, like partner ecosystems.
I have seen some orgs venture into this but it didn’t go as planned so generally not in support.
However, I would support increasing exposure. Awaiting the updated proposal from @WildriRoodt
A bit late here but…
Given recent conversations surrounding treasury management tally], we wanted t…
A bit late here but…
Given recent conversations surrounding treasury management tally], we wanted to formally introduce ourselves as Adapt 3 r Digital, the General Partner of tfBILL, our on-chain treasury bill product.
1600 × 800 131 KB
Our flagship product, the Adapt 3 r Short-Term U.S. Treasury Bill Fund, offers on-chain stablecoin holders 24 / 7 , direct access to US Treasury Bill yield. Upon depositing USDC to the smart contract vault, investors are issued tfBILL tokens which represent Limited Partner interest in a BVI registered professional fund that exclusively holds treasury bills. The entity is bankruptcy remote and solely owned by the holders of tfBILL, who have full legal recourse to tfBILL’s underlying securities. The vault is built on TrueFi’s open, transparent, and battle-tested smart contracts and is conveniently offered on Archblock’s institutional-grade frontend marketplace.
The vault was deployed in September 2023 and currently accepts USDC deposits from KYC’d non-US investors. At the time of writing, the TVL of the vault is approximately $ 8 , 500 , 000 and offers an estimated yield of approximately 5 . 3 %.
tfBILL was built in response to compliance and complexity concerns we continually heard from DAOs and on-chain investors about existing treasury bill offerings. Specifically, many DeFi entities and users expressed difficulty evaluating existing options due to contrived and opaque legal structures with uncertain investor recourse, hidden layers of fees, and aggressive operation in regulatory “grey areas.”
Since the beginning, the primary goal has been to build an on-chain treasury instrument that is simple, transparent, and secure for all users. Here are some of the key ways tfBILL differentiates itself:
Compliance-focused: A tokenized asset is only as strong as the regulatory position of its issuer. Given treasury bills are US securities, tfBILL complies with all applicable regulations (i.e. SEC Reg S), only accepting qualified non-US investors with rigorous controls in place. Although we believe in permissionless DeFi, we feel that it would be ill-advised to put the underlying treasury primitive at risk by offering a permissionless or broadly transferable asset. Although this has shown to be an effective way of bootstrapping (relatively small) liquidity for tokenized treasuries, we feel that the risk only benefits few but is socialized to all. This decision enables tfBILL to be THE lowest risk asset in DeFi.
Simply T-Bills: tfBILL is directly backed by treasury bills purchased through and custodied by a regulated broker-dealer in the United States. The Fund does not allocate to ETFs which, although somewhat liquid, offer greater volatility, higher tracking error, more counterparties, and higher fees. By purchasing treasuries directly, tfBILL has access to far greater liquidity with over $ 150 billion in average daily volume to sell/buy into versus less than $ 400 million for treasury ETFs.
Enhanced transparency: Adapt 3 r Digital has gone one step further than most to ensure the underlying backing of tfBILL is open and accessible to all. Everyday the third-party Fund Administrator provides a daily Net Asset Value attestation, which is subsequently uploaded on-chain and to IPFS. These daily capital updates are required for fees to be taken from the vault. In every on-chain update the manager includes the Net Asset Value of the fund (and thus tfBILL tokens), the underlying positions/CUSIPs, and the source PDF that the Fund Administrator provides. This same data file is used to update our Transparency Board. In addition, tfBILL is currently integrating Chainlink Proof of Reserves for further attestations from the API of our regulated broker-dealer. Finally, the Fund is audited on an annual basis by Wolf & Co.
On-demand liquidity: tfBILL is mintable on-chain through Archblock’s interface, utilizing TrueFi’s smart contract architecture. This interface is open 24 / 7 and currently accepts USDC, but can be expanded to other stablecoins with little friction.
Battle-tested smart contracts: Single points of failure are the hidden risk embedded in every tokenized asset. By using TrueFi’s battle-tested smart contracts, which have facilitated almost $ 2 billion in lending volume to date, tfBILL has achieved two significant milestones that differentiate us from all other players in this space: 1 ) offering a new tokenized asset without compromising on the smart contract level and 2 ) offering enhanced protections and controls by separating the front-end, blockchain, and d’App from the manager of the product itself. Unlike other treasury bill primitives, TrueFi’s underlying infrastructure is independent from Adapt 3 r’s operations and is always on.
If you are looking to learn more about tfBILL check out our documentation or reach out via DM or email.
