Proposal to partner with GRO Protocol for Treasury Management

Summary:

ShapeShift governance approved [SCP-36] Proposal for Treasury Management and Diversification Committee on Nov 18, 2021. This proposal establishes the Treasury Management and Diversification Committee (TMDC) and allows the committee to make decisions on 60 million FOX. In the discussion forum of the abovementioned proposal, it was stated that the current roadmap of TMDC requires obtaining enough stablecoins for 1 year of runway. We propose to help you manage 5% of the TMDC managed ShapeShift DAO treasury through our risk tranched stablecoin PWRD, which offers deposit protection while generating yield.

Abstract:

After the approval of the [SCP-36] proposal, TMDC is in charge of treasury management and diversification strategies. As per TMDC roadmap in the discussion forum, the committee plans to obtain enough stablecoins for 1 year of runway. When selecting a stablecoin or a yield farm for a stablecoin, the security of funds is one of the biggest criteria. Also, irrespective of the type of a stablecoin selected, there remains a systemic risk to it.

Proposal:

We would like to propose helping you manage part of the Funds allotted to TMDC through our risk-tranched stablecoin PWRD, which offers deposit protection while generating yield. Our goal is to make it work like a FDIC protected account but in DeFi with healthy yields.

Suggested implementation:

We suggest TMDC allocate a pilot deposit to PWRD that amounts to 5% of TMDC managed ShapeShift DAO treasury. You could decide to increase the allocation later on after having confirmed that our treasury product meets your expectations.

Budget:

Only 5% of the 60 million FOX allocated to TMDC for treasury management will be deposited in PWRD. This amounts to about $2.38mn in USD terms at the time of writing. This is less than 1% of the available ShapeShift DAO treasury.

Motivation:

With the aforementioned mandate, ShapeShift DAO’s treasury will become much more secure. A large part of treasury management is to reduce liquidity, market and credit risk. By using the risk-tranched stablecoin PWRD, the treasury can reduce the risk of a single stablecoin failure. We believe this mandate will also safeguard ShapeShift DAO treasury from any unforeseen regulatory attack on stablecoins. PWRD is protected by a novel risk distribution model that shields holders from loss, while still accessing DeFi yields. Any loss of capital from stablecoins or protocols is first absorbed by Vault, letting PWRD generate yield more safely.

Diversifying funds to a more secure stablecoin will also help ShapeShift treasury to support the work streams in salary, promotional giveaways and pay for subscriptions/services.

Specifications:

PWRD is a stablecoin collateralised with DAI, USDC, and USDT deposits. On top of it, there’s a risk tranching mechanism to make sure exotic risks like protocol or stablecoin failure would be first absorbed by its sister product - Vault. In other words, PWRD would stay very close to $1 with any yields generated being accrued to your treasury through rebasing.

Even in the unlikely case scenario of a major stablecoin failure, your funds will be safe. It would take multiple simultaneous and major failures of protocols and stablecoins to touch the PWRD funds. Technically, PWRD is designed as a stablecoin. But it is more stable than other stablecoins because Vault absorbs any price volatility of the underlying basket of stablecoins to make PWRD more stable than its components. Yield is delivered into a user’s wallet as a stream of new PWRD stablecoins.

To mitigate smart contract risks, we’ve gone through 2 audits (Peckshield and Kurt Barry) and Code Arena. We also have a $1,000,000 bug bounty program for Gro protocol and have scheduled another audit with Trail of Bits.

PWRD may not give the highest yield available in the market on stablecoins but it gives the necessary deposit security which can help in mitigating risks. With a base yield and having options to earn token incentives on top, it provides a great solution for stablecoin treasury management.

For more information about PWRD stablecoin, please see our docs at https://docs.gro.xyz

  • “PWRD Savings & Stablecoin” offers an introduction to the product
  • “Risk Balancer” and “Yield Generation” elaborate on the underlying yield strategies for PWRD stablecoin and its sister product, Vault (GVT)
  • “Security and audits” list the audits completed and other programs used to harden the protocol’s security

Benefits:

  • Protect your stablecoin treasury from high-impact tail risks like the failure of a major stablecoin or protocol through:
    • the Risk Balancer mechanism that ensures exposure to multiple stablecoins & protocols, and
    • risk-tranching where Vault, the leveraged yield farming product, would absorb the loss for Treasury users if such failure occurs.
  • Generate healthy yields on your treasury balance instead of having the funds staying idle until they’re deployed. With a base yield and having options to earn token incentives on top, we believe ShapeShift treasury stablecoin balance would be better placed to support growth of the ecosystem. Details on token incentive options are available at Gro.

Vote:

  • Yes - I support transfer of 5% of the TMDC managed ShapeShift DAO treasury to PWRD.
  • No - I do not support this proposal in its current form.

0 voters

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