ShapeShift Treasury Diversification & Quartely Management

1. Summary -
Proposal for the DAO to consider a small percentage (perhaps between 0.01% to 0.05%) of income from revenues to be taken as a budget to cost-average (monthly, weekly, or bi-weekly), and allocated in stablecoins and/or other cryptocurrencies to diversify the DAO’s treasury, and reviewed and managed on a quarterly basis through a small team that submits quartely proposals to the community.

2. Abstract -
This discussion is just to start the conversation, and clarify details such as:

  • Which cryptocurrencies to include in this treasury diversification initiative
  • What cost average periods
  • How can cost average periods be adjusted each quarter
  • By how much can the percentage be adjusted each quarter
  • How will each quaretly proposal revision be managed (proposal format, Deadlines, workstream leader, etc)

3. Motivation -
To support the DAO’s to have a diversified treasury. At the moment, all we hold is FOX. For practical operational purposes, it is very likely that before the end of the year we will want to contract with some core engineers to keep the product running and fix bugs, at a minimum. To offer contracts in stablecoin to core teams is a best practice for many DAOs. Having the option at a minimum I think is essential to the success of the DAO.

4. Specification -
This discussion is meant to clarify specifics.

Some suggestions and rough outline on the initiative:

Stablecoins:

  1. TUSD (0.005%)
  2. UST (0.005%)
  3. USDC (0.01%)

Store of Value Coins:

  1. RenBTC (0.007%)
  2. WBTC (0.003%)

The above exemplifies a 0.03% allocation if using that percentage of income made monthly for the diversification budget. Percentage of allocation will vary if given a defined budget for this initiative.

5. Benefits -
Diversification enables a resilient treasury to handle multiple possible future market conditions. Specifically, stable coins are a hedge against a down crypto market. We have lots of FOX, let’s not keep all our eggs in one basket.

6. Drawbacks -
To be identified and discussed, also depending on execution.

Would love to hear other drawbacks.

7. Vote -
An eventual “For” vote (after clarifying details) would be a vote to use income generated on a monthly basis to diversify into other stablecoins and store of value currencies and approved according to the DAO’s community. A workstream leader may be chosen to put together quarterly proposals, with updates and changes in allocation, to the community for approval of diversification adjustments.

An “Against” vote would vote to not take any action in this regard.
To leave everything as is.

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I think many in the community are generally in favor of some treasury diversification for the DAO, including both stablecoins and other assets like eth/wbtc. I love seeing the thought you put into this proposal and I may support something like this.

The one thing I don’t like is any sort of consistent plan for the treasury to sell fox to the market (when it should be bullish it’s own native token). I prefer plans that get us to treasury diversification through some form of lending/borrowing against the treasury now without needing to create extra sell pressure on the market.

Some ideas in the community that are father along in discussion like the UMA token proposal to mint range tokens: Finalizing FOX Range Token Specifications

And the ichi proposal allowing the DAO to mint its own stablecoin: Proposal: $oneFOX Stablecoin, For $FOX Sake

These could help towards the goal you state without requiring the DAO to sell FOX today. Would you want to see this selling for stable/other coins on top of that or instead of, or perhaps would they help satisfy the goal here?

2 Likes

Really great point, we should absolutely avoid any selling pressure. Thanks for clarifying that.

What if we instead took let’s say 0.02% of income generated from revenue and used those funds to allocate to treasury diversification budget?

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I have revised the proposal to use a small percentage of monthly income generated by the DAO to be budgeted to diversify the treasury.

Please let me know your thoughts on this.

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Thanks for the post. I’m generally in agreement for this. My proposal for a validator is to help diversify the treasury as well. I also want to see the DAO hold more than just FOX. I am hesitant for selling FOX on the open market for stable coins for this though. The oneFOX and range token proposals are attractive ways to raise funds without selling FOX.

3 Likes

I like the idea of this with your revised proposal to allocate x% of whatever revenue the DAO brings in and convert it to a basket of stablecoins and eth/wbtc in order to stack some other non-fox crypto into the treasury on a regular basis.

I also in general like the idea of a small committee of community members making quarterly proposals on treasury adjustments/allocation that the community can align with.

I would love to hear feedback from other community members on this and maybe an informal community forms (maybe even a sub part of the tokenomics Workstream?) to handle this on a regular basis?

Any thoughts @willy @danielle @Marley @Beorn and Al or anyone else interested in this subject?(not sure his tag on discourse yet)?

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@willy @danielle

To clarify a proposed allocation budget, if we consider the money in posted on boardroom of $2.86m (unsure if this is revenue or income) and the recent 30-day money out of $13.67k.

if we were to initially allocate roughly 0.0014% of money in ($4,101), to be distrubted amongst stablecoins and other crypto assets suggested above and from other members.

The 0.0014% would equate and be limited to 30% of money going out. So as to limit max expendeture on treasury diversification in a given month.

Would appreciate feedback and concerns on this approach.

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There aren’t any significant statistics that represent cashflow as it relates to the DAO yet. The 2.86M was the initial Fox deposited in the DAO treasury contract from my understanding. The treasury in boardroom provides decent transparency for use of funds though.

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Really great point, I would definietly advocate, if it is in the interest of the community, to have bi-weekly or monthly cost accounting metrics to help inform proposal makers with transparency that is actionable for allocating funds.

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@jonisjon @Beorn

Would it be of interest to CC the the previous CFO of shapeshift or accounting roles currently invovled with the DAO?

They could provide feedback to the community on how we could incorporate these metrics for use by proposals makers and support reasonable means for treasury diversification.

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