Treasury Management USDC Yield Strategy

Hi ShapeShift community, my names Charles, I’m the co-founder and growth lead at Phuture. I’m bringing forward a new idea. The best way I see is to put forward a basic proposal which can be expanded upon from feedback, following the proposal structure.

At this point in time, the ShapeShift DAO treasury has $1,466,495 USDC. This capital should be put to work, in a safe, low risk environment. Starting with a select percentage then growing the exposure from there.

Phuture is a decentralised protocol that gives users passive exposure to crypto assets. We create on-chain index funds and structured products so you can get exposure without the complexity.

We’ve created a low-risk USDC savings vault built upon Notional Finance’s fixed rate market. This product has been built as a treasury management solution for the likes of the ShapeShift DAO treasury.

USV offers an optimised interest rate by investing into a blend of three and six-month bonds. USV then dynamically allocates capital to whichever maturity has the highest interest rate at the time.

Key benefits:

  • Removes the cost, complexity and time needed to manage different maturities.
  • Access your capital at any time.
  • Higher yields than other providers like Yearn, AAVE or Compound

Proposal Details

We propose to move 30% ($439,948.5) of the ShapeShift DAO Treasury USDC holdings to USV - the yield bearing USDC - over a period of time. The ShapeShift DAO treasury can expect to earn 3-5% APY.

3.22% of the 30% allocated would return per year = $14,166

3.22% on the total USDC holding would return per year = $47,221


Directly mint USV, allowing the strategy to manage the underlying bonds and produce the yields on the ShapeShift DAO treasury’s behest.

We would suggest introducing the 30% ($439,948.5) through multiple tranches over a time period which we can share with a more detailed breakdown upon the success of this proposal. ShapeShift DAO treasury would hold the USV assets in their custody. USV is redeemable for USDC at any given time.

We also note that a smaller test transaction would be merited to make sure the ShapeShift DAO treasury can become comfortable with the process. The Phuture team will be available to run through the process for the ShapeShift DAO treasury team.

For the proposed idea

  • USV is able to produce higher yields than Aave, Compound and other like providers because it benefits from the premium that fixed rates can obtain.
  • USDC is deposited for USV, this USV will be held by the DAO. USV has no lock-ups and will be redeemable at any given time.
  • Due to the fixed nature of USV’s lending, the interest earned at maturity on its underlying bonds are insulated from immediate changes in the market rate.
  • The ShapeShift DAO treasury will be able to fully verify the on-chain process and where the yield is generated. They custody the yielding bearing assets and can take comfort in knowing the safety of the yield generated.

Why Generate Yield?

The ShapeShift DAO community could use the additional funds to grow the treasury, fund token buybacks, deploy more capital into new projects, increase marketing spend, fund philanthropic activities. The possibilities are endless. The ShapeShift treasury is in a strong position and one where taking advantage of USV will bring great upside with little to no risk downside risk.

Why Phuture?

Phuture is a decentralised protocol that gives users passive exposure to crypto assets. We create on-chain index funds and structured products so you can get exposure without the complexity.

Our savings vault product range, starting with USDC has been purpose built as a treasury management tool. We benefit from the premium fixed rate yields which means the high yields are not variable, but dependable for users.

USV requires zero management from the ShaepShift DAO treasury, due to the passive nature of the product. Meaning the ShapeShift DAO treasury just has to withdraw if they decide to in the far future.

@We have a treasury management and diversification committee. This is something that would fall under their realm. I’d recommend reaching out in the Tokenomics Public channel and requesting time maybe to present your idea at the tokenomics office hours which is held on Tuesdays lead by @seven7hwave and I know many of the TMDC members are often there listening in.

I’ve shared in the Discord channel and requested time to present. Thanks for pointing me in the right direction!

TMDC (treasury management) has meetings Tuesday and Thursday. Tues 5:30pm (est) and Thur 6pm(est) (you can look in the Event Cal channel to see times

Just looking at the calendar, I see a governance community call for tomorrow but nothing mentioning tokenomics. I take it the foxenomics calls next Tuesday would be the perfect place to present?

Hi @CharlesStorry. Thanks for taking the time to join the DAO community and craft this proposal.

It’s been the longstanding policy of the Treasury Management and Diversification Committee (TMDC) to not use any of the DAO’s treasury stablecoins in a DeFi, yield-generating context. The reason is that the DAO relies on these funds to sustain its operations, and needs to count on them for its future needs. Even a relatively low amount of risk is generally viewed as too high.

Another way to think of this is that it’s not worth risking over two months of runway to earn $14,000 over the course of a year. (Although even if the yield were 10X that, it still wouldn’t be worth the risk IMO).

These funds need to be counted on, no matter what, to fund operations in the months ahead. In fact, the DAO has been so mindful of stablecoin risk management that it’s also made efforts to diversify out of USDC and into LUSD, in order to mitigate the low but nonzero centralization/blacklisting risks of the former.

That said, you’re more than welcome to join a call and talk about this concept. One thought that occurs to me is that in this environment, DeFi yield is hard to come by. Given your perspective that Phuture could provide yield in a relatively low-risk fashion, I wonder if there might be a fit (or fit down the road) with FOXy, which taps into the yield of other protocols (currently Tokemak) in order to benefit FOX stakers. The DAO also has a yet-to-be-launched financial primitive called “Yieldies”), which aims to offer frictionless yield accrual for holders of USDC and ETH. Yieldies could be an especially apt fit here.

So while risking any amount of the DAO’s stablecoin treasury is likely a non-starter, the TMDC would probably be interested in learning more about Phuture, with an eye toward assessing how it might serve as a yield source for Yieldies.

Thanks for the message. I’ll join the Foxenomics calls next Tuesday, we can jam on there :slight_smile:

@CharlesStorry sounds like a plan; I’ll slot you into the agenda for our Tuesday call at 11:00 MT.

Maybe tokenomics, but look for Treasury in the event cal. (thats where i pulled the times from), but presenting to either would work :slight_smile: