The goal of our treasury strategy should be to sustainably grow our assets and ensure funding for research projects and operations.
I’d propose that tokenomics stewards and working group will take autonomous stewardship of treasury strategy with input from the community, as well as core working groups, and only put to an onchain vote bigger strategic changes of our strategy. The WG would take input from all community and working group members into consideration, but most importantly the financial needs for funding longevity projects.
1. Stablecoins vs tokens reallocation over ~12 months
Over time it would rebalance some Ethereum towards USDC in anticipation of needed funding for longevity projects, or into more specific more productive assets like stakedETH, vaults etc. once they see fit
One allocation model could be
~20-30% stable coins
~70-80% ETH and Defi tokens.
Noob question: If a user swaps ETH for VITA (or vice versa), does it make a difference whether this (significant) pool would include USDC, not ETH? Would this potentially mean that Uniswap would have to offer such a user a ETH → USDC → VITA conversion, involving slightly higher fees due to the indirect swap?
Yeah! Uniswap would route an eth swap through usdc, but only affecting fees very slightly… the benefit of having a USDC pool is that its not directly correlated with ethereum price changes
I guess the benefits certainly outweigh the cons here, so +1 to your proposal!
Also, we’ll probably have at least a few holders (maybe even some whales?) pooling their VITA on Uniswap too, and some of them will surely opt for a VITA-ETH-combo, so it could also be routed directly for some transactions.
already implemented given broad consensus and that liquidity pools needed to be set up directly after the auction… but we could make iterations, like adding more liquidity around 0,4-4$ for example to reduce volatility around that price range…
I’d like to suggest we put this to a vote so we can act on some of the things we’ve not yet done from the list above. Including deepening liquidity, and moving allocations to contracts that’ll pay interest. Having this proposal formally accepted also allows us to consider OTC offers. We’ve passed phase 2 here. Shall we go to an on chain vote?
@vincent do you know what the approximate cash value of the annual return from this plan might be? (I can go do the math, but was hoping you might have already done it. )
1. Execute stablecoins vs tokens reallocation over ~12 months
I’d propose moving Vita’s treasury to an allocation of roughly ~40% stablecoin pools, and 60% eth (and defi) pools over the next 3-12 months.
Of the current non VITA holdings (USDC + wETH + USDC in LP ~$8mm) currently:
~15% stablecoins + USDC in LP
~85% wETH
Rebalance these over the course of ~12 months to be:
~40% stable coins
~60% ETH and Defi tokens.
Which would be approximately:
~$3.2mm of stablecoins
~$4.8mm of ETH + DeFi tokens
With the rationale of reducing impact of an ETH correction, given most projects will be funded with fiat currency.
2. Stablecoin allocation
70-80% of the stable coins could be in different yearn usd pools, that currently yield approximately 15-25% annually. We should insure these pools through https://nexusmutual.io/ (1,8% annually).
Place the ~$3.2mm stablecoins into in yearn vaults (eg USDC) to extract a ~15-24% APY
And insure these positions with Nexus Mutual
3. ETH + DeFi token allocation
Summary
Take a total of $4.8mm of ETH and allocate this to:
20-30% crv stEth with Curve and Lido | ~9.5%+ interest
20-40% ETH <> sETH liquidity pool with StakeWise | ~20% yield
~10% ETH <> DeFi Index Token with Indexed Finance or Pie DAO etc. | ~35%+ yield
Breakdown
For the ethereum part I’d propose putting 20-30% in crv stETH (Curve staked Ethereum) through a leading staking provider like Lido and also insure these through https://nexusmutual.io/ . This would yield us 5,5% crvSTETH + 6%+ ETH Staking rewards (-2% Nexus) = 9,5%+ annual interest on our Ethereum.
and
Additionally i’d propose putting 20-40% into smaller, more attractive staking offers such as sETH (Pool Farms | StakeWise ), which currently yield over 20% on sETH<>ETH + 6%. We could take advantage of these discounts to intrinsic value with smaller positions where we could buy 1$ worth of eth for 0,75-0,9$ + ETH2 staking rewards.
@vincent So some things I think should be sure up before voting in the affirmative:
it would be great to model out some of the finances based on @Taliskermalt 's question.
The autonomy suggestion is fine, but this feels like a very high level proposal. Would it not make sense to split this proposal up into a series where this is the broad direction the DAO would wish the tokenomics group to go and final allocations of the Eth and DeFI holdings (for example) could be finalized through an additional proposal.
1. RE: Stablecoins: Somewhat devil’s advocate, somewhat seriously – I’d like to question the 40% stablecoin allocation even to the point where I wonder whether we need stablecoins at all. We raised in ETH when it was $2K. Our backers believe in ETH. Selling almost half of it when we believe the sky’s the limit for ETH price doesn’t seem the best optimal plan. Does anyone seriously believe within the next few years it will ever go much lower than $2K again? Setting aside that this community wouldn’t care, let’s say ETH goes down to $800 next year. Don’t you think the larger crypto community would have a bigger problem at that point? Looking at it from a different angle, the vast majority of our projects are not allocation-size limited. What I mean by that is most researchers will be happy to get $100K (in event ETH drops to $800) or $250K. We should be able to get IP either way and whether we get 2.5X less of a return won’t matter.
I prefer waiting for the next macro peak before converting any of our idle ETH to USDC. Every bitcoin cycle the overall crypto market cap peaks at 10X the previous cycle. We’re not there yet for the 2021 cycle. This puts ETH at $10K+. It’d be a shame to sell at $3K.
2. ETH staking. I’m not a fan of staking ETH in a non-retrievable manner until the ETH 2.0 merge occurs. Yes, ETH 2.0 is supposed to be early next year, but it’s been delayed for 4 years already. Please note I don’t understand all the different staking options @vincent discusses, and I assume some allow retrieving one’s ETH at any time, which seems much safer. I’m not opposed to putting some of our ETH into ETH 2.0 specifically, but 20-30% seems too risky. ETH price going up while sitting in cold storage (500%+) will likely dwarf any yield farming. Let’s not lose sight of that.
@ben: yes, great points and summary! that was the rough direction i proposed…
@timrpeterson its a valid concern and one i share, but where i think it makes sense to strike a balance to potentially give up some upside to protect from downside… but agree that we could try to sell at higher eth price (maybe between 5-8k) intervals and maybe only as much as we need short term for the next 3-6 months… the eth2 staking i mentioned would be tokenized, so can be traded out anytime… and can also be insured on top.
Hi all - first time posting. I’m really new but thought I’d provide my 2 cents.
First, wonderful work putting the strategy together! Appreciate all the clarifying comments. I agree with @Ben — one #idea is the Tokenomics WG can take this as a template and optimize nuances, distill into discussions for discord/discourse, and eventually finalize proposals for the vote
Recently, I’ve noticed protocols discussing & adjusting their yields + rewards on Stables & Eth. I think some of this is to be expected with upcoming protocol releases, Ethereum 2.0, and L2 solutions, and side-chains. From what I can tell, Eth pools are being incentivized accordingly.
Disclaimer: I haven’t digested in detail to propose any specific suggestions. Just noting my own initial thoughts:
If we are long on Eth— maybe reallocating some to a contract where we earn more Eth instead of another staking token (despite lower yield)? I haven’t looked into Lido but another partner to Curve is Convex (crvCVX tokens). mStable.org’s ‘SAVE’ is another option for Stables as well.
Excited to be here while you revisiting Thanks for listening
Another note: do we have suggestions from the Tech Product WG on a solution for this? Seems like everyone is using excel for custom and retroactive calculations on returns.
Tokenomics WG could work with them to develop an automated solution for us going forward that makes the most sense based on the DAO’s alignment.
One thing I would agree with @timrpeterson is the staking part. It would make sense to look for a staking provider (I am no expert in this area), which allows us to retrieve at any given time without any lock-up period - or at least not a very long one.
The crypto markets are highly volatile as we all know and it is always possible to see a u-turn within a few days. This is where we do not want to have locked funds. I believe any step we take regarding liquidity and how to manage funds properly, should include the option of immediate swapping into stablecoins at any given time.
Welcome, yeah that was the idea, agree that it makes sense to carefully optimize the nuances and move slowly instead of shifting it all at once.
We would basically earn more ETH as the usual ETH2 rewards + staking reward token on top which we could sell regularly for ETH…
Great point, and thats exactly what https://lido.fi/ and similar providers are providing… basically a tokenized eth2 which one can trade extremely liquid for eth at anytime + eth2 staking rewards and curve pool rewards.
@vincent I’d suggest removing this, the proposal seems to be largely about existing asset allocation. Additional auctions should be done but I believe should be in a separate proposal with more specifics about the auctions closer to the time.
I would suggest to go with a safe approach for any decision related to the fund. The objective of this fund is to invest in research projects, NOT to invest in speculation & make more money.
Agree to convert to stable coins, however, it is important to ask WHEN? as we are don’t really know when the bull market will end. That said, it’s better to define the max amount of ETH to be converted to Stable coins, and apply Dollar-cost averaging (DCA) approach.
Staking is a good idea, but I prefer to go with normal staking. StakeWise with 20% yield is quite strange. Is there any hidden risk?
DeFi Index Token: I don’t think it is a good idea. It can go up, perhaps with better ROI compared to ETH. However, when winter comes, it will crash hard. Who can be the one to say when to cash out? Again, this is a fund for research, we should take as little risk as possible.
I myself do invest in high risk assets, however, this case I would suggest we all take a safe approach. Longevity is long-term industry, let’s have a 10-20 year vision at least.
Thanks for listening