Balancer DAO H1 2023 Review

Following BIP-103, karpatkey has been appointed as Balancer DAO’s treasury management partner. Our responsibilities encompass yield-generating strategy execution, risk management, and periodic reporting. However, our collaboration with Balancer extends beyond mere treasury management. We’ve been a significant liquidity provider for Balancer pools since 2020, played a pivotal role in deploying Balancer on Gnosis Chain, and managed the initial liquidity of various pools, among other contributions.

The following is a review of our work with the Balancer DAO.

Treasury Management

Financial Performance

Drawing from the latest monthly report for July 2023, the segment of the treasury managed by karpatkey has accomplished:

  • ncAUM (non-custodial assets under management): $5.8M
  • Capital Utilisation: 80.9%
  • APY (annual percentage yield): 3.39%
  • Monthly Farming Results: $16,291

These metrics are set to be refreshed with the upcoming August 2023 report.

Upcoming Initiatives

  • Proposal for the whitelisting of new strategies to bolster the treasury’s performance, adaptability, and diversification.
  • Proposal aiming to integrate certain treasury positions involving BAL under karpatkey’s purview. This is to enhance Balancer’s agility in responding to unexpected market scenarios.
  • Post the Stakewise v3 launch on Gnosis Chain (expected in Q4 2023), we’ll propose that BalancerDAO transfers its existing GNO holdings to the Safe (Avatar) owned by the DAO holding the portion of the treasury managed by karpatkey for staking and yield generation. For more details, please refer to our forum post from March 2023.

Strategy & Execution

  • Utilised the Zodiac Module, particularly the Roles Modifier, to ensure trust-minimised, non-custodial treasury management. Our steps included:
    • Launching a new Safe (Avatar), applying the preset containing the permissions granted by the Balancer DAO to another new Safe (Manager) owned by karpatkey as per the initial investment plan.
    • Conducting rigorous testing of the preset, followed by a detailed documentation submission to Balancer DAO.
    • Post audit, the ownership of the Safe (Avatar) was transferred to the Balancer DAO by adding the same eleven owners of the BalancerDAO multisig and removing karpatkey’s ownership from it.
  • Following the approval of BIP-162, the initial strategy was deployed, and we’ve been actively monitoring and optimising the positions since.
  • BIP-273 was introduced to refine the existing permissions for better effectiveness.

Future Roadmap

  • Enhance the preset update auditing process. We aim to offer a more intuitive visualisation of potential Zodiac preset changes before executing a proposed payload.
  • Remain vigilant of market trends and explore new avenues for the Balancer treasury to seize new opportunities to make it grow while making sure they are aligned with the risk appetite and the long-term vision.

Risk Management

  • Developed a comprehensive risk map tailored for the Balancer treasury, highlighting specific risk parameters and associated preventive and mitigative measures.
  • Collaborated with industry experts to establish a robust alert system, designed to detect anomalies or significant market events. This system is primed to identify irregularities or significant events that could require the initiation of emergency protocols.
  • Proactively conducted sessions to assess potential risks and formulate appropriate responses to unforeseen events.

Upcoming Initiatives

  • Bolster the resilience of our risk management framework by:
    • Introducing new Zodiac Roles, including the disassembler bot, designed to autonomously pull liquidity from any position if certain criteria are triggered.
    • Augmenting the automation capabilities of our emergency protocols.
    • Expanding and refining our alert system through the integration of innovative metrics and machine learning algorithms.


Future Endeavours

  • Enhance the user experience and granularity of our reports.
  • Launch a real-time version of our web-based report.

Other Contributions

Balancer on Gnosis Chain

  • Spearheaded Balancer’s deployment on Gnosis Chain, including creating strategic pools, providing initial liquidity, and addressing oracle contingencies.

Balancer’s TVL Facilitated by karpatkey

  • As of the latest monthly report (July 31, 2023), karpatkey has significantly contributed to Balancer’s TVL by managing funds from partnering DAOs and its own reserves. Here’s a breakdown of the TVL facilitated by pool across Balancer (mainnet and Gnosis Chain) and Aura:
Pool Total USD
wstETH-ETH (Aura, mainnet) $27,147,263
wstETH/WETH-Staked (Balancer, Gnosis Chain) $5,160,276
Staked AuraBAL Compounder (Aura, mainnet) $4,398,645
GNO/WETH (Aura, mainnet) $4,181,596
bb-ag-GNO/bb-ag-WETH-Staked (Balancer, Gnosis Chain) $4,077,823
bb-a-USD (Aura, mainnet) $3,212,527
Locked Aura (Aura, mainnet) $3,065,835
rETH-WETH (Aura, mainnet) $2,971,980
auraBAL/B-80BAL-20WETH (Aura, mainnet) $2,897,434
COW/GNO (Aura, mainnet) $2,740,288
bb-ag-USD-Staked (Balancer, Gnosis Chain) $1,956,077
bb-ag-GNO/bb-ag-USD-Staked (Balancer, Gnosis Chain) $1,687,755
bb-ag-WBTC/bb-ag-WETH/bb-ag-USD-Staked (Balancer, Gnosis Chain) $1,579,991
wstETH/LDO (Aura, mainnet) $793,638
Locked B-80BAL-20WETH (Balancer, mainnet) $686,305
BAL/WETH/GNO/WXDAI-Unstaked (Balancer, Gnosis Chain) $456,823
agEUR/EURe-Staked (Balancer, Gnosis Chain) $425,138
COW/WETH (Aura, mainnet) $357,530
AURA/WETH (Aura, mainnet) $293,335
BAL-GNO-wstETH/WETH-WXDAI-Unstaked (Balancer, Gnosis Chain) $276,294
AGVE/GNO-Unstaked (Balancer, Gnosis Chain) $235,124
EURe/bb-ag-USD-Unstaked (Balancer, Gnosis Chain) $106,433
COW/GNO-Staked (Balancer, Gnosis Chain) $25,794
Total $68,733,904

We deeply appreciate the trust Balancer DAO has placed in us. We remain committed to our role and look forward to continually contributing to the DAO’s growth and success.