Author: @Xeonus
Introduction
The first quarter of 2024 has been dominated by strong positive momentum across the crypto markets. Furthermore, Balancer distinguishes itself as a hub for LST and LRT liquidity which helped strengthen the DAOs overall performance. Overall, treasury performance metrics are transitioning into a healthy and sustainable regime. If the market and Balancer continue to perform like this past quarter, funding of most service providers will be secured with a longer runway ahead. In this report, we will analyze the overall performance and provide an outlook on treasury reserves with the current SP proposal setup.
Key Findings
- Income from protocol fees increased significantly and breached $100k for each bi-weekly fee epoch
- At current market performance, the DAO will earn about $500-600k while spending $891k USDC in the SP configuration per quarter that is currently proposed for Q3-Q4 2024
- Fjord Foundry has been an exceptional revenue driver, netting an additional $432k USDC and 106 WETH to the treasury in Q1
- Income streams from Fjord and protocol fees combined resulted in a net increase in stable reserves which is fantastic news for protocol treasury health and DAO sustainability
DAO Income Performance
Protocol fees
Without accounting for the fee sweep scheduled for the 29th of March, the DAO has earned a cumulative $478k USDC from protocol fees. It is estimated that another $100-140k USDC will be streamed to the DAO treasury until the end of Q1. Main drivers for this success is our deep LST and LRT liquidity from core pools. The overall core pool flywheel is showing its strength across the board both for the DAO, veBAL holders and secondary voting markets (See the core pools view on DeFilytica for historical data)
Cumulative income to the DAO in Q1 (source DeFilytica)
The Optimism deployment of Balancer netted an additional 16,462USDC in income to the DAO based on the fee share agreement (can be confirmed in this doc).
Given the stats presented above and assuming similar performance for the fee sweep occurring on the 29th of March, we can project following annualized outlook (based on protocol fee income alone) compared to previous quarters:
| Total | DAO | Passive veBAL | veBAL Incentives | Aura Incentives | |
|---|---|---|---|---|---|
| Annualized (Q3) 2023 | $6,586,472 | $1,152,633 | $2,235,560 | $1,809,708 | $1,020,524 |
| Annualized (Q4) 2023 | $7,280,012 | $1,274,002 | $2,373,364 | $2,003,900 | $1,641,544 |
| Annualized (Q1) 2024 | $13,690,320 | $2,312,800 | $4,512,360 | $3,104,320 | $3,760,840 |
Comparing Q4 2023 with Q1 2024, we see an increase of 81% in revenue to the DAO which is a very welcomed result overall!
Fjord Foundry
Fjord has been an exceptional addition to overall income to the DAO. The fee share agreement resulted in $432k USDC and 106 WETH in income to the DAO in Q1. The Maxis prepared a Dune dashboard if you are interested in the specifics here
Overall, this arrangement netted in $1.1mln in income to the DAO (based on accumulated daily token value at time of transfer)
Fjord income to the DAO since inception of the agreement (source Dune)
Taking these two income streams into account, we can report a result of
910,231 USDC from protocol fees and Fjord fee share (Dune)
16,462 USDC from the fee split agreement with Beethoven-X
106 WETH corresponding to 380261 USDC at the time of writing (Dune)
to the DAO corresponding to a total of approx. $1.3mln in income to the DAO or $926k USDC excluding WETH streamed to the DAO multi-sig.
Outlook on DAO Spendings
Based on the currently proposed SP setup consisting of Beethoven-X, BD, OpCo and Maxi’s SPs, we anticipate that the DAO will have following spending outlook, assuming all proposals pass and continue to operate in the same budgeting regime:
| Org | Cost (USDC) | Source | Cost (BAL) |
|---|---|---|---|
| Beets MKT | $420,000.00 | Proposal | |
| Beets TECH | $348,000.00 | Proposal | |
| Foundation | $272,733.00 | Proposal | 4,000.00 |
| Opco ADM | $250,338.00 | Proposal | |
| Opco ADM (sup.) | $234,360.00 | Proposal | 3,000.00 |
| OpCo Product | $746,580.00 | Proposal | 31,423.12 |
| Maxis | $660,480.00 | Proposal | 67,728.00 |
| BD Unit | $222,000.00 | Proposal | 25,368.00 |
| Grants | $181,200.00 | Proposal | |
| Hypernative | $60,000.00 | Proposal | |
| Onsite (yearly) | $169,510.00 | Proposal |
Annualized USDC costs would be in the regime of $3.56 mln which is similar to previous funding rounds and overall lower than in Q4 2024 ($4.6mm projected in Q4 2024)
Income vs Spendings
Given the assumptions about our SP landscape provided above the DAO can anticipate an annual USDC burn rate of $3.56 mln opposed to approx. $2.26 mln in income from protocol fees (excluding any additional income streams like Fjord). This would put the stable reserves in Q2 2025 at around $4.62 mln which is above the previous quarters expectation of $3.6 mln indicating an overall reduction of USDC burn rate and approaching an income vs spendings equilibrium.
| Current Stablecoin Reserves | |
|---|---|
| Stables DAO | $1,835,106 |
| Stables Karpatkey | $3,144,767 |
| Stables OpCo | $940,429 |
| Total | $5,920,302 |
You can verify the different treasury assets here
Many SPs are also taking parts of their compensation package in vested BAL. With the current setup, the DAO would spent approx. 131.5k in BAL a year. The treasury still holds more than 4mln BAL tokens in various positions, with more than 3.6mln in liquid form.
Overall Outlook
Overall, the DAO financial metrics have vastly improved, mostly attributed to successes with LST and LRT liquidity in our core pool flywheel and positive developments in secondary income streams like Fjord Foundry. Additionally, we have established a healthy and productive SP landscape fostering further innovation and excitement around the launch of Balancer v3. Given the current positioning in the market we can conclude that DAO financials are looking much healthier than in previous quarters. Aiming for net positive income vs. spendings is something the DAO should strive to achieve in the future without hindering the positive market momentum and willingness to invest in great talent.
Edit: added BAL cost point to overall spendings overview