As the upcoming voting round is focused on funding proposals for several SPs, we took the opportunity to compile a short overview of the DAO financials so that stakeholders can assess the DAO Treasury’s health and stablecoin runway. Some assumptions had to be made, as not all fees for the last 2 weeks have been collected yet. Nonetheless, this report will provide enough information to make an educated decision on funding proposals.
Key findings
- The Integrations SP “Three Rocks” decided to cease its activities, offering the DAO enhanced operational leeway and a prolonged financial runway;
- Protocol fee income increased by approx. 10% compared to Q3 2023;
- SPs such as the Balancer Maxis are taking active measures to decrease overall ask for stablecoins, positively impacting the outlook of our stable reserves;
- It is projected that the DAO will have around $4mm in reserves by the end of 2024 with the current income v. spendings regime
We updated the financial numbers for this year in this sheet based on our new layout outlined in the Q3 report
DAO Income and Distributions
Given we are closing the year, let’s take a look at a quarterly scale:
| Quarter | Total | DAO | veBAL | Passive veBAL | veBAL Incentives | Aura Incentives |
|---|---|---|---|---|---|---|
| Q1 | $3,596,017 | $1,258,606 | $2,337,411 | $857,318 | $1,129,279 | $431,536 |
| Q2 | $2,953,214 | $1,033,625 | $1,919,589 | $371,426 | $1,057,311 | $458,994 |
| Q3 | $1,646,618 | $288,158 | $1,358,460 | $558,890 | $452,427 | $255,131 |
| Q4 | $1,820,003 | $318,501 | $1,501,502 | $593,341 | $500,975 | $410,386 |
Annualized we are projecting for Q4 following numbers:
Effective Distributions
| Total | DAO | veBAL | Passive veBAL | veBAL Incentives | Aura Incentives | |
|---|---|---|---|---|---|---|
| Annualized (Q3) | $6,586,472 | $1,152,633 | $5,433,839 | $2,235,560 | $1,809,708 | $1,020,524 |
| Annualized (Q4) | $7,280,012 | $1,274,002 | $6,006,010 | $2,373,364 | $2,003,900 | $1,641,544 |
Comparing Q3 with Q4 we see that we have a 9.5% increase in total revenue to the DAO, however both quarters were performing much worse than Q1 and Q2, despite better market activity in general.
DAO Spendings
Given the new SP landscape with Three Rocks ceasing their operations and the Maxis decreasing the USDC ask, the overall spendings forecast looks reasonable. Other SPs like Beethoven-X technical increased their ask while also increasing deliverables / headcounts which hopefully will have a positive impact on financial ask from SPs like the front-end team.
Annualized Spending (Stablecoins)
| Org | Cost (USDC) | Source |
|---|---|---|
| OpCo FE TEAM | $964,700.00 | Proposal |
| Balancer Maxis | $583,260.00 | Proposal |
| Beets MKT | $420,000.00 | Proposal |
| Beets TECH | $348,000.00 | Proposal |
| Foundation | $333,291.00 | Proposal |
| Opco ADM | $250,338.00 | Proposal |
| Grants | $181,200.00 | Proposal |
| Onsite (yearly) | $162,140.00 | Proposal |
Annualized costs would now be approx. $3.24mm (v. $4.6mm projected last quarter)
Income vs Spendings
Projected Spendings
| FY24 Q1 | -$810,732 |
|---|---|
| FY24 Q2 | -$810,732 |
| FY24 Q3 | -$810,732 |
| FY24 Q4 | -$810,732 |
| Total | -$3,242,929 |
Projected Revenue
| FY24 Q1 | $326,125 |
|---|---|
| FY24 Q2 | $326,125 |
| FY24 Q3 | $326,125 |
| FY24 Q4 | $326,125 |
| Total | $1,304,500 |
Current Stablecoin Reserves
| Stables DAO | $1,279,909 |
|---|---|
| Stables Karpatkey | $3,088,276 |
| Stables OpCo | $1,265,079 |
| Total | $5,633,264 |
| Stables EOY 24 | $3,694,835 |
With these rough estimates, totaling $1.3mm in income v. $3.24mm in spendings, projecting a rather cautious current fee income of around $326k USDC per quarter to the DAO, we can forecast reserves until Q1 2025 at ~$3,7mm stablecoins.
This is a much more optimistic outlook than in Q3, when we projected $2,27mm with a lower revenue scenario. In this spreadsheet, you can project different scenarios based on change from 12m average.
Given our new spending regime, we would need to 2x our fee income to stay net zero which should be possible with new LST narratives and overall market sentiment picking up (boolish!).
Outlook
One interesting aspect that we didn’t touch upon is the fact that Fjord Foundry income has picked up in the last quarter. The Maxis will do a proper analysis of this income source to better assess its impact.
Generally speaking, the outlook is more optimistic given the lower projection of spendings and higher income. We advise SPs to keep cutting costs whenever possible, keeping the DAO as lean as it can be to be operating efficiently. Noting these numbers only take into account our stablecoin reserves. Although we still have other assets that might appreciate in value in the future, it is affirming to report our stable reserves v. spendings approach a more palatable equilibrium.