It has been well documented by Xeonus and others that the DAO will run out of stablecoins sometime in Q3/Q4 2023 based on current numbers. While progress has been made to increase revenue it would still be prudent to extend the DAO’s runway sooner than later. An opportunity has emerged to cleanly convert BAL to USDC using Aave’s one way bonding curve contract. This takes BAL and gives out USDC at the chainlink oracle price of BAL/USD + 50bps.
There is ~91.6k BAL left to be filled out of the total 100k BAL. The DAO would gain ~$571k USDC if this swap was made today. You can confirm this number by calling the 7. getAmountOut function on etherscan.
This can effectively be viewed as a treasury swap with Aave DAO, BAL for USDC. This BAL would be used by them to lock in veBAL and vote for Aave boosted pools. Aave is a very important long term partner for Balancer which makes this an appealing option for raising stablecoins.
I recognize this could be a controversial decision but the opportunity to use this bonding curve contract might disappear at any moment so we will need to act quickly if we want to pursue this. Pending how the discussion goes I think we should plan on a December 8th vote.
Specification
If approved, the DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will initiate a transaction with the BAL token contract 0xba100000625a3754423978a60c9317c58a424e3d calling the approve function with the following arguments:
Amount: The current value from calling 6. amountBalToBeFilled here, which is 91661437022397199910676 at the moment
Next, the DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will initiate a transaction with the bonding curve contract 0x04f90d449D4f8316eDd6Ef4F963b657f8444a4cA calling the purchase function with the following arguments:
amountIn: same value as Amount above, 91661437022397199910676
Between the recent revenue gains which have us trending closer to $4M annualized revenue and Orb coming in under budget, this additional USDC would be enough to get us through Q3 2023. The numbers would have to continue improving either on the revenue or costs side to get us through Q4 2023.
So the answer today would probably be one additional quarter of runway, noting that these numbers are highly volatile of course.
I am a little on the fence about this one, however 2% of the treasury isn’t an amount that makes me feel very uncomfortable. The potential of only extending the runway by one additional quarter doesn’t feel super, but as the past few months have shown market conditions can get worse in a very quick manner, so having stables on hand is a positive. Overall I am not against at this time.
Perhaps this could be one of several similar measures that collectively get runway to a point that the community thinks is sufficient- based on the best available opportunities?
I’d add that such a strategic and long-term partner/friend like Aave holding more BAL (likely to turn into veBAL and participate more in our governance) is super positive in and of itself.
If on top of that Balancer DAO needs to secure a longer runway (the current one is definitely not conservative at all) I don’t see why this shouldn’t be done. To me it’s a no-brainer.
Even though it’s only an additional extra quarter of runway, I think it’s suitable since it’s a swap with a trusted partner and stable coins are low. It is paramount that Balancer has sufficient funding to continue, and its better we tackle the problem now, rather than later.
Aave are long-term partners and hopefully, they will get more involved in governance.