As a reminder, the outcome of BIP-161 mandated that a sale of 250k BAL be pursued to boost stable reserves as we approach Year 2 funding season for service providers. If this proposal is approved, the mechanics will be as follows:
250k BAL will be transferred from the Treasury to the OpCo (sub of the Foundation)
OpCo will independently work towards a private sale for the tokens and hold the proceeds on their balance sheet in the short term until funds are used to pay budgeted expenses
The goal is to exchange 250k BAL for around 1.5M of USDC but it is impossible to guarantee this due to potential market fluctuations between the time of posting this proposal and the time that the transaction is executed. Once complete, if there are any issues or concerns, the OpCo will report back.
Specification
The DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will transfer 250,000 BAL to the Balancer OpCo LImited’s Multisig 0x3B8910F378034FD6E103Df958863e5c684072693
Remaining payments in USDC due to OpCo and Orb for Year 1 will be halted, overriding [BIP-20] and [BIP-55] requests (954,471 + 305,725), for a total of 1,793,413 USDC. Uncompromised funds and savings can be dealt by the DAO when appropriate.
Hi, brother, just passing along a few questions/concerns:
This transfer would be triple the remaining amount due to OpCo, which hasn’t yet been authorized for year 2. We’d be more comfortable if the transfer was just slightly over 533K, with the remainder held by the Treasury, especially under the present circumstances, where a few community members are pushing for significant reforms/restructuring of the sub-orgs.
Good call out @Franklin. Makes perfect sense.
Currently, we could cancel the remaining USDC payments for Orb as well (954,471 + 305,725), for a total of 1,793,413 USDC. Both have been cutting costs, so it’s even possible there will be enough from this deal to close Year 1.
In case there is a significant downward shift in token-price, then the Treasury would have to cover for approved funding.
Thanks for voicing that - here are a few points that will hopefully clarify the purpose of the proposal and alleviate these concerns:
Purpose of the Balancer OpCo: The OpCo serves two roles as described in BIP-55. First and foremost the OpCo acts as an Administrative and Operational element for the DAO, as the operating subsidiary of the Balancer Foundation. The OpCo is acting for the DAO in this proposal. The OpCo is under the direction of the Balancer Foundation, with a board of majority community members. See also [Proposal] Incorporation of the Balancer Foundation for more background. For completeness I note that the second role of the OpCo is housing the Front-End Development Team. This second role is not directly relevant to this proposal.
Proposal Category: This proposal is about treasury management at the DAO level, however there isn’t a category for that in Discourse. In a secondary sense the proposal also relates to funding, since maintaining an element of the treasury in stable is a hedge against a potential market downturn. I selected the closest option of “Service Providers” and “Funding Proposal”, which may influence perception of what this proposal is for. This proposal is not a funding request, and does not relate to any budget changes for any service providers. Funds held on the OpCo Balance sheet remain at the disposal of the DAO until used to settle approved payments to service providers.
The process of selling BAL OTC requires contracting with an OTC desk. The DAO cannot do this step, and the OpCo is the entity that has this capability, acting under the Balancer Foundation.
After a successful sale, the OpCo can hold the proceeds on its balance sheet effectively as an extension of the DAO Treasury for the benefit of the DAO. The DAO can decide how it would like to use these stables. By using these funds over time to settle operating expenses of the OpCo and potentially other service providers (as Danko also notes), it allows the DAO Treasury to reduce USDC transfers to the OpCo, and thereby boost the DAO’s stable reserves.
The primary reason there is any mention at all of the next payment to OpCo in this proposal is the need to alter the terms of a prior community vote: BIP-55 that set payments from the DAO for operating expenses in USDC, which would be changed to BAL if this proposal is voted through.
Let me know if further clarification would be helpful - that was a mouthful - hoping to be comprehensive.
Understood, thanks for the clarification, brother. We have a similar structure at Aura, w/ a subDAO responsible for off-chain relationships. I think where our orgs would differ in this particular case is that here, it seems that OpCo would function as an extension of the Balancer treasury, whereas for us, we’d simply transfer the balance back to the main treasury after the OTC deal was completed, and fund our version of OpCo at the usual time that it would be funded.
Your explanation, however, was very reasonable and I’ll pass your words along. I believe the concerns of the delegates primarily lie in how excess funds would be handled in light of possible restructuring. But if everyone is comfortable with it, I guess that’s a bridge we can cross if we ever get to it. It might alleviate some concerns if this proposal was structured more like an administrative proposal just for the OTC rather than a joint OTC + payment proposal, as any time funding comes up these days everyone jumps to their feet.
Thanks, these are good concerns and it’s good that we have more eyes on it. Either way, funds are safu. As @Tristan345 explained, OpCo can act as an executor for the DAO to get the OTC deal off-chain. However, from GRC perspective, we better not be selling tokens ourselves, so I much ratter pay service providers in tokens (business as usual). Also, I don’t like the idea of using OpCo exclusively for the sale in behalf of the DAO, as it could be considered a VASP under BVI’s law, OpCo’s current jurisdiction. We don’t want that.
We will edit the proposal to reflect these changes: halting further Year 1 payments in USDC for Service Providers, overriding [BIP-20] and [BIP-55] requests. Uncompromised funds and savings can be dealt by the DAO when appropriate, refunding the Treasury or rolling over Year 2, if possible.
Update: OpCo has concluded the sale of 250,000 BAL to an OTC desk pegged to market price. The sale was conducted over three days / 72 hours for total proceeds of USDC 1,618,624.46 (average USDC 6.47 per BAL, ex fees). The OpCo will apply these stablecoins for committed and future payments to SPs and approved operating expenses.