Proposed Actions Overview
1. Deposit USDC on Compound v3
Compound v3 is a streamlined protocol version emphasising security, capital efficiency, and user experience. Following a proposal executed on September 18th, v2 is being phased out, with measures in place to transition users to v3. OpenZeppelin and ChainSecurity have audited v3. As of the day of this writing, $315M USDC is deposited in v3, offering an APR of 4.7%, inclusive of COMP token rewards.
2. Deposit DAI on AAVE v3
This strategy aims to diversify stablecoin holdings via AAVE v3, a leading decentralised money market with a strong link to the Balancer DAO. AAVE v3 was officially deployed on mainnet in January 2023 after being live across six networks since March 2022. This version introduces features for enhanced capital efficiency and decentralisation, coupled with new risk management tools. Comprehensive audits by firms like Trail of Bits, ABDK, Peckshield, OpenZeppelin, SigmaPrime, and formal verification by Certora. Currently, AAVE v3 holds $69M DAI with an expected APY of 4.07%.
3. Deposit USDC on AAVE v3
Same logic as above but for USDC. As of the day of this writing, the total USDC supplied on AAVE v3 is $332M, and the expected APY is 2.85%.
4. Deposit DAI on MakerDAO’s DAI Savings Rate (DSR) module
MakerDAO, renowned for creating DAI, is a leading DAO in the DeFi sector. A recent DSR rate hike in May and the introduction of eDSR (enhanced DSR) in August make it an attractive strategy from a risk/reward perspective. Currently, eDSR offers an APR of 5%. By diversifying the Balancer treasury’s stablecoin allocation and capitalising on the higher yield offered by one of the most battle-tested protocols, the investment approach can be optimised.
5. Unstake stETH on Lido
Post the Shapella fork in April, users can now unstake or withdraw staked ETH from the different LST providers. This action was not part of the previous preset update request to the Balancer DAO due to its timing.
6. Stake (and unstake) ETH on Rocket Pool (rETH)
To diversify LST holdings, we suggest adding RocketPool to the whitelist for ETH staking and unstaking. RocketPool ranks third in the liquid staking market, holding about 805,000 ETH, or 5.5% of the total market. In market share, Rocket Pool’s rETH trails Lido’s stETH (74%) and Coinbase’s cbETH (11%). Despite slightly lower liquidity for rETH to ETH swaps on major DEXes, Balancer DAO treasury’s allocated amount should face minimal slippage. For example, DeFi Llama indicates a swap of ~5,900 rETH for ETH would have under 0.01% slippage. Currently, rETH offers an APR of 3.03%.
7. Swap Various Tokens on SushiSwap
Recognizing the dynamic nature of token liquidity, we propose the whitelisting of additional swapping routes to enhance the efficiency of swaps for the Balancer DAO. We seek permission to swap COMP, DAI, USDC, USDT, and WETH on SushiSwap:
- Token In List: [COMP, DAI, USDC, USDT, WETH]
- Token Out List: [DAI, USDC, USDT, WETH]
8. Swap rETH <> WETH on Balancer
Considering the inclusion of RocketPool in strategy #6, it is desirable to add alternative swapping options for rETH <> WETH, ensuring flexibility when adjusting this strategy. Balancer, with a pool TVL of $58M and a daily trading volume of $60k at the time of writing, stands as a top choice to fulfil this objective.
9. Swap rETH <> WETH on Uniswap v3
This mirrors the rationale behind the previous action but extends to Uniswap v3. With a combined TVL of nearly $6M and a daily trading volume of $3.2M, factoring in the rETH<>ETH (0.05%) and rETH<>ETH (0.01%) pools, Uniswap v3 presents an additional viable avenue for executing the desired swaps, should the need arise.
10. Swap stETH <> ETH on Curve
This action echoes the aforementioned strategy but pertains to a different liquid staking token (stETH) and operates on the Curve platform. With a current TVL of approximately $196M and a daily trading volume of $4.7M at the time of writing, the stETH <> ETH pool on Curve represents a compelling alternative when modifying the Stake ETH on Lido strategy.
11. Restake AAVE on the Safety Module
Although this action was not initially requested in the strategy due to the absence of compounding in the Stake AAVE on the Safety Module strategy, it is now deemed desirable. This move is driven by the strong partnership between AAVE and Balancer, aiming to compound the results and refrain from selling the resulting AAVE rewards. The current preset permits compounding through two different actions:
Stake. Nevertheless, the
Restake action allows a more efficient approach to achieving the same result.
12. Delegate AAVE/stkAAVE to karpatkey
As per BIP-452, the Balancer DAO has made the decision to delegate voting power in the AAVE DAO, which is granted by AAVE and stkAAVE, to karpatkey. Given that any changes to this strategy, such as unstaking or staking, necessitate the reinstatement of delegation, it is prudent to include this action in the preset. Doing so alleviates the Balancer DAO’s burden by enabling karpatkey to execute it directly through the Manager Safe. As long as BIP-452 remains valid, this permission will remain active.
13. Wrap stETH
While conducting our routine examination of the permissions granted to karpatkey within the preset, we identified an inconsistency. Specifically, we observed that the route wstETH → stETH is currently whitelisted, whereas the reverse path, stETH → wstETH, is not. Consequently, we are submitting a request to rectify this omission by adding the latter route to the whitelist.