Financial Impact of the first SP Proposal Round to the Balancer DAO Treasury

Disclaimer: I am currently part of the Balancer DAO Treasury and active Baller. Additionally, I will be applying as an SP both in the Balancer Foundation as a board member as well as a Balancer Maxi. I will abstain from voting on any of the SP proposals.

Executive Summary

  • The Balancer DAO is introducing the switch from subDAOs to service providers. Service providers will be funded by the DAO treasury
  • Optimistic forecasts from the previous 2 month period (Apr-Jun '22) suggest that the net income for the Treasury is approx. $6.498 Million USDC per year opposed to approx. $5.44 Million USDC in spending for all currently proposing SPs
  • In order to be able to fund SPs, BAL would have to be market sold to compensate all currently proposed SP demand
  • Additionally, approx. 574k BAL would be vested per year


The Balancer DAO is currently undergoing its biggest change since the inception of subDAOs with the introduction of the Operating Framework for Balancer DAO

In short, the new Operating framework introduces the funding of Service Providers and the creation of a Balancer Foundation to lay the groundwork for interaction with the protocol and legal entities.

We are currently discussing multiple proposals asking for funding through the service provider framework.

As a member of the treasury, I feel obliged to discuss the financial implications to our treasury so that the community can make informed decisions on which SP should be funded. Let’s be blunt: the situation is dire and we do not have unlimited resources.

Status of the Balancer DAO Treasury

In the last couple of weeks, I have been building a treasury dashboard to get a better understanding of our income streams across chains. With the help of this dashboard, we can make some estimates on the current market situation and how it would affect our income and spending based on current SP proposals.

You can interact with the dashboard here: Balancer Analytics

Pleaes note that the treasury and protocol fee dashboards, respectively, analyze each chain separately. An aggregate view is planned.

Income streams

Let’s take our mainnet treasury for example: Balancer Analytics

The DAO currently has 2 main sources of income:

  • Protocol fees
  • Copper launch fees

Based on current market conditions and fee configurations, we can estimate roughly $12k in daily income from those sources for mainnet:

As you can see, the main driver is protocol fees (this is after the cut for veBAL holders, so pure income for the DAO).

Given the data of the last 2 months, we can estimate that we - on average - get $250-300k USD in revenue from those income streams per month.

A detailed breakdown of the effectively collected fees for all networks can be found here:

The numbers on effectively collected fees across chains suggest roughly $14.5k in income per day. We can therefore estimate an optimistic net income of roughly $437k USD per month. Please note that May has been a particularly good month in terms of fees collected.

Treasury Reserves

Another important aspect are our treasury reserves.Based on the current market situation, we roughly have $36 Million across all chains, mainnet again the main aggregator of the Balancer DAO wealth

Very important to note is the fact that more than 73% of our reserves are liquid BAL

Key Take Aways

  • Our projected yearly income at the current rate is set to approx. $3.12 Million USD
  • The main income source are protocol fees on mainnet
  • Our treasury currently holds approx. $34 Million USD in assets
  • Our main wealth comes from BAL, making up $26 Million

Putting SP Proposals Into Perspective

Given the treasury assets that are at our disposal I want to give a quick overview of the projected spending for the next year, given the scenario that all SP proposals get approved and extended

SP proposals as of June 20th 2022

Service Provider Proposal Quaterly cost $ BAL Passive reserve Gross Monthly Cost / FTE (incl. any additional costs)
Orb Collective Funding Proposal for Orb Collective $997,169.00 0 $20,145
Balancer Maxis [BIP-18] Fund the Balancer Maxis for Q3 $0.00 32925 1829 (1250 BAL vested +579 BAL liquid on avg)
Balancer Foundation [BIP-14] Funding Proposal for the Balancer Foundation $68,000.00 approx. 104000 for self-insurance $4,533
Balancer Grants [BIP-X] Fund Balancer Grants for Q3 $60,000.00 101500 $3,333
Balancer Community Group (BCG) Fund Balancer Community Group [BCG] $118,500.00 0 $6,583
Front-end team tbd $318,000.00 0 tbd
Kolektivo a.k.a Ecosystem Ops and Devleopment Squad Funding Proposal for Ecosystem Ops and Development Squad $63,000.00 9130 $11,667 + 1k vested BAL

Financial implications to the Treasury

Given these proposals we see a net cost for all SPs per quarter at

  • $1.624 Million USDC
  • 143,555 BAL
  • $500k USD reserve in BAL, which will eventually be paid back - one time event

With these estimates, we can project a yearly cost basis of

  • $6.498 Million USDC
  • 574,220 BAL

Opposed to an optimistic forecast of

  • $5.25 Million USDC in income

with a lower bound of $3.6 Million assuming $10k daily revenue

We are therefore running more than 1.036x the current stable income rate at an optimistic forecast, meaning in its current state, the SP proposal cost basis is slightly not sustainable for the treasury. As a result, treasury reserves in terms of BAL would need to be market sold to compensate for the current demand and given market conditions.

In addition, we would be spending more than 574k in vested BAL per year.

Additional Info

Cumulative net cost in terms of stables and BAL relative to reserves with an optimistic forecast of 14.5k in daily USDC income

Cumulative cost Cumulative income Delta BAL BAL Treasury
Q3 22 $1,624,669 $720,000 -$904,669 143555 5912590.3
Q4 22 $3,249,338 $2,033,884 -$1,215,454 287110 5769035.3
Q1 23 $4,874,007 $3,347,769 -$1,526,238 430665 5625480.3
Q2 23 $6,498,676 $4,661,653 -$1,837,023 574220 5481925.3
Q3 23 $8,123,345 $5,975,537 -$2,147,808 717775 5338370.3
Q4 23 $9,748,014 $7,289,421 -$2,458,593 861330 5194815.3
Q1 24 $11,372,683 $8,603,306 -$2,769,377 1004885 5051260.3
Q2 24 $12,997,352 $9,917,190 -$3,080,162 1148440 4907705.3
Q3 24 $14,622,021 $11,231,074 -$3,390,947 1291995 4764150.3
Q4 24 $16,246,690 $12,544,959 -$3,701,731 1435550 4620595.3
Q1 25 $17,871,359 $13,858,843 -$4,012,516 1579105 4477040.3

Edit 5: adjusting estimates on new calculations


Thanks for putting this together. I think one important thing to note is that Balancer is still technically a tech startup. We’ve captured a good portion of market share through Crypto’s version of Blitzscaling (LM Incentives) and while there’s been some hinting at Product Market Fit (Index Coop’s MBP, etc.) there still is a bit to go. I think operating at a net loss is not a huge deal. As long as each SP has the same long term thinking in mind - That finding PMF and a path towards profitability matters.


Thanks so much for putting these numbers together X

I share the sentiment that Balancer is a start-up in an emerging market, and therefore running at a net loss for the first years is justifiable as long as we continue to grow and capture market share.

If we can extend our runway to at least 2+ years via a top-up through the Foundation - I think we can take more risk for the next 12 months.

We don’t know how long the bear market will last, but when the sentiment picks up again, we need to be in the correct position as an ecosystem.

Finally, we are currently distributing 75% of our earnings as “dividends” to veBAL holders on top of BAL + bribing rewards. I think a 50% / 50% split between Treasury and veBAL holders could be justified if this increases Balancer’s budget and capacity to become the largest AMM.

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I am against the current SP budget plan for the following reasons:

  1. In the current market situation, most projects are in contractionary days, we need to plan for the worst, TVL and FEE may further drop sharply. Under such circumstances, a substantial increase in expenditure beyond our capabilities brings great challenges to the survival of the project.

  2. Treasure’s current main asset is BAL, which means that we need to sell a large amount of BAL at a low price to maintain SP expenses. This will greatly shake the confidence of the community, resulting in lower BAL prices → lower pool incentives → lower TVL → lower FEE, which is a vicious circle;

I recognize the value of the work of the various SPs, but what we need to consider at the moment is whether our current budget is sustainable if the bear market lasts for 2 years, or even 4 years. In this case, we need to spend our limited funds on the most important things: technology development and ecological support, rather than adopting more aggressive marketing budget.


I want to clarify: there is no budgeting plan. I just put together a scenario where all SP proposals would pass and what that would mean for our treasury funds. Who is being funded in the end is up to the voters.


Appreciate the time put into this. It helps clear a few things.

We share a similar thought with those above around operating at a loss as not a big deal but we shouldn’t hand out money without complete consideration. This is why it is important that SPs have clear key objectives so we know where the treasury is going and what we are getting in return. Without clear objectives, it makes us much harder to analyze the SP on a quarterly basis.

With a bear market looming, the treasury has a high likelihood of decreasing and BAL being worth much less so it is worth keeping that in mind. We shouldn’t get too complacent about the dangers of a bear market and ensure that we have enough money to last at least 3 years.


Thanks for this @Xeonus – I think this is very helpful to voters.

Just wanted to bring up a point that would hopefully guide the discussion to a proactive angle.
It’s not as much a discussion about whether to operate at a loss or not.
Firstly, it’s a matter of the length of the runway one has when operating at a loss and whether that is a conservative enough timeline to get one into a market that the treasury feels comfortable spending BAL.
Secondly, it’s a matter of discussing where the capital should be spent in order to get us to a spot where we are no longer operating at a loss.


Super detailed and helpful analysis @Xeonus, thanks so much for this!

I’ll echo the general sentiment that:

  • we should not slow down to because we are not profitable yet. If we don’t invest now we probably will never become a profitable protocol/DAO and the whole project would be jeopardized and not sustainable.
  • HOWEVER, we should definitely control really well how we spend each penny of the DAO.

Thanks for putting this together @xeonus, i’m a sucker for some good data tables. it would be interesting to see the average spend per individual in these SPs, understand there is a wide spectrum in some of the SPs, but still a interesting data point to me.

In terms of operating at a loss vs. not, to me it was never about making it a requirement to have to operate in the black. It was more quantifying what the protocol is getting in terms of ROI for the sake of voters. It totally makes sense to spend a lot to get a product/platform up and running with the future prospect of x times return on that spend, but what does that look like for Balancer at this point? If a clear direction with defined steps/milestones hasn’t been decided at this moment why spend more than you need now? Fernando’s post about his view of where Balancer should be heading has been debated and reaffirmed by many as the where they want the protocol to ultimately be years from now, but as a voter I see no roadmap around what steps are going to be taken to get the protocol in that position.

I hope that direction can be made more clear as Orb biz dev/product dev steps out of Blabs umbrella and future funding is decided by voters (in addition to any other biz dev group that gets voted in). That way voters can hold individuals accountable to the roles they are signing up for. That doesn’t mean “you said you’re going to deliver x so you have to deliver x”, things change quick and i’m sure comparable deliverables will be recognized.

There should be a concise way for party to capture what value-add they have had in the past as well as how they plan to grow the protocol without ambiguity. Myself included, please let me know if there is lack of information around what I’ve done in the past and what I plan to continue to do in the future, I can add as many details as needed.

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I updated the sheet with an average monthly cost / employee / FTE including all additional expenses. I am aware that for certain SPs their salaries are capped, but still I want to show how much a FTE costs overall including expenses. Interesting view on the range of ask for those SPs for sure.


Balancer Maxis should have a USD value as the amount in BAL doesn’t help with the comparison.

I’m aware of the oscillation in price so I would probably put a range or an average from the past 3 months (13USD-3.5USD) given the fact that your funding is per quarter.

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Most of that amount is fully vested so not sure if it makes sense as I always made the distinction between ask for USDC and BAL so that we know from which treasury source we take those funds.

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Thank you for this great analysis @Xeonus :clap:

There’s a lot of valuable information here. One thing readers may notice is that Orb’s cost per FTE is a lot higher than other proposed service providers. I’d like to offer some detail on this.

  1. Orb’s cost structure contains high-cost items that are crucial to the Balancer ecosystem, which are not included as part of other SP proposals. Notable examples: smart contract auditing, legal services, recruiting, in-person ecosystem gatherings (“on-sites”).

  2. Orb employs top talent in the space and competes with the best teams in web3 and the greater tech industry to hire and retain people. The global market for tech talent dictates the amounts we pay our team members. I’m not suggesting in any way that Orb’s people are better than any other SP’s people; recruiting and hiring work differently in our world than they do in the decentralized world of DAO contributors. Not everyone wants to live the DAO contributor life; if we were to structure our team that way, we’d have a hard time attracting and keeping people who are game changers for Balancer.

Orb is an expensive investment for the DAO to take on, but at the same time it has a cost structure that is normal for a startup in the web3 space. Ultimately, we at Orb take very seriously the responsibility to give back more value to the DAO than it spends on us and we are confident that we’ll deliver results that meet the community’s expectations.