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.
- 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
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.
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.
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.
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
- 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
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
|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|
|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|
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.
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|
Edit 5: adjusting estimates on new calculations