As per BIP-103, karpatkey is Balancer DAO’s partner for treasury management, responsible for deploying yield-generating strategies, risk management, and reporting. However, karpatkey’s contributions extend beyond treasury management, significantly enhancing the Balancer ecosystem. Since 2020, karpatkey has been a crucial liquidity provider for Balancer pools, facilitated Balancer’s deployment on Gnosis Chain, served as a delegate for Balancer’s AAVE and ARB, and launched a comprehensive master plan to enhance Balancer’s financial health.
Below is a timeline summarising our activities from the beginning of our collaboration with Balancer DAO to the present:
The following is a detailed review of our work with the Balancer DAO for the first half of 2024 as well as the upcoming initiatives in different areas.
Financial Results
Since its inception, the Treasury has achieved:
- Accumulated net revenue of $265,741 USD.
- A net average Annual Percentage Yield (APY) of 4.37%.
Based on the most recent monthly report detailing the treasury’s performance for June 2024, the treasury’s portion managed by karpatkey has achieved:
- $8.24M of ncAUM (non-custodial assets under management)
- 98.6% of capital utilisation
- An APY (annual percentage yield) of 5.4%
- Monthly DeFi results of $35,656
Strategy, Reporting & Execution
Since the beginning of 2024, we have put forward the following proposals:
- [BIP-611] Delegate BalancerDAO ARB to karpatkey
- Delegation of 2M ARB voting power held in the Balancer DAO treasury to karpatkey, empowering it to provide enhanced support for initiatives that align the Balancer and Arbitrum ecosystems.
- [BIP-621] Lock SAFE balance
- Lock SAFE balance in the Balancer DAO multisig into a reward booster created by SAFE to be eligible for additional benefits in the future.
- [BIP-628] Balancer & Cow Protocol Strategic Partnership – Launching CoWAMM Pools (co-author)
- Establishment of a strategic partnership between BalancerDAO and CowDAO to develop CoWAMM pools on Balancer.
- [BIP-648] Balancer DAO Financial reporting
- Framework for insights into the DAO’s finances and operational activities. This is a first step to become a leading partner to the DAO and focus on aiding its decision making process.
- Roles V2 Migration & New Treasury Permissions - Snapshot vote still pending.
- This proposal will play a key role in both improving the auditing process of whitelisted permissions as well as facilitating a straightforward deployment of actions.
- Introduction of CoW Swap; gas-minimised and MEV-protected swaps.
- Updated ERC-20 allowlist and pool addresses, as well as removal of deprecated contracts.
Future Roadmap
As our collaboration with the Balancer DAO continues to grow and evolve, we remain committed to enhancing every financial aspect of the DAO and deeply engaging with its activities and core products. For the second half of the year, we plan to create and execute the Balancer DAO Financial Master Plan that will aim to:
- Establish comprehensive financial reporting guidelines, with a financial stability analysis to identify improvements.
- Optimise the existing portfolio by:
- Deploying additional assets into yield-generating strategies in a risk-averse manner.
- Unwinding existing positions that are no longer aligned with the DAO’s objectives and re-deploying resulting assets.
- Establish a sustainable financial strategy that secures Balancer DAO’s long-term growth and resilience by:
- Forging strategic partnerships with aligned DAOs.
- Increasing runway funds in stablecoins.
- Developing a BAL Token Sustainability Plan to improve relevant on-chain metrics.
Risk Management
- Internally built an Agile Execution App (AxA) which enables asset managers of the Treasury to swiftly execute pre-designed strategies for emergency purposes (allowlisted swaps and exits).
- This solves the dependency on protocols’ user interfaces and minimises human error/time-consumption whilst ensuring dual-layer security (preset filters act as an initial security check, followed by the execution of predesigned strategies within the app).
- Hypernative alert setup for each of the protocols in the permissions preset.
- This includes oracle pricing, ownership transfers, pool liquidity checks, withdrawal queues, collateral ratios / health factors and amongst other DeFi metrics and smart contract risks.
Upcoming Initiatives
- Bolster the resilience of our risk management framework by:
- Introducing and implementing the new Zodiac Roles module.
- We are enhancing our emergency protocols by developing bots, referred to as guardians, to automate our risk management strategies. These guardians will act based on specific triggers such as suspected exploits, unusual pool behaviour, and rapidly decreasing collateral ratios, among other predefined risk scenarios. We plan to introduce this concept to the Balancer community soon. For more details on guardians, you can read about them here.
- Assessing our alerts accuracy and 3rd parties models, so guardians don’t get triggered with a false positive. We are currently working together with Hypernative.
- Continuously researching protocols and setting alerts, this is an ongoing process as we continually integrate new protocols. To enhance efficiency, we are working on automating significant portions of this process.
Other contributions
Balancer on Gnosis Chain
- Facilitated Balancer DAO <> Gnosis Chain endeavours by:
- Use of protocol and liquidity hub for Gnosis Chain.
- Non parasitic treasury farming.
- Future objectives include:
- Gyroscope ECLP.
- Gyroscope reHype Pools.
- CoW integration.
Balancer’s TVL facilitated by karpatkey
- As per the latest monthly report which covers the existing positions till June 30th 2024, karpatkey was responsible for providing a considerable TVL when managing the funds of partnering DAOs as well as its own funds. Below is a table that showcases facilitated TVL by pool across Balancer and Aura (on mainnet and Gnosis Chain):
| Pool | Blockchain | SUM of Funds |
| wstETH/GNO-Unstaked | Gnosis | $24,577,328 |
| rETH/WETH | Ethereum | $18,068,836 |
| sDAI/wstETH-Unstaked | Gnosis | $14,356,826 |
| wstETH/WETH | Gnosis | $6,764,087 |
| sDAI/USDC.e/USDT (sBAL3)-Unstaked | Gnosis | $5,542,024 |
| wstETH/WETH-Unstaked | Gnosis | $4,314,189 |
| COW/WETH-Unstaked | Ethereum | $3,779,215 |
| Staked auraBAL Compounder | Ethereum | $3,647,255 |
| wstETH/WETH (v2) | Ethereum | $3,251,591 |
| COW/GNO | Ethereum | $3,176,287 |
| Locked AURA | Ethereum | $3,034,896 |
| Locked AURA | Optimism | $2,649 |
| WBTC/WETH-Unstaked | Gnosis | $2,608,074 |
| auraBAL/B-80BAL-20WETH | Ethereum | $2,039,904 |
| Locked B-80BAL-20WETH | Ethereum | $1,900,240 |
| SAFE/GNO-Unstaked | Gnosis | $1,497,918 |
| Staked auraBAL | Ethereum | $1,315,125 |
| COW/GNO-Unstaked | Ethereum | $3,120 |
| COW/GNO-Unstaked | Gnosis | $1,308,312 |
| wstETH/BAL/AURA-Unstaked | Gnosis | $1,171,339 |
| wstETH/COW-Unstaked | Gnosis | $636,787 |
| EURe/sDAI | Gnosis | $519,690 |
| stEUR/EURe-Unstaked | Gnosis | $480,882 |
| GBPe/sDAI-Unstaked | Gnosis | $475,830 |
| COW/WETH | Ethereum | $398,187 |
| GIV/GNO-Unstaked | Gnosis | $198,194 |
| wstETH/LDO-Staked | Ethereum | $96,721 |
| osETH/WETH | Ethereum | $94,786 |
| wstETH/COW | Gnosis | $49,423 |
| GBPe/WXDAI-Unstaked | Gnosis | $2,530 |
| GBPe/EURe-Unstaked | Gnosis | $2,509 |
| bb-a-USD (v3)-Unstaked | Ethereum | $462 |
| wstETH/GNO | Gnosis | $233 |
| Grand Total | $105,315,447 |
Thank you for entrusting us with this critical role. We are committed to maintaining our contributions and dedication to ensure the continued success of the Balancer DAO.