Hi All, ZeKraken here, been posting on the forum for awhile, but first time submitting a proposal. Please let me know if you have any feedback on any of the below points.
Motivation
As treasury swaps become more commonplace and now that the protocol fee has been turned on you should expect to see more yield farming activity coming from the Balancer DAO. In the vast majority of cases treasury assets should not just sit idly by, they should be put to work to earn yield while the tokens are in your possession. This is of course if the farming is done in a thoughtful, measured, and appropriate way.
Investment Proposal
Below I outline the selected strategies for the FEI, TRIBE, and MTA that the Balancer DAO recently acquired through treasury swaps with those respective protocols.
FEI / TRIBE:
- 2,454,000 FEI was acquired on Dec 9 2021, worth $2,448,559 at the time of this post
- 2,598,000 TRIBE was acquired on Dec 9 2021, worth $2,535,854 at the time of this post
- ACTION: Deposit the full balance of both tokens to Rari Protocol’s Fuse platform- FeiRari (Fei DAO Pool) [Pool 8]. TVL - $171,405,955
- ESTIMATED RETURN:
- FEI - $81,292 (in FEI) annually based on 3.32% APY
- TRIBE - $718,407 annually (in TRIBE) based on 28.33% APR
- Total - $799,699 annually
MTA:
- 334,000 MTA was acquired on Dec 14 2021, worth $297,714 at the time of this post
- ACTIONS:
- Stake the full balance of MTA on the mstable platform giving us an equal amount of vMTA. staked MTA TVL - $6,361,104
- Vote on the dials page, giving 100% of the voting balance to the MTA/WMATIC/WETH Balancer Polygon pool. This will bring additional MTA staking rewards to Balancer’s LPs in the Polygon pool. Note: the Mainnet Balancer pool is already capped at 10%, so no vote will be made for that dial at this time
- ESTIMATED RETURN:
- $76,333 annually (in MTA) based on 25.64% APY
- OTHER:
- We will not delegate mstable governance voting rights at this time. Rather the Balancer DAO will maintain the right to vote where it sees fit
- For more information about the mstable’s staking/voting process see this link
Risks
There are a few risks to highlight around the depositing of treasury held assets. By far the biggest risk is smart contract risk which could result in partial or total loss of assets. However we are choosing to deposit on highly reputable platforms.
One option to combat the smart contract risk would be to utilize cover from Nexus Mutual for the two protocols. Currently those rates are 2.6% annually for both Rari and mstable (rates subject to change).
Another potential risk is around a reduced return on investment of this proposal vs. other potential strategies. There may be other strategies that could be deployed, but more often than not a much greater return comes with more risks. We feel we can get a decent return with an acceptable amount of risk.
Disclaimer: all figures and estimated returns are subject to change with market conditions, these figures presented here serve as a snapshot in time.
EDIT: MTA and TRIBE voting rights should be delegated to the Ballers Gnosis Safe; To further clarify this piece because I think it is important to do so, the Ballers will not take any vote unilaterally. The idea is to share a summary of what is being voted on (when necessary, not all things need to be voted on) and solicit community feedback first before taking action. The reason for delegating voting power to the Ballers is two fold, 1) if there is some requirement to vote quickly it is much more likely this can happen with the Ballers multisig over the Balancer DAO multisig that has many more signers 2) eventually we want to have the voting responsibility aligned to one of the new SubDAOs which will have a process around voting, so this acts as a stopgap to flesh out that process and then ultimately move it over to the responsible SubDAO
