[Proposal] Invest FEI/TRIBE & MTA tokens

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

7 Likes

I support this. Good return for the DAO with minimal risk.

  • Yes, let’s do this
  • No, do not do this (say why)

0 voters

2 Likes

It is a very good idea to continue enlarging the treasure. I think there is not much risk regarding the benefit it represents. And the risk there is, as you said, is minimized by contracting insurance with NexusMutual or InsurAce. What we should figure it out is how we mitigate the possibility of a front end type attack like the one that occurred a few days ago on Badger Dao. I ask this because from what I read Nexus did not pay for that attack. What do you think?

Let’s add to this proposal that our TRIBE voting power will be delegated to Gnosis Safe which is the Baller multisig holding the copper BAL. This way we avoid bothering the DAO Multisig if we need to vote on something.

1 Like

I personally don’t think it makes sense to take out insurance for these positions. Unless a lot of people disagree, I’d leave the issue of insurance to a future proposal if someone wants to put it forward.

As far as mitigating front end attacks, it’s a good point. Not sure if there’s anything we can really do about it though.

2 Likes

I agree, I don’t think insurance is necessary for these two strategies, however I wanted to be comprehensive and have it as an option for those that felt strongly about it and wanted to state their case.

5 Likes

@zekraken thank you putting this together & with great detail well done ser. I agree with investing the treasury and maximizing it’s value as outlined here. First thing that comes to mind is what to do with the rewards earned.

Question for not only you but everyone, do we want to include an agreed upon time frame, ETH or USD value benchmark for claiming / compounding rewards? Obviously it costs some gas but ultimately pays for itself depending on market conditions etc. For a later date, or different proposal are fine answers just want to get perspectives on this.

2 Likes

https://vote.balancer.fi/#/proposal/0xc8ae96ec058ace7f0a47c2e0d39de6f18c569db73a3662f6d30c466318df42ff

I think insurance doesn’t really make the most sense when farming native tokens on their native platforms. My logic is that those tokens prices are already heavily exposed to an exploit event anyway. If/when we expand into more complex investment strategies, then maybe it would make sense to purchase cover on our investments.

In regards to protecting us from frontend attacks, it is up to the dao to clearly define the contracts they will be interacting with prior to execution. I think that should be included in the snapshot proposal similar to how actions are outlined here Snapshot that way there is full transparency on the strategy being executed upon.

Great proposal @zekraken btw :slight_smile:

5 Likes

A very valid question. I think the claiming cycle is partly dependent on what utility, if any, the claimed token brings along with it. In a system like Curve you may need to take action to re-boost. It seems that the right cadence for more simple cases like re-investing for a compounding effect would be to claim on a quarterly cycle to line up with any future financial reporting we may do.

In terms of the how, I see a future where we should entrust the power of claiming to a SubDAO rather than needing a proposal each time, but before that structure is established it may make sense to have a bundled request to be review and signed off by the community. Those are my thoughts for now fwiw.

1 Like

Great proposal, @zekraken .

I agree with @Mike_B that buying insurance for farming native tokens on native platform doesn’t make sense. And Fei APY is only 3%, no room to spend on insurance. Yeah, we just put this option on the table for the future.

4 Likes