Background
At this point in time the Balancer treasury has $2,780,625 USDC. This capital should be put to work, in a safe, low risk environment. Starting with a select percentage then growing the exposure from there.
Phuture is a decentralised protocol that gives users passive exposure to crypto assets. We create on-chain index funds and structured products so you can get exposure without the complexity.
We’ve created a low-risk USDC savings vault built upon Notional Finance’s fixed rate market. This product has been built as a treasury management solution for the likes of the Balancer treasury.
USV offers an optimised interest rate by investing into a blend of three and six-month bonds. USV then dynamically allocates capital to whichever maturity has the highest interest rate at the time.
Key benefits:
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Removes the cost, complexity and time needed to manage different maturities.
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Access your capital at any time.
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Higher yields than other providers like Yearn, AAVE or Compound
Proposal
We propose to move 20% ($556,125) of the Balancer USDC holdings to USV - the yield bearing USDC - over a period of time. The Balancer treasury can expect to earn 3-5% APY.
3% of the 20% allocated would return per year = $16,683
3% on the total USDC holding would return per year = $83,418
Execution
Directly mint USV, allowing the strategy to manage the underlying bonds and produce the yields on Balancer’s treasury’s behest.
We would suggest introducing the 20% ($556,125) through multiple tranches over a time period which we can share with a more detailed breakdown upon the success of this proposal.
Balancer would hold the USV assets in their custody. USV is redeemable for USDC at any given time.
We also note that a smaller test transaction would be merited to make sure the Balancer treasury can become comfortable with the process. The Phuture team will be available to run through the process for the Balancer Treasury team.
Key Points
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USV is able to produce higher yields than Aave, Compound and other like providers because it benefits from the premium that fixed rates can obtain.
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USDC is deposited for USV, this USV will be held by the DAO. USV has no lock-ups and will be redeemable at any given time.
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Due to the fixed nature of USV’s lending, the interest earned at maturity on its underlying bonds are insulated from immediate changes in the market rate.
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The Balancer treasury will be able to fully verify the on-chain process and where the yield is generated. They custody the yielding bearing assets and can take comfort in knowing the safety of the yield generated.
Risks
- Short term losses can occur due to Intra maturity price fluctuations of the underlying bonds. However, these will always be recovered as the bond reaches maturity.
Why Generate Yield?
The Balancer community could use the additional funds to grow the treasury, fund token buybacks, deploy more capital into new projects, increase marketing spend, fund philanthropic activities. The possibilities are endless. The Balancer treasury is in a strong position and one where taking advantage of USV will bring great upside with little to no risk downside risk.
Why Phuture?
Phuture is a decentralised protocol that gives users passive exposure to crypto assets. We create on-chain index funds and structured products so you can get exposure without the complexity.
Our savings vault product range, starting with USDC has been purpose built as a treasury management tool. We benefit from the premium fixed rate yields which means the high yields are not variable, but dependable for users.
USV requires zero management from the Balancer treasury, due to the passive nature of the product. Meaning the Balancer treasury just has to withdraw if they decide to in the far future.