[TempCheck] Treasury Sustainability Proposal

Shutter DAO
1

[TempCheck] Treasury Sustainability Proposal: Adopt a framework for treasury management

Authors: DAOplomats.eth (@Baer_DAOplomats)

Draft Date: 2024-04-26.

Related discussions: [1] [2] [3] [4]

Summary:

This proposal proposes the following.

  1. Adopt a template for the DAO to utilise the tokens in the DAO treasury to generate yield and diversify the tokens.
  2. Delegate the rights to manage the allocated tokens to a multisig using Fractal and Hats protocols.
  3. This proposal foresees two on-chain proposals.

Motivation

With the treasury heavily reliant on SHU tokens, valued at approximately $53M, and limited liquidity, the DAO can only depend on the 6.5M in USDc acquired post-launch. Given the absence of revenue streams, it is crucial for the DAO to diversify its token holdings and acquire assets that ensure long-term sustainability.

The current allocation of the DAO

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The USDC, which earns 0% interest or fees, can generate yield to acquire other assets with relatively low risk. Aave USDc markets offer around 10% yield, and yield optimisers are running, giving around 15 -20 % on the allocated asset.

Background

The DAO’s treasury management strategy needs to prioritise long-term sustainability. However, the current allocation of tokens requires on-chain votes, which could hinder swift actions for changing positions or withdrawing funds. We propose deploying a vault governed by the SHU token holders, which would allow us to allocate and execute strategies permissionless, thereby ensuring your voices are heard and valued in our decision-making process.

Specification

The strategies can be implemented using the following steps.

  1. Stage 1: The setup:

  2. Deploy a multi-sig under Fractal Framework to delegate the rights to manage the tokens.

  3. Integrate Hats protocol for fully permissionless management of permissions on-chain and off-chain.

  4. Stage 2: Seeding

  5. Seed the multisig with a budget in USDc, which can be allocated to multiple strategies proposed by the manager.

  6. Stage 3: Management

  7. During this phase, the allocations must be monitored continuously, and the risk-to-return ratio needs to be evaluated. The managers should regularly update the DAO on the positions. The DAO can dismiss and reclaim the funds with an executable vote.

Stage 1: The setup

The proposal aims to deploy a vault using Safe, which will be controlled directly by the Fractal governance contract. Safe will allow the delegation of permissions and the setting of spending limits.

The Hats protocol can be used for further modular management of permissions. The relative specificities should be ironed out if this proposal passes the temp check.

  1. [Off chain] temperature check to initiate the Safe under fractal governance.
  2. [Onchain] vote to transfer and accept the ownership of the Safe by the DAO.

Stage 2: Strategy implementation

During this stage, managers can propose a budget with specific goals for the DAO, and a chain vote should follow to allocate the budget. The allocation managers are expected to provide KPIs that will enable them to measure performance and evaluate the goals stated.

The manager should be selected based on various criteria, such as their track record, fees, ability to achieve proposed goals, etc.

[Onchain] vote for budget allocation and strategy acceptance.

Stage 3: Management.

The continuous management of the allocation is necessary to evaluate the strategy and the Manager’s performance. The DAO should constantly monitor the allocations, and the manager should provide the DAO with essential information on a regular basis.

Next Steps

  1. Gain community sentiment in the proposed direction [Snapshot vote]
  2. Propose the formation of Multisig with the fractal [On Chain]
  3. Proposal for seeding the Multisig with a selected strategy. [On Chain]

Disclaimer

No Guarantee of Results; and Limitation of Liability:

This proposal is neutrally presented based on current community sentiment.

DAOplomats is not compensated for this proposal and is not associated with any of the parties mentioned in the proposal above.

Given the evolving nature of the Defi ecosystem, we acknowledge that the proposed changes carry inherent risks and uncertainties. However, we have taken every precaution to ensure the thoroughness and viability of this proposal, and we are confident that it can yield the intended results with your support and involvement.

The author(s) and associated parties are not liable for any outcomes or damages from this proposal’s implementation or lack thereof.

Copyright

Copyright and related rights waived via CC0.

I support this temp check
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1 Like
2

I’m moving this proposal to later today if there aren’t any comments.

1 Like
3

From what I can tell, there’s certainly interest in the community for 0x36 to establish a treasury management strategy. I’m not sure we need a temp check to establish that.

What we really need are some more concrete details on what that strategy will look like. I believe that might make for a more valuable temp check proposal.

For instance:

  • How much of the treasury’s USDC should be allocated to this active management, and what is the target yield?

  • What specifically would be the manager’s role - would it be advisory only or would we expect them to be moving assets around regularly?

  • What will the manager selection process look like? Would this selection not require another vote of some sort to codify that selection before the rights to manage this new safe can be allocated to the manager?

Again, there’s consensus the DAO needs a strategy. Let’s suggest and discuss the relative specificities of potential strategies and have temp checks discussions on those items.

The post by Frank from 19 days ago laid out these questions here: Shutter DAO 0x36 Discussion Regarding Treasury Management

It might make more sense for us to engage there and answer those questions together before putting up this proposal without those answers.

1 Like
4

Thanks for the comment. We currently have four different discussions on this topic, and if you read carefully, I’m the first to comment on many of those. We are just talking in circles with no concrete action is happening, so within you feedback, let me summarise the the general sentiment and put a strategy rather than moving this forwards WDYT?

1 Like