PTIP-18 Use USDC in treasury to earn yield for the PoolTogether protocol

PTIP-18 Use USDC in treasury to earn yield for the PoolTogether protocol.

Authors: @AndyKaufman & @RegisIsland

Simple Summary

We propose to take $2,000,000 of USDC from the treasury and deploy it on the Rari Capital Stable Pool for a period of one year. As of this writing this will yield 13.2% APY. The PoolTogether protocol would earn $264,000 over the course of one year. These funds can be withdrawn from Rari early with the passing of an on chain proposal.

Motivation

With the recent treasury diversification from PTIP-11: Treasury Diversification the PT protocol is in control of about $6.27 million dollars in USDC. The reasoning for the diversification was for long term sustainability. A portion of this USDC could be put to work earning yield for the protocol to further extend our runway, support more funding of large PTIPs, projects, and development.
If the $2 million we propose to deploy is put into sponsorship it will earn $80,200/year on compound at current rates (2.3% apy plus 1.7% in comp rewards).
80,200/52 weeks = $1540/ week added to the total prize in the USDC pool. This is a negligible increase in the weekly prize. The interest earned deploying to Rari Capital would be 3.3 times higher.
The protocol does not need all of the $6.27 million at once. We are missing out on extra yield that could be used as stated above.

Rationale

A few other yield sources were considered (Yearn, Cream.) Those come with tradeoffs. Cream has been exploited in the past, and Yearn is deposited into the protocol already. The yield on some of these sources is also substantially lower. If we used Yearn we would essentially be contributing to the Yearn “Pod” and taking away from current PoolTogether depositors.

The Rari Eth pool was exploited in the past via an integration with Alpha Finance, but that has since been resolved and did not affect the Stable Pool. Rari offers a source that is relatively more safe than others and currently independent from PoolTogether. There has been general support from the community to put a portion of our treasury funds to work. This is a relatively safe, and simple way to increase the value of the PoolTogether treasury passively over time.

Technical Specification

  • The details of the on-chain proposal

Deploy $2,000,000 of treasury USDC to Rari Capital stable pool.
Send 50 POOL each from the treasury to @AndyKaufman & @RegisIsland for authoring the proposal.
Send 20 POOL from the treasury to developer @McOso for creating the transaction.
Send 10 POOL from the treasury to @rliriano for inspiring us to create this PTIP

The current specific technical details of the transactions required for using the timelock funds, depositing to Rari Capital stable pool & specific rewards to contributor wallets will be updated.

Status

Currently seeking feedback from the community and how it might impact the decision of PTIP-17: Deposit USDC into USDC Prize Pool Sponsorship and creating the function to create the transactions on chain.

Amount of USDC to be allocated to earning yield on Rari Capital?

  • $2 Million
  • $1 Million
  • Other
  • Against this proposal

0 voters

2 Likes

I think those funds would be better suited in our own USDC pool. The APY will drop significantly as soon as that 2,000,000 is deposited. We would be taking significant risk depositing it there and I don’t think the return will be as advertised. Certain key analytics are not easy to find on rari but there was a pretty high APY advertised for Badger a couple months back and when I did a test transaction the APY dropped about 90%. Spreading our funds around in our own pools that capture 50% of interest to reserve is safe, profitable, and serves several purposes that benefit pooltogether.

4 Likes

I voted against this. I do like the idea of treasury management but I think any changes to treasury should be thought about more holistically. Specifically as it relates to risk management.

We can earn 5-10% APRs by depositing into compound (as outlined in PTIP-17). I think we should start there and take time to decide a more holistic approach.

Thanks for writing up.

4 Likes