Q4 2023 Treasury Report and Runway Considerations

[underthesea]

The Finance team previously published more extensive treasury reports. This post is a simpler approach to present the current treasury, recent spending, and projected treasury runway. If any further information or data is relevant or requested it can be explored in this thread.

TLDR Treasury stablecoin runway based on Q4 budget spending is 7 months.

Current Treasury

As noted this accounting does not include POOL or Protocol Owned Liquidity. Majority of these holdings can be seen on info.pooltogether.com with the addition of the delegation funds on Optimism and the ETH on the governance contract.

Recent talks and direction have pointed towards using ETH to build more protocol owned liquidity and using OP and stMatic to incentivize V5.

2023 Q4 PTBR Budgets

This table shows the present quarters approved team budgets in dollar value. Almost all of this funding was in USDC.

If we take our treasury stablecoin holdings of $1.45m and divide by $630k 2023 Q4 team budget spending we arrive at a runway of 2.3 quarters or essentially 7 months. Treasury stablecoin runway ending September 2024.

Discussion

Any thoughts on treasury, spending, runway are welcome.

[RichCL]

Good transparency and great writing style.

Is there a source link for these tables? (obviously in a way that doesn’t dox any individuals getting payments). Interested to know what kind of detail is intended to be shared going forward.

[pete]

Maybe it’s worth revisiting point #3 on my proposal? OUSD APY has outperformed Aave DAI APY practically every single day over the past 3 months.

[AndyKaufman]

Good try sir or madam but no.

[Lonser]

Big THX creating this great overview!

That we need to drastically decrease treasury spending is obvious I think.
Regarding Grants Team, I can already say that I don’t plan to propose a Grants PTBR Q1. I will try to write a longer post regarding that in the future and/or explain it on the council call. Short Reasoning is that I think it did fund a lot of great things and was needed in the past but going forward and considering treasury we don’t need it anymore. All unused funds will ofc go back to treasury and I plan to contribute to the Community through PoolTime and as a general Community member ofc!

The highest Team Generation Software also already announced that they plan to reduce funding ask next Quarter. How much that will be is not concrete yet through asfaik.

I personally would like to see PoolTogether be sustainable funded for the next years to come. Also launching V5 on ETH and depositing the stable coin funds that are currently on V4 on V5.
That way there would be a contious buyback of POOL that would benefit all depositors through bigger prizes.

Maybe also allocating some small amounts to other stable coins and Prize Vaults to come like OUSD or GloDollar through a partnership for mutual benefit if possible.

Also I wanna highlight and congratulate @TheRealTuna for the great proposal in the past to convert some stable coins to ETH.

PTIP-84- Increase ETH exposure while supporting the stETH pool

Overview Withdraw $250,000 in DAI tokens currently held in sponsorship and send to the Pooltogether Executive team. Pooltogether Executive team will swap the DAI for stETH and deposit $150,000 USD equivalent into the steth.win pool as sponsorship. The stETH sponsorship tokens and the remaining stETH will be sent back to Pooltogether treasury. Motivations and Reasoning Pooltogether’s treasury holdings are mostly stablecoins and POOL with the stablecoins earning a very low rate of return and ti…

That one paid off and increased the total treasury by a bit, also funding public goods through the steth pool!

Answering the question from RichCL, the source of the Tables are the PTBRs from last Quarter

PT Budget Requests

[Lonser]

Also adding, one little feedback regarding the tables,
I wouldn’t call it all Prize Liquidity, we currently got 699k in PTaUSDC on ETH in the treasury and 69k in the Prize Distributor as Prize Liquidity on ETH here. I think you counted them both together which is not false but I just wanted to point out the difference!
After V4 has been discontinued and 60 days have passed so all prizes can be claimed, V4 Prize Liquidity will go back to treasury.

The Delegation budget on OP is not fully 300k for delegations atm anymore, 50k are used for prize ticket liquidity asfaik but that is fine counting it together imo, it’s still 300k all asfaik.

As mentioned, the tables do not include POL (Protocol owned liquidity), I still wanna link here the great Poolexlporer protocol page you made so people can see the POL positions if they want here, it currently only 19 ETH providing some POOL price liquidity downwards but will go up and earn some more fees when POOL price goes up.

Also one general point, although the focus here is on stable coins and I think it’s important to look at spending in $USD, the other big asset in the treasury is POOL and when thinking about a broader treasury spending strategy that would be not forgotten to be looked at as well! At current price and token liquidity we can’t rly utilize it and spending POOL from the treasury is ofc always inflationary for current token holders, we should still keep that in mind that it’s also there in the treasury!

All in all, big THX for the great overview!

[42069]

damn, this is not a very open, welcoming, diverse, and inclusive comment in line with the PT CoC. Does not keep the good vibes going

[Brendan]

Thank you @underthesea for gathering and presenting the data.

There wasn’t any specific question, but rather a request for discussion so I’m going to add some random thoughts:

Maximizing Runway

To maximize runway, I believe we should rely more heavily on the POOL in the treasury. Those who are building the protocol full-time want to hold more POOL, so leaning on POOL rather than stables would make the treasury last longer.

The PTBR for G9 Software last quarter was entirely in stables, which meant that the treasury wasn’t utilizing the available POOL. By allowing contributors to request budget in POOL, the runway can be extended.

Managing Runway

There is still work to do to build out V5, the tokenomics, and to shut down V4. We need to keep spending until the protocol is ready, at which point spending can be dialed down. In that way, I see our spending being front-loaded while we wait for the next bull run.

That being said, we should still try to spend efficiently.

Desired Longevity

I believe that we need to ensure we have runway until the next bull run, at which point the protocol can diversify the treasury. I estimate we’ll need to last about 21 more months, or 7 quarters.

Yes, this number is made up. However, it is based on the Bitcoin halvenings. Each bull peak has occurred approximately a year and a half after each Bitcoin halvening.

Bitcoin Halvenings:

Num	Date
#1	November 28, 2012
#2	July 09, 2016
#3	May 11, 2020
#4	Estimated to occur in April, 2024

Bull peaks:

Num	Date	Months after halvening
#1	Dec 2013	13 months after
#2	Dec 2017	17 months after
#3	Nov 2021	18 months after
#4	Estimated Aug 2025	16 months after

Some Feedback

I think it would be clearer to include all assets in the treasury, rather than excluding PoL or ETH. About ~$410k in ETH and PoL was excluded from the runway, but that was under the assumption that it would all be used for protocol owned liquidity.

At the end of the day all of it can be used for runway; it’s just a matter of what portions we want to tie up temporarily in efforts like prize asset liquidity or PoL. If ownership of PoL is burned then we can truly exclude it and consider it “spent”.

[poptones]

lil update for those who couldn’t make it to last week’s council call: due to the concerns regarding the treasury & runway, i’ve decided to dissolve the growth team after this quarter. all unused funds will be sent back to the treasury.

like lonser, i’ll continue contributing to the ecosystem as a pooltime member and helping grow the protocol from there. appreciate everything the growth team has done this year, and a BIG thank you to @tim for recognizing the need for a growth-driven squad and taking initiative in establishing one

thx @underthesea for the transparency and overview appreciate you bringing these concerns forward for public discussion.

[BraveNewDeFi]

Going back to this analysis, I think this should be the mindset for determining max. burn rate every quarter:

@Brendan

I believe that we need to ensure we have runway until the next bull run, at which point the protocol can diversify the treasury. I estimate we’ll need to last about 21 more months, or 7 quarters.

I’ll say that the OP in the treasury should be reserved for incentives and the POOL in the treasury can’t be counted as a potential asset for two reasons, imo:

1. It isn’t liquid and it can’t be given out as ownership, since POOL only controls treasury funding requests. POOL no longer equals ownership of the protocol since POOL isn’t used to govern the V5 protocol by design.
2. It’s the universal prize token, and using it to fund teams would dilute depositors’ winnings over time. That’s a consequence of choosing POOL as the universal prize token.

Given that, there’s currently $1.89m in assets that can be used to fund teams for the next seven (7) quarters, which means the max. spend each quarter should be capped at ~$270.5k if we want to stretch it out for seven more quarters.

This doesn’t include any allocation of funds to bolster POL either, so if we cap spending at $250.5k per quarter for the next seven quarters, that would free up $140k to allocate to improving liquidity for the POOL token.

Given this, we need to cut spending by quite a lot per quarter going forward, which means hard decisions need to be made by the community.

[nopey.eth]

Strongly agree @BraveNewDeFi

While there is room to refine the the details, this is the right order of reasoning.