Treasury Assets Management #2 (Non-stablecoin assets)

[BRONDER]

Overview

In the Treasury Working Group’s first operational quarter, the Treasury Assets Management #1 proposal was discussed, transitioned to PTIP 54, and approved by the community. In the end, funds were deployed into PoolTogether V4 and AAVE instead of Notional due to limitations imposed by the governor alpha contract, which is the contract that executes on-chain governance proposals.

With PTIP-54, the community made idle stablecoin assets productive and helped offset the prize subsidy by adding sponsorship capital in V4. PoolTogether has idle non-stablecoin assets in the treasury, and now is the time to take a look at these assets held in the treasury and how we can make the best out of them.

Selling Governance Tokens

Many of the non-stablecoin assets held by the treasury are DAO governance tokens. While some holdings are small and represent protocols PoolTogether does not utilize or use for a yield source, we should be conscious of the impact that selling another protocol’s governance token can have. When Yearn farmed POOL and sold it, our community was unhappy. This is one consideration to make when reviewing possible asset management strategies but should not hinder our community if the best possible outcome is selling an asset.

ETH VS USDC

In all of the cases that will be reviewed, selling the non-stable asset is a possibility, however, it is important to determine what we want to sell it for.

The first option would be ETH. This would help us cover ETH expenses generated by the Exec team, Grants and the different Working Groups.

The second option would be USDC, which would be used to be deposited in PoolTogether V4 and earn yield for the protocol.

What token do we want to get when selling other assets?

• Sell assets for ETH
• Sell assets for USDC
• Sell some assets for USDC and some for ETH (explain)
• Sell assets for a different token (explain)

Assets

All of the assets held by the PoolTogether protocol are listed here (except for TRIBE): Treasury

We will review these tokens one by one and offer different possibilities for each one.

GTC ($86K)

Currently, all of the GTC is held in the Treasury Timelock without earning any interest. GTC is the governance token of the Gitcoin DAO.

As of now, we’re not making use of the token, given that we’re not involved in the Gitcoin DAO. Therefore, holding the token in the Timelock does not seem to be very useful or profitable for the protocol. There are 2 possibilities regarding the GTC token*:

What should be done with the GTC held by the treasury

• Sell 100% of the GTC holdings
• Send the GTC holdings to the Exec team to take part in Gitcoin governance

*The sale of GTC is also being discussed in RFC: Protocol Deployed Liquidity On Polygon Uniswap V3

COMP ($39K)

Currently, around $22K is held in the Treasury Timelock without earning any interest. Another $17K is used as V3 reserves, incentivizing the V3 COMP pool. Those reserves are earning interest in Compound (0% APR?), which is distributed as prizes in the COMP pool.

Keeping the COMP token on the treasury can be leveraged to strengthen our relationship with other DAOs. Given that we’re still using Compound as a yield source, holding COMP can be seen as a symbiosis between the 2 protocols.

There are 2 possibilities regarding the COMP token:

What should be done with the COMP held by the protocol

• Hold COMP in the Treasury Timelock + V3 reserves
• Sell the COMP in the Treasury Timelock and Withdraw and sell the COMP used as reserve in V3

SUSHI ($10K) + UNI ($7.5K) + BADGER ($1.3K)

Currently, all of the SUSHI, UNI and BADGER are used as V3 reserves, incentivizing the corresponding V3 pools.

SUSHI reserves are earning interest in SushiSwap (9.5% APR), which is distributed as prizes in the SUSHI pool.

UNI reserves are earning interest in SushiSwap (0.18% APR), which is distributed as prizes in the UNI pool.

Badger reserves are not earning any interest as of now.

PoolTogether is not using these protocols as a yield source, so unlike with Compound, selling these would not have too much of an impact on DAO to DAO relationships. The other factor to keep in mind is if we should keep incentivizing liquidity in V3 pools for non-stable assets, or use those resources to get other assets which can be used to earn yield for the treasury.

There are 3 possibilities regarding the SUSHI token:

What should be done with the SUSHI held by the protocol

• Keep the SUSHI as V3 reserve
• Withdraw and sell the SUSHI used as reserve in V3
• Withdraw and stake in SushiSwap the SUSHI (9.5% APR) used as reserve in V3

There are 2 possibilities regarding the UNI token:

What should be done with the UNI held by the protocol

• Keep the UNI as V3 reserve
• Withdraw and sell the UNI used as reserve in V3

There are 2 possibilities regarding the BADGER token:

What should be done with the BADGER held by the protocol

• Keep the BADGER as V3 reserve
• Withdraw and sell the BADGER used as reserve in V3

WMATIC ($55K)

Currently, all of the WMATIC is unclaimed in AAVE and was generated from V4 Polygon deposits. However, no more WMATIC will be accrued, as WMATIC rewards have been stopped in AAVE.

This MATIC could be used to keep the treasury diversified while also earning yield in a validator. As most of the PoolTogether protocol’s activity happens in the Polygon blockchain, it could make sense to keep this MATIC.

There are 3 possibilities regarding the WMATIC token:

What should be done with the WMATIC held by the protocol

• Withdraw WMATIC rewards from AAVE, bridge them to Ethereum network and stake them (5-10% APR)
• Withdraw WMATIC rewards from AAVE and sell them
• Withdraw WMATIC rewards from AAVE and use it as TWAB rewards for V4 depositors

WAVAX ($15K)

Currently, all of the WAVAX is unclaimed in AAVE and is being generated from V4 Avalanche deposits.

A similar argument as the one presented with MATIC can be made for AVAX. Staking AVAX was considered as an option, however, staking on Avalanche is not feasible for the protocol.

There are 2 possibilities regarding the WAVAX token:

What should be done with the WAVAX held by the protocol

• Withdraw WAVAX rewards from AAVE, and lend them in AAVE V2 (1.4% + 4.3% vAPR)
• Withdraw WAVAX rewards from AAVE and sell them

stkAAVE ($7K)

Currently, all of the stkAAVE is unclaimed in AAVE and is being generated from V4 Ethereum deposits and DAI Treasury funds deployed in AAVE.

Just like with the COMP token, AAVE is the only yield source in V4. Keeping this token can help strengthen DAO to DAO relationships and enable future collaborations.

There are 2 possibilities regarding the stkAAVE token:

What should be done with the stkAAVE held by the protocol

• Withdraw stkAAVE rewards from AAVE so that it earns staking rewards (6.9% APR)
• Withdraw stkAAVE rewards from AAVE and sell them

TRIBE ($42K)

Currently, around $22K is held in the Treasury Timelock without earning any interest. Another $20K is staked in Rari Fuse pool (15% APR). This TRIBE was accrued during the Ondo Laas program.

The same argument as COMP and AAVE can apply with TRIBE.

There are 2 possibilities regarding the TRIBE token:

What should be done with the TRIBE held by the protocol

• Stake the TRIBE (15% APR) in the Treasury Timelock in the Rari Fuse pool
• Withdraw the TRIBE staked in the Rari Fuse pool and sell all of the TRIBE

Let me know your thoughts and let’s start making the most of our treasury!

P.D. Note that only 10 transactions are allowed in each on-chain execution, so we may need to prioritize assets with a higher valuation and leave some others for next time. WMATIC, WAVAX and stkAAVE can be managed by the Exec Team, so their management does not require on-chain transactions. TRIBE is also held by the Exec Team, so it would just require one transaction to be sent to the Multisig.

[Gonbatfire]

Given that our protocol mostly depends on Aave and Polygon, it only makes sense to have a say in their governance, tho I don’t know if there is anyone keeping track of what’s actually going on in those two

Is there any plans to use Compound/Fei in V4?

[BRONDER]

I cannot know with certainty if any protocol is going to be used in the future. I know that we have actively discussed Tribe Turbo, but right now we are far from meeting the requirements that they have. Compound has not been discussed as far as I know, because it does not provide higher yields than AAVE right now.

[Pierrick]

Thanks for the summary and the various options offered.

As you mentioned, we may want to sell some assets for USD and some for ETH.
Regarding the budget for operations, it has drastically reduced during the past couple months with gas prices going down. We also plan to sunset V3 pools, which should reduce our expenses too.

Currently, we have these two Sablier streams that are streaming ScUSDC from the treasury to the Operation Safe:

• Sablier | Real-Time Finance
• Sablier | Real-Time Finance

So about $374k are withdrawable in the future for operations and there is also $22,646 in the Operation Safe, so it’s about $396k already allocated for operations.

During high gas prices, we were spending about 2.1 ETH per week. I think we are way below this number now but I don’t have any metrics to confirm it, so I will check for this week how much we spent to operate V3 and V4 pools and will post the result here.

We also have to spend 2 LINK tokens per draw for V4, so 14 LINK tokens per week.
Now that we have migrated to Chainlink VRF 2, we should spend less LINK tokens, today’s draw cost us 1.45 LINK but it’s too soon to say if it will be about the same for future draws.

I’ll come back next week with a weekly and monthly budget for ETH and LINK, so this way we will have a bit more data to decide how to allocate funds.

Crypto prices being what they are and kinda on a downtrend these days, maybe it would be wise to sell for USDC and then buyback ETH and LINK when we need some for operations but seeing that the Sablier streams are not empty yet, this proposal should maybe only focus on treasury diversification and not necessarily operations.

Regarding the fate of the tokens in our treasury, I don’t have a strong opinion for most of them and I think our choices should be directed by synergy with other protocols.

That’s why I think we should keep the TRIBE tokens, it could be a fruitful collaboration if we propose a RAI pool in the future.
Aave is our main yield source, so obviously we should keep the stkAAVE.
WAVAX should be distributed via the TWAB Rewards to depositor on Avalanche, same for wMATIC.
Gitcoin is where I participated in my first hackathon and it was one featuring PoolTogether, so I think it makes sense to keep a good relationship with them and do some more hackathons on their platform to attract some talents.

[TheRealTuna]

Of the current poll results, i am most disappointed with the desire to sell off the TRIBE. We should be trying to grow that partnership as their platform has products that can benefit us down the road. Dumping tokens acquired in a partnership will set a bad precedent and prevent other protocols from wanting to work with us in the future.

[Taliskye]

I think now is an odd time to sell many of the tokens we hodl, DeFi summer is coming. If we’re going to sell any of them I think we should approach the protocol to see if they would like to do a buyback, save face a little.

I think exploring TWAB with most of the tokens would be an interesting avenue.

And I really have to strongly second @TheRealTuna regarding the TRIBE, I get the Ondo really screwed us into a token valuation pit, but that’s not Fei-Rari’s fault so we shouldn’t discard those token due to a bad taste. What Fei and Rari are buidling with their platform is a massive suite of products some of which I’m confident we will be able to utilize and explore just as we had done with the Fuse pools in v3. We should be working to have a protocol representative from PT working with them to see how and where we can fit in.

[Pierrick]

Little update regarding our weekly spendings of last week to run the pools.
The following calculations are based on today’s price of $2,917 for ETH and $13.33 for LINK

For V4, it cost us 0.16 ETH and 11 LINK, so at current price: $613 weekly, $2,452 monthly, $29,424 yearly.
For V3, it cost us 0.39 ETH and 4 LINK, so at current price: $1,191 weekly, $4,764 monthly, $57,168 yearly.

Once we sunset V3 pools, we should be able to reduce our cost significantly but I also expect our cost to rise once we are going to release new V4 pools.

That being said, at current prices, we have enough funds streaming from our Sablier streams to continue to operate for several months, even years.
So the operations budget is not really worth considering in our diversification plans but I think it would be wise to diversify between USDC and ETH in case of a bear market. We now have to decide which percentage we want to allocate to each.