Abstract
This proposal seeks approval to allocate a portion of the DAO treasury funds into DeFi strategies involving ETH, BTC, and USDC, ensuring full compliance with relevant financial regulations, tax laws, and governance frameworks, while maintaining risk mitigation and capital protection. The primary objective of this deployment is to optimize treasury efficiency, generate sustainable yield, and diversify the DAO’s financial strategy while maintaining responsible risk management.
Motivation
Currently, the DAO holds a significant balance in stables and low-risk assets. While stability is valuable, keeping idle capital in the treasury results in an opportunity cost. Allocating these assets into well-vetted DeFi protocols subject to compliance with applicable regulations, achieve the following objectives:
- Generate sustainable yield to support ongoing DAO activities
- Diversify treasury holdings across productive and compliant assets, ensuring alignment with the DAO’s risk management framework
- Optimize capital efficiency while maintaining liquidity for operational needs
By approving this proposal, the DAO can take a proactive approach in leveraging DeFi opportunities while ensuring responsible risk management practices.
Execution and Transparency
The DAO will oversee the allocation strategy, ensuring full compliance with legal, tax, and regulatory requirements, including risk management protocols, as well as alignment with the DAO’s governance structure, by:
- Risk mitigation by selecting protocols with a strong security track record
- Sufficient liquidity to allow for timely withdrawals when needed
- Yield optimization by selecting strategies that balance risk and return
To maintain full transparency, all transactions will be executed on-chain, and a periodic performance report will be shared with DAO members. This report will include:
- Deployed funds and associated DeFi protocols
- Earned yield and overall performance
- Any relevant risk or security updates
Example of Projected Estimated Yield:
Deployed Capital: $0.15-0.2M (split across ETH, USDC, BTC)
Targeted Strategies:
ETH staking via LSTs (e.g., Lido, Rocket Pool) → 5% APY
USDC deployed in blue-chip DeFi lending protocols (e.g., Aave, Stake Dao) → 7-10% APY
Note: While these protocols are considered reputable in the DeFi ecosystem, they still carry inherent risks, including smart contract failure and market volatility.
BTC used in yield-bearing strategies (e.g., liquidity provision or wrapped BTC staking) → 2.5% APY
Disclaimer:
These yield estimates are based on current market conditions and past performance. Actual returns may differ due to fluctuations in the market, changes in DeFi protocol dynamics, and other factors. These projections are not guaranteed and should not be considered as financial advice.
Risk Warning:
Investing in DeFi protocols involves significant risks, including but not limited to impermanent loss, smart contract vulnerabilities, and protocol failure. The DAO will take reasonable steps to mitigate these risks, but contributors should be aware that capital loss is possible. Past performance is not indicative of future results.
Projected Returns:
Monthly Yield: ~$ 3000(depending on allocations and compounding effects)
Yearly Growth: ~4% - 6% increase in treasury value, assuming conservative reinvestment
Important Note:
These projections are based on historical performance data and expected market conditions at the time of writing. The actual yield may differ, and no guarantee is made regarding the achievement of these returns.
Allocation of Proceeds
- Yield generated from deployed assets will be reinvested into the treasury or allocated according to future governance decisions.
- Any adjustments or reallocations will be subject to DAO governance approval to ensure continued alignment with treasury objectives.
Voting Options
- For: Approve the deployment of treasury USDC, ETH, and BTC into DeFi strategies as detailed in this proposal.
- Against: Reject the proposal; no deployment will occur.
- Abstain: Abstain from voting.
Implementation Plan
Upon approval, the DAO treasury team will initiate the structured deployment process, selecting the most optimal protocols while ensuring transparent execution. Regular updates and performance reports will be provided to the DAO community to track progress and ensure responsible treasury management.