Note - all prices/figures in this proposal are as of 11/14/21
Considering the fact that PRINTS trades are almost always denominated in ETH, the NFT collection tends to be highly correlated with ETH, and the treasury contains ~640 ETH currently, it would be prudent to alter the asset allocation of the treasury to achieve the primary goals of:
- Improving stability through diversification, to ensure that critical expenses can be funded even if PRINTS and/or ETH decline in value
- Providing useful absolute returns to help fund our operating expenses
The basic idea is to generate yield on our idle assets while we come up with the projects they’re intended to fund.
Deploy 60 ETH/month split into various DeFi protocols over the next 4 months, each with different risk tranches:
Deployment will happen according to this breakdown:
Risk Level Monthly Allocation Total Allocation Investment Yield (APY) Expected Return (Yearly) Low 30 ETH 120 ETH Lido - ETH staking 4.9% $26,750 Low 15 ETH 60 ETH ($275k) Aave - USDC pool 4.0% $11,000 Medium-high 10 ETH 40 ETH ($185k) Yearn - USDC vault 10.0% $18,500 High 5 ETH 20 ETH Yearn - yveBOOST vault 18.0% $16,500 60ETH 240 ETH 7.0% $73,000
All of these destinations appear to have robust liquidity, enabling us to close out our positions expeditiously.
Deployment details — main vault signers will execute the allocations themselves through the gnosis safe interface directly (via apps), or have the option to delegate this work to any of OPEX vault signers through the creation of a specific “Finance” wallet or vault to handle all treasury management operations.
- APYs — the yields on these pools aren’t fixed, which means they will vary over time as more or less users deposit/withdraw assets from them.
- Swapping — Gnosis has Uniswap, Sushiswap, and Curve apps on their platform that can be used to execute the swap. Signers will need to check market conditions at the time of the swap to determine the platform with the best price/least slippage.
- Depositing — Similarly, Gnosis has Aave, Lido, and Yearn apps that can be used to deposit into those protocols.
This gradual approach to allocating idle treasury allows us to get comfortable with the concept and process before increasing the scale of to include larger amounts of assets and more complex strategies.
It also allows us to halt allocations should circumstances change.
Additionally, once we have token liquidity we can utilize the trading data from our token to get a much more accurate view into the degree of correlation between the token, our NFT asset values, ETH prices, and other tokens. This will significantly increase our ability to construct a mean-variance optimized portfolio to maximize the returns achieved per unit of incremental risk.
We can halt this program at any time for any reason, including if we think we’re moving too fast. Alternatively, we could increase the allocations if we feel comfortable doing so.
There are also opportunities to increase the complexity of the investments down the road if desired.
If vote passes here, this will be sent to snapshot for a final vote.