Proposal: Perform minimal treasury diversification

Background

Right now the DAO is very well capitalized, but it just holds NATION and some ETH.
NATION is the most important asset for the DAO to hold, as it’s the heart of the community when it comes to economic alignment.
ETH is also fine as it’s the platform that makes this all possible.
However, the DAO might need some other tokens in order to hedge market risk, and also to pay certain providers that would only take fiat, therefore needing stablecoins (to interact with the physical world).

Proposal

Because of the initial liquidity seeded by the DAO in the Balancer pool, the DAO has generated some profits.
I propose to withdraw some ETH from the Balancer pool, and to withdraw 50 NATION from the DAO’s treasury. We can do this at the same time or just after kickstarting liquidity rewards, since there will be significant liquidity then.

Specifications

  • Withdraw some ETH from the Balancer pool, and keep it in the DAO.
  • Withdraw 50 NATION from the DAO to 0xbac3ab60a1643e5f5de8eb62cb4bb232711d9dcd (address I use for Nation3) to be diversified into WBTC. The reason for doing this is that we need to do one trade a day, to not impact the market’s price, and the DAO’s voting time is 2 days, so it’s infeasible. In the future we won’t do it like this, since it requires trust (see final section).
  • With current volumes, diversifying 50 NATION should be done over at least 5 days to not impact the price.
  • Pay back 13 ETH to Luis (myself), which is the amount of ETH I lent to the DAO to seed initial liquidity in the Balancer pool. Proof.

Future proposal

This is a one-off proposal for now. In the near future, we should create a committee of experts in treasury management who can have some leeway in managing some of the DAO’s funds. Such proposal will require more thought, but should come soon.

Changes

Based on feedback from community members, I have amended the initial proposal to include the following changes:

  • Leave the ETH amount unspecified, so we can put it under a vote.
  • Kickstart this at the same time or right after liquidity rewards start.

Update

Vote is up! Snapshot

6 Likes

I think 60ETH is to much for the pool and to the holder,maybe we wait for the pool more bigger and then do this would be better

4 Likes

I think the direction is good, has stable assets, and pay back debt. It makes sense for one independent nation.

How much ETH is in the liquidity pool? That would determine whether it’s a good time to withdraw the liquidity. I remember there is only 50+ ETH in it yesterday. The page of the pool info just can’t be loaded right now.

U mean withdraw the LP profits right? cuz withdraw the liqulity which is not good in this moment?

It does not make sense to withdraw from the pool or swap the treasury before we start the LP program. Once that is in place, that would be a more appropriate setting due to lower slippage.

3 Likes

Great points here @massatio.eth @gym-wolf @jiawen. Will update the initial proposal to kickstart this after LP rewards/higher liquidity is in place, and also provide some options of how much ETH to withdraw to put it under a vote.

3 Likes

I think the options would make the proposal better.
Thanks for the debt(13ETH) you lent to Nation3. :slight_smile:

1 Like

Very agree with this. withdraw nation and ETH after liquidity rewards if the liquidity is big enough then would be good. coz that way the price impact would be bitty.

Withdraw nation and ETH after liquidity rewards if the liquidity is big enough then would be good. coz that way the price impact would be bitty.

I agree to withdraw some eth from the pool, however, it’s too much, actually, I don’t care about the short-term setbacks, however, we’re just born, I suppose it will be better to withdraw a bit less, like half of the proposal to decrease setbacks.

I think it is possible to build a liquidity pool first, and then repay the debt after stabilization.

1 Like

You are wise. I agree with this. withdraw nation and ETH after liquidity rewards if the liquidity is big enough then would be good. We should control the risk .

:handshake:Agreed to hedge market risk and response, might as well set up a currency pair to keep stable.

Vote is up! Snapshot