One of the basic value propositions of Yam DAO is the ability for the DAO to put its diversified treasury to work for the purpose of growing the Treasury and accruing value to community members. @ross has already begun the process of proposing mechanics that begin to address the latter. Meanwhile the Treasury has already been used to farm various tokens for the Treasury (e.g. $INDEX, etc) on behalf of the DAO. In the same vein as @Snake’s proposal to use the Treasury’s $UMA to vote in UMA’s oracle system in order to earn revenue for doing so, I’d like to highlight another strategy for the DAO to consider.
Curve Finance’s voting system for rewards has given rise to what some have called the “Curve Wars” where protocols are competing with one another to incentivize liquidity for their own Curve pools.
As a result of this new game theory, we now have boosted CRV staking protocol https://www.convexfinance.com/, systems like https://bribe.crv.finance/, and protocols like https://votium.app/ which allow projects to directly appeal to token voters with rewards in their native token. The ecosystem is now evolving even further with protocols like redacteddao.xyz building on top of these incentives using OHM style mechanics, etc.
Yam DAO does not have its own stablecoin, so there is no need for the DAO to participate in the Curve Wars as a reward provider. However, our Treasury does give us the opportunity to participate as a voter.
I believe it would be beneficial for the DAO to consider committing a portion of the Treasury to accumulating $CRV and $CVX and utilize these holdings to vote on Curve gauge weights in exchange for rewards.
I would advocate for the revenue to be split between the Treasury and a tokenholder value accrual mechanic. Mechanics to consider include, but are not limited to, “Buy Back and Burn”, an ibYAM staking solution in the vein of $xSUSHI or $sSPELL, etc.
The specifics of the mechanic can be determined through future discussion as these are just two examples that come to mind.
There are multiple benefits to this endeavor:
It allows the Treasury to generate yield without the risk of impermanent loss.
It generates additional revenue for the Treasury with very low labor requirements to execute.
The Treasury benefits from both the yield generated from voter rewards and also the underlying tokens’ value accrual.
Revenue generated helps extend the DAO’s runway.
Revenue generated helps to fund additional dev resources needed to ship products.
Revenue generated can be used to provide liquidity for future Yam DAO products.
Voter rewards are denominated in the native token of the protocol which is incentivizing the votes, allowing the Treasury to accrue further diversified token positions over time.
With enough voting influence, Yam DAO’s voting position has the potential to encourage additional B2B and DAO-to-DAO interest and partnerships with other projects that want our vote. Such relationships have been lucrative for the Treasury in the past.
Revenue sharing as a result of incoming revenue would increase community morale and contribute toward a more positive metanarrative around the $YAM token.
If this idea gains momentum and alignment from other members of the DAO, the next step would be to put forward a more formal Proposal and Request-for-Feedback specifying exactly which assets the Treasury would acquire ($CRV or $CVX), how large of a position to take, and which assets would be swapped to do so. My hope is that we can begin to flesh out these points via discussion below.
If approved by governance, I believe we would need to determine whether the existing multisig has the ability to participate in the bribing/voting protocols we would want to utilize. If a new multisig is needed explicitly for this purpose, we would need to determine who among the core contributors and other DAO members to empower as the multisig signers.
We would also need to determine general guidelines and parameters for how the DAO wants our Treasury position to vote, whether to prioritize for the most valuable rewards available each vote, whether to prioritize strategic relationships, or whether to adjust on a case-by-case basis. All open for discussion.
In terms of development load, we would need the following:
Smart contract to handle the initial on-chain transactions when acquiring our initial token position.
Adjustments to the Yam frontend to reflect the new Treasury position and any resulting revenue.
If the DAO arrives at consensus around a revenue sharing mechanic, a smart contract would be necessary to manage this process unless the revenue share can be tied into an existing mechanic (i.e. “Buy Back and Build”).
If a staking or ibYAM mechanic were to gain favor, additional work would need to occur to Yam’s frontend to allow for interfacing with the staking contract.
This is not a formal proposal.
At this stage in time, I am only seeking to put this idea in front of the community to spur discussion, solicit feedback, and determine whether the DAO has an appetite for this. Any and all on-topic feedback is welcome. I invite anyone who wants to participate in the discussion to do so.
I am particularly interested in @krugman25’s POV on whether the value proposition is worth it compared to other ways we could put the Treasury to work, in addition to how this would impact our Treasury rebalancing and established risk parameters.
I look forward to hearing everyone’s thoughts on this.