YIP: Multipart Yam Treasury Rehabilitation Proposal

YIP Multipart Yam Treasury Rehabilitation Proposal

Basic Summary

All of these will be voted on separately.

YIP Part 1 – Create Bounty of $500 for a Dune Dashboard for Yam Treasury and all related assets including multisig accounts

YIP Part 2 – Replace current Yam/WETH liquidity on sushi.com AMM (currently ~$1mm) with Yam Treasury owned liquidity by using 500k ETH from treasury and minting 500k YAM (will be burned if removed from liquidity position). Then redirecting current liquidity rewards of 5k BoU $Yam per week to the operations multisig.

YIP Part 3 – Analysis of current treasury assets and rebalancing to fit our overall long term strategy, and determining how to earn yield from assets in the treasury. Create a Request For Proposal (RFP) to hire a contractor to do analysis and report.

Abstract - What am I proposing?

YIP Part 1 – Creating a Dune dashboard for the treasury and all related assets that Yam holds for transparency and also better decision making.

YIP Part 2 – Yam Treasury owned Liquidity has been discussed here: A Roadmap For YAM (Part 4 - Protocol Owned Liquidity) - #9 by ross

Current prices of Yam and liquidity is low enough that the treasury can afford to invest in owning of our own liquidity. Additional details below and in the thread above. This is something we can accomplish right now with minimal required new infrastructure.

YIP Part 3 – Discussions around earning yield from the treasury has diminished, more efforts need to be allocated to this task. If no one has the time to allocate towards this endeavor, we should consider creating a RFP for a treasury management contractor who is paid hourly based on work performed when requested with detailed reporting.

Motivation - Why am I proposing it?

YIP Part 1 – Yam’s treasury is an integral part of Yam DAO. With accurate and transparent information on the treasury, better decisions can be made to grow the treasury and Yam DAO.

YIP Part 2 –

  1. The treasury creates its own Protocol owned Liquidity by using un-productive ETH that’s sitting in the treasury and pair it with newly minted Yam with a guarantee that these Yams will be burned if it is ever removed from the liquidity position.
  2. If and when the total LP position 5x from current value, we remove the original value of ETH to be placed back in the treasury to be utilized for benefit of Yam’s Treasury.

An example:
Current liquidity is approximately $1 million in Sushiswap’s Yam/ETH pool.
We redirect the liquidity incentives to the operations multisig. Currently Yam is paying 12,500 $YAM as incentives which will be entirely redirected to the operations multisig.
We use $500K in ETH from the treasury and pair it with $500K newly minted YAM and add to the Sushiswap’s Yam/ETH pool. If all current LPs remove their positions the pool will still have $1 million in liquidity but now it is owned by Yam’s Treasury.
If and when the treasury’s LP position grows in size to $5 million, then we remove $1 million in liquidity, burn the $500k in Yam and deposit the $500 in ETH back into the treasury.

This accomplishes many things:

  1. Creates Protocol owned Liquidity for Yam’s Treasury
  2. Yam’s treasury earns the swap fees. Currently the ETH is not producing any revenues.
  3. Yam’s treasury has a direct incentive to grow the value of Yam (it has skin in the game)
  4. Treasury value is currently ~$5 million so it will require about 10% of the treasury, but the ETH is still owned by the treasury.

YIP Part 3 – Yam’s treasury need consistent Tender Loving Care but it does not require a full time person to maintain, instead we should have a contractor that Yam can call on and ask to do a report.

Poll to Measure Sentiment
YIP Part 1 - Bounty for Dune Dashboard

  • Create
  • Do not create

0 voters

YIP Part 2 - Use ETH from treasury, pair with newly minted YAM (if removed from LP required to be burned) and create protocol owned liquidity. All current liquidity incentives diverted to Yam’s operational multisig.

  • Implement
  • Do not implement

0 voters

YIP Part 3 - Create a Request For Proposal (RFP) to hire a contractor that is paid hourly to analyze Treasury’s growth and report new opportunities to increase value to the Treasury that are in line with current investment strategy.

  • Create RFP
  • Do not create

0 voters

Everything is up for discussion, please put in your comments below.


Appreciate the proposal. I have a few comments and questions:

General comment:

  • It would be helpful to give these different proposals individual names so they are easier to discuss separately. They can become separate YIPs once ready, so maybe just “Treasury Dune Dashboard,” “Protocol Owned Liquidity V1,” and “Treasury management”.

Part 1:

  • Regarding the Dune Dashboard, I think this is a good idea. No idea about whether that cost is fair or not though. But maybe a good start.
  • Who is scoping out what this dashboard should include and supervising this work?

Voting Yes on this one.

Part 2:

  • Can you add $ signs to the ETH and YAM amounts for clarity?
  • Redirecting the rewards to the multi-sig makes this process more complicated since we would need to change the incentivizer contract. I recommend that if we do this, we simply use the existing contracts and earn the proportion of YAM rewards that we get from how much of the pool we have. Based on this proposal that would be half of the YAM, but in reality it would probably be more as existing stakers may exit since they are may no longer feel responsible for providing liquidity.
  • This ETH is only unproductive if we don’t use it for other things, which you are proposing we do in “part 3.”
  • The realistic ROI for providing our own liquidity is low (most likely below break even and/or other investment options) and we need to be up front about that. The reason that we give rewards to LPs is to offset that. The same is true if the treasury owns the liquidity. We are doing it to so that we can assure that we have acceptable liquidity depth without paying for it continuously. Anything beyond that should be considered a boon and not an expectation.
  • If we are aiming for yield on that ETH then this is not an “optimal” solution.
  • I’m fine with this as a rule written in, but we should again be up front about the fact that this may take years to happen.

I still think there are better options to acquire Protocol owned liquidity than this and the gain is minimal. POL is a long term issue and not a short term one, so I think this is unnecessary at this time, but if voters are committed to doing this then it probably isn’t a problem, especially as a short term solution. But that is exactly how I see it. A hasty solution for a longer term problem that we should explore more fully.

Another caveat is that if we are planning on reworking YAM’s long term issuance plan and schedule, I would prefer if we didn’t tack on random new issuance before we sort that out. But again that is up to the voters. We should be clear that we have plans to submit additional proposals for YAM issuance in the near future.

Holding off on voting for part 2 until we sort out some of the issues mentioned above.

Part 3:

  • This is basically what I have been doing for the DAO. I’m happy to keep doing it. The issue as I see it is not that there isn’t someone to do it, but that there are no clear guidelines about what to do and the landscape keeps changing. Hiring a consultant isn’t going to solve that. We need to determine what our priorities are then if we need someone to do a report we can do that. Otherwise its just going to be someone who doesn’t know what is going on giving the same information that we already have.
  • As an example, we did have somewhere to put ETH not long ago. There were going to be new Synths that would have sucked up most of our inactive funds, earned yield, and been productive. As we both know, those synths are not ready yet, and so there is money sitting around. Hiring a consultant to tell us what to do with our funds 3-6 months ago would not have solved this problem since all our assumptions were different.
  • If we do it, who is creating this RFP? I’m voting no on this one for now. Don’t see what the RFP adds.

I agree that we should put our funds to work. Yearn vaults are the low hanging fruit. Either in the tri-pool as you suggested, or separately with ETH in stETH (or another) and USD in the typical vaults. We should be entering with enough size that gas fees aren’t a big problem.

But remember that we have plans (that everyone seems to like) where treasury yield goes to stakers/voters. Yearn vaults auto-compound so it may be a headache to determine splits for rewards.If we are going in this direction, we should look at element.fi as a way to split our principal and yield, and also get fixed rates.

@0xE mentioned that for a small bounty of $500 a proposal isn’t necessary and can be paid from the operations multisig.

@ross suggested that instead of the Protocol owned liquidity we invest half of our idle ETH into the stETH yearn vault which I think is a good idea, I put together a proposal here: