I really appreciate you beginning this dialogue and the work you put in. This is a great base framework to go by. I have a differing opinion regarding the breakdown of how these funds should be allocated though.
Here is what my thesis is based off of. YAM can do well if crypto does well. YAM will not do well if crypto crashes. There is just no way around it. So I do not see the need for any kind of hedging or just being conservative in general. Just being an Ethereum project is a bet on crypto in itself. There is no reason to cap our upside by taking a conservative approach. I’ll give you a good example. In 2016, DigixDAO (DGD) raised 466,648 ETH, worth $7M at the time. Digix didn’t hedge or convert that ETH to cash. They held essentially all their reserves. At the peak of 2017, that 466,648 ETH was worth over $650M. Essentially, we might as well capitalize on the upside because on the downside we’re screwed anyways. And the upside is so asymmetrically huge that we want to maximize.
So here are my thoughts on allocation breakdown (using your terminology):
Bonds & Fixed Income 20%
Let me clarify a few things. I think we should have a stablecoin balance requirement (not included in this breakdown) that is used for day-to-day operations/salaries. Once over that amount, the excess gets invested. When under that amount, all new funds go towards that balance until it hits the threshold.
I think there is no reason to hold cash outside of what is necessary for expenses. You can hold stablecoins and deposit them in Curve to generate a low risk yield. There should be no cash just sitting when we can be generating a return on those stablecoins. Since this is considered “yield farming”, I put 0% for cash and factored that into the “Bonds & Fixed Income” category. So maybe something like 10% stablecoins earning a low risk yield, and 10% on farming strategies.
Then equities. We should be betting on the space. More specifically, the Ethereum ecosystem. One thing ETH enthusiasts will disagree on is the value of BTC. Some think it is valuable and others think it’s worth very little. To avoid unnecessary circular arguing, we should avoid investing in WBTC and stick to things we can all generally agree on: DeFi and other Ethereum projects. Yield-farming can be complex, high-risk, and even a losing endeavor in many circumstances. If you include the time and risk involved, it can actually be a more intensive way to generate inferior returns compared to betting on the right Ethereum projects. That is why I put such a high weight in equities versus yield farming.
I’d like to have a distributed, trusted team of multi-sig signers that control and invest these funds. We would need investment strategists who have a proven record of successful investing in the space. It is better to place trust in experts than to try to manage investing in a fully decentralized way with many people. This space also moves very fast, so not being able to make the necessary moves in time due to a lengthy process/large consensus seems like a disastrous way of managing funds. We can set investing rules/guidelines and have the ability to vote them out if we see fit.
I don’t think this should be how we allocate all the funds (as stated by the OP and Trent), because we would like to use some to seed policies for the insurance product and be able to utilize funds for other products. But for the fund portion of the treasury, these are my thoughts on how I think we should allocate it.
Good work so far guys. I’m very interested in furthering this discussion with all of you.