PGM-30: Treasury Management #4

Summary: Update the treasury management of non strategic holdings

Context: Quest & Warden protocols are generating fees, which were initially accumulated.

As explained in PEP-1 Recap, most of the non-strategic assets held by the DAO were sold for USDC to complete the loan repayment to Angle & secure most of the interest cost.

However, the DAO has to pay back 320,000 USDC after 1 year, meaning that a maximum of 324,000 USDC are still missing.

This post will present a treasury overview and discuss the following topics:

  • Transfer of assets to the corresponding multisigs
  • Allocation of the remaining non-strategic assets holdings
  • USDC accumulation to reduce the debt exposure over time.

Treasury Overview (update March 8th):

Community Multisig:

Locked Tokens Multisig (aka Warlord Mainnet Multisig):

Collateral Multisig:

Locked Tokens Polygon Multisig (aka Warlord Polygon Multisig)

Quest Fees Collector contract:

I) Transfer assets to the corresponding multisigs:

Warlord Mainnet Multisig:

  • Swap cvxCRV for st-yCRV
  • Swap CLEV + cvxFXS + bb-a-USD to USDC
  • Send PAL & USDC to Community Multisig

The CVX & AURA strategies updates related to Warlord release will be discussed in the next PGM.

Collateral Multisig:

  • Reminder to swap sdCRV to st-yCRV
  • Swap CRV to st-yCRV (increasing the Health Factor of the position)
  • Send CVX to Warlord Mainnet Multisig

Community Multisig:

  • Send CRV & APW to the Warlord Mainnet Multisig
  • Keep MIMO & SAFE for now (low balance & not transferable)
  • Consider how to allocate the remaining assets (D2D from swap & USDC - see II)

As voted on PGM-23, all strategic assets farmed with the POL are transferred to the Warlord Mainnet Multisig every end of month, at the same time as the yield claimed on all strategies.

II) Allocation of the remaining non-strategic assets holdings:

The community multisig holds 44,150 USDC (11 months of loan interests) + 73,200 D2D from token swap with Prime DAO (+80$ of MIMO + SAFE airdrop). .

D2D: Prime DAO deployed a pool on Balancer V2: B-80D2D-20USDC and is creating vote incentives to improve the base yield. The current yield on Aura for this pool is ~ 110% APR.

Considering the D2D holdings value (1900$), it would only require 478 USDC as equivalent.
This additional strategy would allow to increase the strategic assets accumulation by 200$/month.

USDC: As explained above, the 44,150 USDC have been accumulated by selling the non-strategic assets to cover the loan interest costs. If the D2D LP is created, the remaining balance would be 43,670 USDC.

While these funds should remain in USDC and easily available, the DAO could consider the following strategy:

  • Deposit USDC on Morpho-Aave V2 and earn 1.44% APR + 1310 MORPHO/year at the current rate (token not transferable)
  • Withdraw 4,000 USDC / month to pay the interests (if not earned during the month)
  • Migrate the position to Morpho-Aave V3 once live with gauges.

III) USDC accumulation to reduce the debt exposure over time:

As described in PEP-1 Recap, selling the protocol fees was part of emergency actions taken to avoid liquidation on the Angle loan. However, the DAO still needs to accumulate up to 324,000 USDC over the coming year to repay the principal.

Some possibilities:

  • Periodically (monthly ?) sell the non-strategic assets obtained from Quest and Warden fees to increase the USDC holdings.
  • Deposit on a lending Market like Morpho to generate around 1.4% APR
  • Swap any non strategic airdrop received to USDC
  • Partially pay back in anticipation to reduce the total amount to pay

Means: None

Technical Implementation: None

Voting Options:

  • Yes, let’s update these strategies
  • No, rework the proposal
  • Abstain
Should we update the strategies described above ?
  • Yes, let’s update these strategies
  • No, rework the proposal
  • Abstain

0 voters


Well this is a timely proposal.
I’m okay with most ideas here except:

  • We should start thinking about another main treasury currency for our DAO (GHO?)
  • Euler’s hack is reminder main treasury should NEVER be deposited in another protocol and should remain avaialble and safe at any time;

I hope more people will participate here since there’s quite a few important topics at hand.


Totally agree with treasury diversification, GHO is a potential solution, crvUSD & LUSD too.
The reason I suggested to swap & hold USDC is because the debt is denominated in this currency, and we have to pay monthly interests on it.

However, considering what happened over the past few days, I think we’ll all agree that it’s better to do a few more tx / month if it allows to have safe holdings.

We could consider to keep only 1-2months of interest & convert everything else to LUSD until other decentralized stablecoins options are available.

Saying that funds should never be deposited seems a bit extreme, but the due diligence on the protocol should always be done, and as you mentioned, diversification is also important on this point.

The proposed strategy to deposit on Aave through Morpho could still be considered imo, as these are two protocols were audited several times. We could also consider Aave only which is well battle tested + have the safety Module and a good stable treasury, but I’ll also understand if the community rather keep these funds sitting on the multisig as these are owed by the DAO.

My thinking on this point will be very different for the stable treasury accumulated over time, as we should to generate yield on it, but we’ll need to be very careful on the strategies selected.


I’m okay with what you say except on the point Euler’s hack is reminder main treasury should NEVER be deposited in another protocol and should remain avaialble and safe at any time. This is right but avoiding some yield from protocol multi-battle tested like Aave would not be the best decision. Or even Morpho who has a TVL of $183.81m according to DeFi Llama and they have been audited multiple times, even recently, last time was 1/03/2023 for the Morpho V1 and 24 August 2022 for Morpho-Aave V2 according to their doc.


I understand the pushback for this, not everyone in the DAO has the same level of risk management.
In the current setting, it seems overboard to take additional risk on our whole stablecoin stash for 2% APR. We’d basically be risking everything for 1000$ per year…
Additionally gas fees to move the funds in and out (let’s say 20$ a tx, one deposit monthly and two withdraws, one for the loan and one for potential contributors) would amount to an extra 700$ in gas.

I would love to focus on LP mgmt and treasury structure instead of investment for now. Maybe we could revisit it once stablecoin treasury is over 500,000$ ?


Taking into account the fee for each tx is not worth it, you right. But in the meantime, it’s sad to see this amount not getting back some yield. But the best is not to take risks to not lose money with fees + other things.

1 Like

I agree with everything you said

I think it would be good to find a compromise. Right now the treasury is not big enough to take the risk of farming with, but later, it might be a good idea.

It could be interesting to be able to farm as much as we spend for the loan for example, but we are far from there


I support this, let’s reduce USDC exposure but continue to have the interests prepared.


I also agree with Figue’s and Starny’s sentiment that we shouldn’t push to farm with our stables at their current size.


If you count the loan + interets in this amount yes it make sense, otherwise once the DAO finishes to pay back & have 50-100K+ in stables the question should already be reconsidered imo, but we’re not there yet.

Makes sense, especially since it’s not really “our stables” but a debt.

However, if enough funds are generated by the protocol and especially if the loan funds are not allocated, we should consider the following repayment plan or a similar one reducing the loan time and amount of interest paid (this is assuming ~ 31k monthly earnings):

Month 1 = 4k interests (paid)
Month 2 = 4k interests
Month 3 = 100k anticipated pay back + 4k interest

Month 4 = 2.75k interests ((320k - 100k) * 0,15)/12
Month 5 = 2,75k interests
Month 6 = 100k anticipated pay back + 2,75k interests

Month 7 = 1,5k interests ((320k - 200k) * 0,15)/12
Month 8 = 1,5k interests
Month 9 = 1,5k interests
Month 10 = 120k + 1,5k interests

This would allow to:

  • Reduce the interest paid by 21,75k$ (Lowering the effective loan APR to ~ 8,2%)
  • Reduce the loan period by two months
  • Progressively recover the collateral
  • Focus on treasury structure faster

Lmk your thoughts on this point !

1 Like

This is an excellent idea, but implies we would have to sell some assets (yCRV or auraBAL) to pay back every 3 months, as our USDC accretion rate is still not sufficient to make 100k in 3 months.

So current proposal would be:

  • Sell Quest rewards directly for USDC (could be automated in v2)
  • Find another reserve asset in the upcoming months
  • Mobilize 100k USDC by end of May to reduce our loan pressure

Did I sum it up correctly? If so, vote will be up tomorrow

1 Like

Oops sorry I got confused between the monthly fees & total monthly earnings my bad !
Even if there are many stuff cooking that should increase the protocol revenues, it’s true that the inflow in fees is currently lower than 31k/month.

I’d rather avoid selling strategic assets, but we can reduce the anticipated repayment to start, and update the plan depending on the revenues.

Assuming ~ 10k/month earned in non strategic assets & the 40k$ held in USDC, the treasury committee could send a first anticipated repayment of 50k after 3 months, and reevaluate later if possible do do more. This would already reduce the monthly interest cost from 4k to 3.38k, and allow to start recovering part of the collateral if needed.

So to recap the current proposal:

  • Sell upcoming Quest fees & non strategic yield to LUSD until automation
  • Keep ~ 500 USDC to LP with D2D & stake on Aura + 1 month of interests (4k)
  • Convert all remaining USDC to LUSD
  • Launch the tx on the different multisigs mentionned in I)
  • Mobilize at least 50k by end of May to reduce the loan pressure
  • Consider other decentralized stablecoin solutions once available (in another PGM)

If all good I can push the vote tomorrow


Hey guys, sorry, I’m trying to get more involved in governance, but I’m having a hard time finding time right now. I agree with dydymoon’s last answer, I think it’s a good compromise. I just wonder if there is a risk with LUSD: if we buy it at the end of each month, and swap it for USDC to pay back the loan (4 times a year), is there a risk of slippage even if we are not talking about huge amounts?

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Very nice thread. I finally had the time to read through the entire thing and digest all that information. It’s great recap, and also very useful to see all the MS contract adresses in one place. I don’t have anything different from what has been said already. I agree with all the key points raised:

  • disposal of all non strategic assets to build up a position of stablecoins as quickly as possible,
  • risk mitigation by diversification: holding different stablecoins, starting with LUSD and potentially GHO later on.
  • keeping the stablecoins on the MS. The risk/reward on Morpho is not worth it.
  • early repayment of portions of the loan if possible. It’s confortable to have a buffer of 40k available, but it comes at a steep price (15% APR). It makes sense to reduce that interest payments as they currently consume a large portion of the quest fees.

Hey, it should be fine using aggregator with MEV protection, we already did large swap in the past and there was no issue with Cowswap or DefiLlama swap for ewample.
That being said, increasing the tx amount will also increase the gas cost spent a bit, but worth it to secure the treasury.

Thanks for the answer, when I said slippage, I meant that if we buy the LUSD at a price of $1.04 at the end of one month, and three months later, when it’s time to pay back the loan, if the LUSD is trading at $1.01, we will have a difference of $0.03 per $1. Do you think we should be worried about that?

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Very good point.

Luckily, since the Chicken Bonds product release, LUSD is trading closer to the peg (most of the time between 1.01 & 1.02, however you right it can be worth more sometimes.

As most of the tx are done by end of month for accounting purposes, it might be complex to wait for the peg to buy, however we could try to put a limit order.

I’d say the a % premium is a risk to take since the alternatives would be to mint LUSD directly, which requires ETH as collateral, or to potentially risk more with centralized stablecoins.

Finally, if LUSD is bought around 1.04$, one solution could be to short it on money market such as Aave with e-Mode, but this requires more management to avoid liquidation, and additional risks as funds would be deposited and used as collateral, so I don’t think the DAO would take such risks.

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It seems that there is a lot more momentum and integrations with LUSD these days, so hopefully as it is getting more visibility, there will be more arbitrages keeping it closer to 1$.
That being said, paying a small premium for the extra security doesn’t really bother me. For example, buying between 1$ and 1.015$ seems reasonable, but i wouldn’t rush to convert the treasury from USDC to LUSD if the exchange rate was at 1.05$.
It’s a good approach to diversify the treasury with different stablecoins, but i don’t think there is an urgency to convert all the fees every single month if the price isn’t right. I think it’s more of a target, and we should try to get there progressively as the treasury grows. I like the idea of using a limit order. The short on AAVE seems a bit overly complex.

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Yes, I completely agree with the last answers. A premium of 0.01$ for extra security is completely ok for me, and a limit order in a time frame of 3-4 days at the end of each would allows us to optimize a bit the trading rate. Should we chicken in with our Lusd before paying back the loan or is it too risky?

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Also a good point, thanks for the feedback and questions !

I don’t think we should deposit the LUSD in the CB because there is a delay before being able to Chicken in.
Before that you’re in the first bucket, which doesn’t earn any yield as everything is sent to the 2nd bucket, the reserve.
Since we’ll probably have to withdraw before the end of the period, we would just pay gas for nothing.

Additionally, it seems that the general opinion on this thread is to avoid allocating the funds needed to pay back the debt, however this strategy could be considered in the future.