PGM-25: Treasury Management #3.1

Paladin Governance Management (PGM) PGM - Approved
1

Summary: Update the CRV strategy

Context: As mentioned in Treasury management #2, most BAL & CRV holdings have been transferred to the Locked Tokens Multisig, with other strategic assets.

While the CVX & AURA have been locked already to avoid missing another round (considering that there are not a lot of possible strategies for these assets), some of the BAL & CRV are already deployed but there might be better strategies.
The BAL strategy discussion can be found on the Treasury Management #3.2.

Rationale: The current CRV holdings are the following:


Breakdown of the 85.26K CRV:

  • 56.8K held on the Locked Tokens Msig
  • 9.93K + 18.20K Pending claim on Main Msig
  • 0,3K CRV on the fees Collector

One of the long term goal is to get the ability to max lock CRV for veCRV, allowing to benefit from all veCRV features without additional restriction: Governance power, gauge weight power, veBoost, protocol fees and any potential airdrop to veCRV holders.

However, we need to be whitelisted to lock CRV, and this can take time, so the DAO started by using wrappers and might continue before asking the veCRV whitelist directly depending on the result of this proposal.

After PGP 17, the Paladin DAO deposited 71981 CRV in the Stake DAO liquid lockers, which allowed the DAO to get earnings and part of the voting power.

Breakdown of sdCRV earnings:

  • 719,17 + (88,17 pending claim) 3CRV on the Main multisig
  • 2479,84 (+35,58 pending claim) SDT from sdCRV bribes on the Main mutisig
  • 77,19 (+13.5 pending claim) CRV on the Main multisig
  • 17.66 3CRV + 12.32 SDT + 6.07 CRV pending claim to date on the Locked multisig (since the sdCRV have been sent recently)

sdCRV voting power: Since the treasury doesn’t hold veSDT, the voting power of the sdCRV is reduced. Even after the 30-Day TWAP period, the sdCRV voting power was always between x0.6 and x0.7, meaning that earnings are lower than holding & voting with veCRV max locked.

Current voting power for 71981 sdCRV staked:

Several options to optimize the strategy:

1) sdCRV strategy: (Buy & lock SDT or get veBoost)
The max boost is x1,57, so with current numbers, the voting power would increase to 113010 veCRV by holding 46090 veSDT (SDT locked 4 years). Otherwise we’d need to lock at least 29.3K veSDT to get 1:1 voting power.

Additionally, Paladin could release the veSDT market on Warden which would allow to consider the opportunity cost of buying veBoost on Warden.

Not to mention that there are also 85.26K CRV not allocated yet, which would basically double the amount above if we were to allocate it there too. Also, the CRV holdings are constantly growing thanks to the POL Strategy and fees.

2) st-yCRV strategy: Yearn recently launched the yCRV , which allows different options: st-yCRV, lp-yCRV & soon vl-yCRV. While vl-yCRV is not out yet, the two other are, and st-yCRV can be interesting for us:

  • 2,21x boost on Curve Admin Fees (4.98% APR)
  • Yearn 10M veCRV & yveCRV/yvboost not migrated used to boost new users
  • st-yCRV gauge weight power is used to get bribes
  • Auto Compound bribes rewards into more CRV
  • MegaBoost (not permanent): Yearn is donating 1M yCRV to boost the yield (30k yCRV Weekly) 6,91% APR
  • No lock or restrictions
  • No buy & lock of additional token (yet ?)
  • Current st-yCRV APR: 36.72% (vs 20,53% APR on sdCRV).

3) Ask the veCRV whitelist directly & max lock:

As one of the long term goals is to fully enjoy veCRV benefits by being able to max lock CRV (either part or all of it), we could make a proposal now and try to be whitelisted, but not sure if the vote would pass easily.

In my opinion, the CRV should be migrated to Yearn with the st-yCRV strategy to benefit from the boosted yield (live since 1 month already), wait & explore the vl-yCRV option once live, and start working on the Curve whitelist proposal.

Means: None outside gas costs

Technical implementation:

  • Claim pending CRV rewards on the Main Multisig, send to Locked tokens Multisig and start working on the Curve whitelist proposal

Then:

  • If sdCRV is voted: Deposit & stake all CRV for sdCRV-gauge, buy & lock SDT or get veBoost
  • If st-yCRV is voted: Unstake sdCRV-Gauge for sdCRV, sell for CRV, approve & Deposit all CRV for st-yCRV
  • If veCRV is voted: Publish the whitelist proposal and migrate as soon as whitelisted

Voting options:

  • Keep the sdCRV strategy
  • Migrate to st-yCRV strategy
  • Try directly the veCRV strategy
  • Explore other strategies
  • Abstain
Which strategy for CRV holdings ?
  • Keep the sdCRV strategy
  • Migrate to st-yCRV strategy
  • Try directly the veCRV strategy
  • Explore other strategies
  • Abstain

0 voters

2

I am totally in favor of going in the st-yCRV strategy first while waiting for the veCRV whitelist process ! :100:

1 Like
3

I’m in favor of going with the st-yCRV strategy, as it will allow us to quickly increase our CRV holding for now (biggest CRV yield + auto-componded), but also move aprt of those yCRV into the upcoming vl-yCRV system, allowing us to regain voting power over a part of our CRV treasury, to be used for Quests.
But I’m against trying to get he Whitelist for the current Locker Multisig, because having the tokens locked in this Multisig for a long period (here 4 year max to always have full voting power) will block us from sending those CRV to the Sister DAO when the initiative will be launched (update to come soon), and forcing us to wait the decay for that lock, losing voting power over time to unlock the tokens and send them to the subDAO (making it less efficient in term of controlled voting power).
For that reason, I’m more in favor of going with the yCRV strategy for now, and prepare the demand for a Whitelist when the subDAO will be launched instead.

4 Likes
4

That’s right, So yes 100% for the st-yCRV strategy !

5

Small precision: all farmed tokens with POL are claimed at the end of the month for accounting reasons. As such, all CRV described above have already been harvested.

I’m in favor of locking all our liquid CRV in sty-CRV but also don’t believe we should sell our sdCRV, at least until vlyCRV is out.
I would urge everyone to remember why we are locking assets in the first place: to provide a base of votes to Quest clients. Yield is only the secondary effect.

A Curve whiteliste doesn’t seem appropriate for the time being.

1 Like
6

I’m against keep on using sdCRV because:

  • It’s currently inefficient for us (45k veCRV voting power for 72k CRV deposited)
  • 45K votes is really low, it’s not as if we were able to cover the clients quests (we can fill up to 3.8% of T quest or 1.5% on the bLUSD quest)
  • Even if not currently the case (as we voted for bLUSD), voting with sdCRV on Paladin pools would leads to PAL sold for SDT as all bribes are paid in this token.

Additionally, the yield is also very important to grow our positions and prepare the locked ones.

However, I agree that we need to get voting power to provide a base, and I also agree that it would be best for us to get an automated contract managing the assets before asking the whitelist and locking, so I have another solution that would optimize our position:

We’re currently holding a total of 157250 CRV (sdCRV & CRV taken into account), and we have 45000 veCRV votes with it.
Unlike CRV, we can lock CVX for 16 weeks and directly vote on Quests, and according to this Convex Dune dashboard, 1 vlCVX controls 5.64 veCRV, so to reach 45k votes, we’d need to buy around 8k CVX locked for 16 weeks.

According to Paraswap, there is a 6% slippage to buy 8k CVX with CRV, so it would cost 52k CRV (instead of 45K if looking at the fair price) We could ofc buy in several times or in OTC to reduce the price impact.
By doing this, we would control the same gauge power through the vlCVX holdings, and we could allocate 100k CRV+ in profitable farming on Yearn or Convex (didnt got the time to digg their update)

Even if we might not prefer holding too much CVX for a long time, I think the trade is acceptable as it would allow us to vote with the same voting power that we currently have + farm with 100k+ CRV at the best rate to increase our positions.
The CVX could be sold back for CRV at the end of the period if the subDAO contract is ready to ask the whitelist and lock.

Wdyt ?

7

More efficient ways like buying CVX, if more vote efficient could be the way to go, but I’m not sure a direct transition would benefit us because we would lose money on slippage as well as voting power for a period of time.

Optimal idea would to sell 25% sdCRV → buy 2k CVX with 13k CRV → lock it and repeat over 4 rounds (of two weeks) on the Wednesday, when sdCRV peg is at its best, and before the new Convex gauge vote, so we benefit from next to no slippage and boosted voting power thanks to Stake’s TWAP methodology.

Everything else would be locked on Yearn (~100k CRV)/

2 Likes
8

Most of the slippage issue is coming from the CVX swap, I couldn’t find whales for an otc deal in my contacts, so if anyone in the community wants to swap CVX for CRV in OTC with the DAO, please comment this post !
Otherwise, yes DCA is the best option, however 2 months seems a lot, 1 month should be enough:

  • Week 1: Buy & lock 2k CVX with CRV (atm 11667 CRV)
  • Week 2: Buy & lock 2k CVX with CRV + Sell 50% of sdCRV & add in st-yCRV: 60 CRV of slippage on 36K swap atm (+ still all sdCRV VP)
  • Week 3: Buy & lock 2k CVX with CRV (+ still part of sdCRV VP)
  • Week 4: Buy & lock 2k CVX with CRV + Sell 50% of sdCRV & add in st-yCRV (+ still part of sdCRV VP for some time)

Based on the current price, we’d pay around 1,5k CRV of slippage for the cvx (46700 instead of 45200) + 400 of slippage for selling sdCRV as the slippage is low for 72k atm.
Also, the sdCRV peg is currently better than after the buy back (180 vs 700 CRV of slippage), but makes sense to do it every Wednesday to benefit from the new gauge vote on Convex

1 Like
9

Ok, so let’s offer the following options for vote since it seems the debate has made its round:

  • Migrate all to st-yCRV strategy;
  • Migrate liquid CRV to st-yCRV and sdCRV to CVX with a one month DCA;
  • Go back to drawing board;

Additional feedback: Dashboard to follow if a CVX buy is worth it - Current discount on CRV buy is ~8%

1 Like
10

Vote is now live: Snapshot

1 Like
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Quorum for PGM-25: 474314 hPAL votes

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