PGM-XX: Treasury Management #5

[Dydymoon]

@Figue

Doesn’t exist.

As precised in the post, what I call the committee is represented by the multisig(s) for locked tokens & the signers, which both exist.

I’m not the one who started to call these the Warlord multisigs, but I guess it’s better to start referring to it as Locked Tokens multisig like when it was created.

@Figue

Yeah, which is why this product is not made for the DAO’s treasury, as clearly highlighted in PIP-11.

It was clearly stated in the article and in the comments of the PIP-11 that the core team suggestion was to deposit treasury in Warlord too.

@Figue

Also, CVX and Aura represent ~10% of Paladin treasury, so I think the worry is pretty overstated.

I’m assuming we’re taking non PAL treasury, in which case it’s actually 11,9%

However if we’re taking debt into account, the CVX & AURA share are significantly increasing:

As a reminder, the 100 ETH loan has no deadline or interest, so this is framing the worst case scenario if we were to pay back everything.
However, the Mimo loan has to be paid back in 11 months, paying up to 4k$ of interest per month depending on potential anticipated payback.

Additionally, the main reason of why I’d like to grow the strategic assets and avoid starting a distribution now is because over time, it’s possible to reduce the main PAL outflow (the Quests) by voting & filling it directly.

This would allow the DAO to reduce significantly the PAL selling pressure and sustain a good APR on the Paladin related pools.

@Figue

he would have seen that the distribution of WAR was suggested over a 6 month period, and because WAR has a 4 month max-cooldown

I understand that point, but I believe 6 months is a bit short to estimate that the treasury state will be high enough to start self sustain at least part of the costs, which is why I suggested to define threshold and rediscuss distrubution once reached.

For the Stable/ETH part, I suggest at least 2,5M minimum for the following reasons:

• 500k would be used to pay back all debts
• 2M would be used as runaway over 2 years (including part of the Paladin core team currently paid by Mithras Labs, and the DAO contributors)

However I believe this threshold should be higher to allow more margin.

As for the strategic assets threshold is a bit harder to define but i’d say:

• AURA: At least 0,4% of the vlAURA supply (currently 0,08% held by the DAO)
  This would allow to fill around 20% of both PAL-USDC & palStkAAVE-AAVE quests, and allow to always have the 0,2% quorum needed per gauge for vlAURA to count on the vote.

Above that, I believe part of the AURA earned (up to 50%) could be deposited on Warlord & distributed, while the remaining should be either delegated to earn USDC, or deposited on Warlord but without distributing it.

• auraBAL: This is the 2nd AURA yield stream after the PAL-USDC POL.
  Hard to estimate a treshold on this one but I believe the strategy should keep running until the AURA treshold is reached, then the position could be reduced if needed.

• CRV & CVX: The DAO currently holds 155K CRV mostly on the collateral multisig.
  If locked, this represents 10% of the Quest on PAL-ETH but it would require a whitelist and long time locked. The DAO also holds 8,6k vlCVX (which represent 45k veCRV votes)

Assuming all CRV are sold for CVX over time (without premium), 200k veCRV votes could fill 13% of the current Quest. I didn’t took discount into account but this will increase over time with the POL & st-yCRV strategies.

We could also aim for 20% filled so around 300k veCRV votes, and same as AURA, up to 50% of the tokens earned after this could be deposited on Warlord and distributed, while the remaining would be delegated for USDC, or deposited on Warlord without distirbuting it.

• veTETU: This position is currently delegated but not included into Warlord because of the veToken design. It’s currently earning USDC & imo this should remain this way until the stable treasury treshold is reached.

After that, I believe the DAO could stop relock and decide if this should be converted for vlAURA (depending on the rates, underlying votes between both, and AURA treshold), sold or distributed.

• veAPW: Same as veTETU, not included in Warlord because of the veToken design.
  I believe its too early to take a decision on this asset considering that the V2 is about to go live but not many informations have been revealed yet.

So to resume:

• Accumulate at least 0,4% of the vlAURA supply (covering 20% of both quests) in vlAURA, which will also reduce the PAL expenses by the same ratio.

• Progressively pay back Mimo loan, retrieve CRV & convert for CVX locked to cover 20% of the PAL-ETH quest, and reducing the PAL expense by the same ratio.

• Accumulate stables with non strategic assets and votes incentives delegated until at least 2,5M$ (including all debt paid back)

• Consider distributing up to 50% of the revenues once these threshold are reached

• Wait & see for veAPW

@Figue

Paladin is not an Olympus fork, nor a hedge fund, there is no asset backing the PAL price. Seems to be a terrible route to venture into.

I never spoke about OHM fork or hedge fund ?

As for the value backing it might be a wrong formulation but what I meant is the healthier the treasury is, the better it will be for PAL appreciation I guess.

This is not forking ohm or being a fund, i’m just supporting DAO treasury management & optimization imo.

@Figue

This is highly deceptive as they are owed over 12 months and 1 installment was already paid.

You right I forgot to deduce 1 month (one of the data manually updated in my sheet sorry) however I explained that this would be paid over 12 months and can be reduced.

@Figue

In essence, there is noting asked for the DAO here except waiting as no thresholds were offered as a starting point.

I think this comment details everything pretty well, my bad if I wasn’t clear enough.

@Figue

It is just a way to pre-empt the 2 part of PIP-11 that was supposed to ask the DAO to deposit 80,000$ of CVX & AURA over 6 months to boostrap the product.

80K$ represents the quasi totality of the CVX & AURA holdings, which is why I’m against depositing now if it means distributing it and losing the yield.

@Figue

There a ton of good suggestions in the above proposal so I would like to use them to craft a better proposal. The idea here will be to find a compromise between rigorous treasury management and Warlord bootsrapping.

Happy to collaborate on this proposal to present a good compromise to the community, I believe the details outlined above can be interesting too.

@Figue

Instead of locking newly farmed CVX and AURA we could lock WAR as a DAO and start the distribution once we hit the 25k$ of the first month. This would have zero impact on current financial situation and enable to start creating additional utility for hPAL lockers.

You mean stake WAR ?
25K$ of what ?
Not sure about the impact since I didn’t fully inderstood the alternative.

Again, I’m not fully against depositing if the WAR are controled by the DAO, as long as the yield is retained and the strategic assets underlying are not redeemable. (However I’d like to follow the strategy explained above and reach the threshold before starting a distribution, which will be much interesting at this point anyway.)

However, if you absolutely want to do an airdrop to bootstrap the product (which can make sense) I’d like to suggest another option:
A retroactive hPAL airdrop vested for early depositors on Warlord, let me explain why:

1. The PAL holdings is representing 89% of the total treasury, and beside the small part in POL, is not generating revenue compared to the 11% of remaining.
   An airdrop of the governance token would not hurt the treasury earning as much as distributing the strategic assets at the moment.

2. This solution would attract new depositors not familiar with the project and would increase the decentralization by increasing the amount of hPAL holders

3. Using hPAL over PAL for the airdrop could reduce the selling pressure because of the 10 days cooldown, and because people could hold PAL to vote considering it’s related to Warlord where they deposited.

4. Adding a vesting on the airdrop could also help to spread & reduce the potential selling pressure over time.

5. These new hPAL lockers could be interested to lock their hPAL if they follow the governance forum as they would know that long term goal is to distribute part of the revenues

The amount should definitely be discussed, but I believe it’s a much better solution than distributing WAR just yet. A snapshot could be done a few weeks/month after the Warlord release to distribute the hPAL airdrop vested to every depositors.