LidoDAO Treasury Choices
We’ve launched three other treasury-related proposals aiming to obtain a clear signal from LDO token holders regarding basic principles for how the DAO should manage its treasury.
Lido holds ~17.5m DAI in the Aragon treasury (entities have discretion over allocation of stablecoins depending on needs to meet supplier payments)
100% of these reserves are held in DAI*, for now we have made smol proposals to increase our use of its full possibilities (namely the Dai Savings Rate)
As many of these stablecoin reserves will be required over the next few months, rather than immediately, ideally, these stablecoin reserves would actually be held in some sort of permissionless, on-chain, (non-US?), money-market vehicle or security (token holders allowing)
Although there is significant progress towards bringing these on-chain, the technology is not fully ready yet
Until we can move our Aragon stablecoin reserves to this in a safe way, or Dai builds in sufficient DSR to compare with these rates, there is a question of what level of specific stablecoin exposure is desirable
Given SteakFi’s experience in stablecoins and present contributions to MakerDAO, we have views on each of these options (and our favorites) but would prefer to hear from token holders and the community without biasing the set
The proposal needs specific options to be voted on, so we would appreciate token holder views on what suitable options could be.
Final Snapshot options may vary to accommodate simplicity and execution.
Starting Options
Do not change (Stay 100% in Dai)
Migrate 100% to another stablecoin
Introduce balanced diversified exposure to a mix of stablecoins
For example, one set of options could well be:
Do not change (Stay 100% in Dai)
Migrate to 100% in another stablecoin
a. LUSD
b. USDC
c. USDT
Introduce balanced, diversified exposure to a mix of stablecoins
a. DAI/USDC/USDT (3pool)
b. LUSD/USDT (non-US)
c. LUSD/USDC/DAI (non-Tether)
d. LUSD/USDC/USDT/DAI (everyone is invited)
Other exotic options are also possible, such as changing the operating expense expectation to EUR, GBP, CHF vs USD altogether (likely at the cost of some liquidity, acceptance among suppliers and FX risk) or decentralized-native units of account such as RAI. We will only propose these if there appears to be strong demand in the forum period.
*a protocol where SteakFi members also contribute to as the Strategic Finance Core Unit
Considering all the FUD and rumors, both DAI due to USDC collateral and USDC itself pose potential risk if they become frozen.
That being said I have issues with the liquidity of LUSD and USDT has yet its own issues.
This means I personally am leaning towards 3d to balance risk of each individual asset. This increases ops overhead but I don’t see a specifically better path at the moment.
Interesting and necessary conversation. Treasury diversification can also include EUR stablecoins as mentioned by @steakhouse above.
I’m a contributor at Angle Protocol and we started pushing the conversation about treasury diversification since the launch of agEUR and more recently here. Including a robust decentralized stablecoin in the treasury allows:
hedging of the USD risk,
payments of Euro-denominated expenses,
access to euro-based yield.
The benefits can be further discussed - We’re jumping in to mention that agEUR (see documentation) could also be considered here.
Couldn’t agree more here. We seem to be defining diversification as which USD stables we want to hold. While I do agree it makes sense to allocate across multiple dollar based stables to reduce risk (and I’m a huge fan of LUSD), why not diversify outside of USD, as well? I see two main benefits:
1 - Practical. If LidoDAO has expenses in other currencies, it makes sense to match stable holdings in similar currencies. Do we have EU based contributors, for example? Are we just paying them in dollars and letting them carry the currency risk? Wouldn’t it be better to fix contributor payments in their local currency? As a EU based contributor (to another crypto project), it’s not pleasant seeing my monthly salary fluctuate based on the EUR/USD exchange rate. I would definitely like the option to fix my salary in EUR. Few DAOs offer that option, but diversifying out of USD stables would make that possible!
Diversifying out of USD also reduces currency risk. Holding dollars the past year has been a great move, but it’s only a matter of time before that changes. As a global DAO, why be overly reliant on one currency?
2 - Symbolic. Why are we perpetuating reliance on dollar based stables? Especially when clearly we see regulatory attack on those same stables from the USA! The EUR, for example, is the 2nd most widely used currency in the world, 20% of global reserves, and yet in crypto it’s practically non-existent. A large crypto treasury starting to embrace non-USD denominated stables, even if we only start small and do 5% or so, would be hugely symbolic and beneficial, imo.
I would also love to see RAI used, even if only a very small % of total treasury stable holdings (1%, for example). Again, LidoDAO could really lead here by embracing non-USD denominated stables. With RAI we even have a fully decentralized, crypto native stablecoin that needs wider adoption.
Let’s properly diversify, but not just across different flavors of USD…
Hey, everyone I’m Yuliyan from Liquity’s team. Thank you for mentioning LUSD in this discussion as a viable option.
It totally makes sense to diversify something around 10% of your stablecoin reserves in LUSD, with which you will add to your portfolio probably the most decentralized and resilient stablecoin on Ethereum. LUSD is often traded above peg, because of the premium of resiliency as we call it, but recently the price has held constantly close to $1.00, which makes buying it now even more appealing. You could sell it with 2-3-4% profit at the right time.
There are also a lot of interesting strategies that you can run with LUSD. Check out our yield dashboard for an overview of the yield opportunities that you have. All things considered, diversifying your stablecoin reserves with LUSD would be beneficial for the LidoDAO community. Our team would be happy to further discuss possible strategies and the process as a whole.
Less concerned about specifically which stablecoins are held, versus making them earn yield. Would like to see proposals to utilize those stables in Backed or Ondo to purchase US treasuries and capture yield that can fund the team going forwards.