Dear Nansen team,
Thank you for your support and for the additional questions:
- For (T)MMFs, a (significant) hurdle rate for the yield does not appear appropriate, given that the alternative is holding cash, which generates zero yield (no opportunity cost) and that, apart from good ALM execution and (limited) duration risk management on behalf of the MMF issuer, MMFs mostly pose (traditionally perceived to be very low) credit exposure to the US government.
- An unwind of sUSDS may be considered if yields drop below (T)MMF yields plus an appropriate risk compensation for the added credit risk, or if the risk profile of sUSDS becomes more elevated. Any such considerations are not yet enshrined as part of TMC-6, and we would seek the necessary approvals before executing any such actions.
- By design, money market funds will be returning short-dated US Treasury yields minus fees (with fee levels currently typically 20–50 bps/year). Given the limited number of available (T)MMF options at the moment, diversification among different issuers takes priority for now, but we might propose larger allocations to better-performing funds down the line. This would, however, require separate approval and is not yet covered by TMC-6. For sUSDS, we will be closely monitoring the risk profile and the quality of the assets backing sUSDS; if the SSR drops below the risk-free rate plus a suitable risk premium, we may propose a divestment of any sUSDS positions.
- Regarding operational monitoring and day-to-day risk controls: monitoring will likely be conducted via custom Dune Analytics dashboards (with liquidity checkpoints at least monthly), as all related operations are fully onchain. These monitoring dashboards may be made available publicly.
- Regarding the scope of the mandate and resourcing: this proposal fits within the existing Treasury Management Committee (TMC) scope insofar as the TMC executes actions on behalf of the DAO that have been approved by DAO governance; the TMC has very little to no discretion over specific allocation decisions. It represents an expansion of the TMC’s scope to the extent that there is an additional management aspect to allocating and rebalancing between sUSDS and (T)MMFs under this proposal.
- Regarding the expected use of proceeds (around USD 1m/year): the Lido DAO holds significant assets in its treasury, and it is in the interest of LDO token holders and the Lido protocol that the DAO manages its treasury in a sustainable manner. The additional revenue generated is therefore not directly earmarked for specific expenses but rather serves to bolster the DAO’s general protocol surplus.
- There is no compensation adjustment or additional cost to the DAO for treasury management, as all Treasury Management Committee members are now active contributors to the Lido DAO, contracting with either the Lido Labs Foundation or the Lido Ecosystem Foundation, and these additional activities fall within the scope of existing contributor arrangements.