DAO Treasury management

There are currently around $2.3M mUSD sitting idle in the mStable DAO. As an mStable stakeholder, I’m proposing that a portion of the funds is deployed on dHEDGE to gain potential upside exposure which will benefit the mStable ecosystem in the long term. dHEDGE is a decentralised asset management protocol that ranks the best managers based on their risk-adjusted returns.

I suggest a collaboration where a minimum 250k USD is initially deployed on dHEDGE via the soon to be launched dHEDGE Top 10 Pool. The Top 10 pool mirrors the top 10 best managers on dHEDGE. In return dHEDGE will enable mUSD through the Fox Swap easy onboarding service (see dHEDGE Medium page for further explanation, can’t include links here). dHEDGE will also diversify funds currently on Compound and AAVE. dHEDGE will at a minimum match the amount mStable puts on dHEDGE in mUSD SAVE where dHEDGE can still earn from assets lent out on Compound and AAVE plus get a return from a portion of mStable Swap fees as well as MTA rewards.

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I am for this proposal, it makes sense that we put some of the mUSD that has been sitting idle in the mStableDAO’s treasury to work to earn some sort of return.

The initial proposed amount makes sense as a proportion of the mUSD (c10% of the total) that can be put “at risk”, and the corresponding integrations and use of mStable’s SAVE product by the dHedge protocol is a great example of DAO/DAO collaboration.

I’m interested to hear other community member’s opinions on how much of the mUSD should be allocated, and what other options there are alongside the Top 10 pool, as a more complex strategy with low risk and high risk allocations could also be explored.

I note too that this proposal assumes that the DAI currently in the mStableDAO treasury is inaccessible/used elsewhere. This will be further clarified in an upcoming forum item should the mStableDAO signers ratify it at the end of this week.

Thanks @phenrikand! Looking forward to seeing where this goes.

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I’m for this proposal as well.

I would push it a bit further and propose to start with an initial amount of $500k. I wouldn’t deploy capital in the Top 10 pools by performance, rather in the Top 5 (or so) pools by liquidity. If you look at the pools ranked 6th to 10th, the sum of the capital invested in them is quite low.

dHedge pools are also grouped by a “risk factor” value that goes from 1 to 5. In my opinion we could invest in multiple pools in a way to balance the risk factor at 3/5. Not too risky, but not too conservative as well.

Excited to see dHedge participating in mStable SAVE products. Hopefully we’ll see many more partnerships of this kind following.

Great idea!

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I think partnerships like these are important to cross pollinate the community but also great for marketing.

10% seems like a good number with potential room for expansion

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I think this is an interesting proposal.

I’m keen to understand more about the top 10 strategy and how it works. Also need to be careful about this given it is the first active strategy that the mstabledao would be deploying with dao funds. Needs to have very broad approval in my view.

Excited if this happens as a partnership where mUSD is added to dhedge and the dhedge dao stablecoins are put into save :rocket:

Yes, I think this proposal has some quorum threshold applied to it. We’ve been thinking about implementing this on our snapshot votes for a while, and it makes sense to bring it in for this one (and all proposals thereafter).

We will need to do some sums to calculate what quorum looks like based on past governance participation and vMTA holder numbers/first principles on what constitutes good governance…

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Definitely excited for a cross-collaboration between DAOs, and a great entry point at that.

Very curious about the deployment of the funds into dHEDGE. I always thought dHEDGE operates exclusively with sUSD, so would this necessitate a change from mUSD to sUSD prior to deployment, or do the funds flow into enabling mUSD for onboarding on FOX for the Top 10 Pool and therefore stay in native mUSD for swap liquidity?

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I like the idea–definitely want to decrease opportunity cost and earn yield where it makes sense. I think we could possibly explore some other yield aggregator options outside of dHedge.

Putting mStable’s DAO treasury to work is beneficial for the DAO as well as the general overall growth of DeFi product adoption.

As an ecosystem builder and investor in both the DAO and DeFi spaces I can see how such a collaboration will set the tone for more Web3 native financial instruments to mature and therefore I recommend supporting this proposal.

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Very good idea!!

One thing that I definitely like is to put the capital that is unused to work!

However I do also see some risk with this. Firstly, why did you suggest dHedge? Just curious, since there are other alternatives to put the money to work.

Secondly, with traders in general I am a bit skeptical. Just like with fund managers, some traders have good periods with winnings and they do gain a lot in the leader board but that does not necessarily means that it would continue. The loss and win is highly dependent on the basket of traders. That part I don’t like, I would rather prefer a methodical approach.
Let’s follow a strategy where the funds are invested into the overall ecosystem or into DeFi. The sDefi token would be great for that. It aligns very much with the mStable ethos. If defi grows, so does mStable, it’s basically an investment into the future of the ecosystem but hedging for mStable’s underperformance.

10% seems like a good number to invest.

Yes they need to be swapped for sUSD prior to deployment (I know a good place for that :slight_smile: )

The dHEDGE index will be rebalanced on a monthly basis so will keep following the best traders. I do think other protocols for yield seeking should be explored for the majority of the treasury (like Compound or AAVE), but for upside dHEDGE is the leader in decentralised active management. Defi assets on dHEDGE could be a good alternative to the index (a custom pool can be managed by mStable DAO through dHEDGE Gnosis Safe App. Could be put up as alternative in a snapshot vote:

  • dHEDGE Index
  • mStable DAO pool on dHEDGE (managed through Gnosis Safe app)
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I’m all for making use of idle assets. My preference would be to start with a more battle tested protocol but support this proposal as it stands. I appreciate that it is a mutual partnership.

To play devil’s advocate, although this proposal is only for a relatively small portion of the DAO’s fund if something does end up happening it will probably mean bad press for MTA regardless of size. Just food for thought. At this point I’m not for pushing the amount up to 500K. ~10% seems appropriate.

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Thanks for clarifying this. So if I understand this correctly, we have to swap our mUSD from the treasury into sUSD to deploy into a performance index with moderate to high risk and returns, whereas you will match our deposited sUSD with the same amount of mUSD to put into our SAVE module, plus granting access to the FOX via mUSD?

So as a result, our TVL for mUSD will remain the same, mStable users will gain easier access natively into dHEDGE, and we are exposed to the TOP 10 pool which might or might not work out for our deposit, depending on the Top 10 performance over the coming months and years.

To me this sounds like that most of the risk is on our plate, with almost no risk at all to dHEDGE. SAVE is well known to be above average in returns for a stable deposit, with quite massive APY peaks during volatile markets, while exposing one to comparatively little risk, other than smart contract or stablecoin failure.

I think the proposal itself is sound and should be pursued, but I feel the numbers might need to be tweaked to match the risk profile on both sides equally, to benefit both protocols in a similar way, considering we will probably always have the higher risk simply because of the nature of each protocol.

I could see a smaller amount initially, with a higher proportional commitment to lock mUSD into SAVE, and then based on the performance of the Top 10 pool over x months, a further commitment, with further proportional mUSD commitments from dHEDGE’s side.

This has gone to voting on the mStable snapshot as MDP-21.1 & 21.2.

Votes close on April 6th!

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Hi Metanauts,

The voting for this proposal has successfully completed, and the community almost unanimously voted in favour of allocating 200,000 mUSD into the newly released Top Index Pool of dHEDGE.

We’ve already gotten in touch with the dHEDGE DAO to negotiate this exchange of tokens, and you can follow the transaction flow out of our treasury here, and the corresponding receiving of dTOP tokens right here.

As agreed upon, mUSD is now also enabled as an onboarding gateway to the dHEDGE ecosystem via Fox Swap on all their pools that support this feature, so this makes accessing the power of the platform right from your mStable portfolio easier than ever.

Furthermore, dHEDGE has committed staking the 200,000 mUSD received into our own SAVE contract to put their idle capital to use, which completes the virtuous cycle of this cross-collaboration between the two DAOs.

On behalf of the mStableDAO I would like to thank @phenrikand and the rest of the dHEDGE team for a smooth workflow, an excellent display of cooperation and support sorting out all the communications and behind-the-scenes activities, as well as enabling the pathway for future collaborations down the line between dHEDGE and mStable.

You can find our official announcement right here.

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