MDP23.1 - Incentivized Liquidity Provision on Balancer Finance

Summary

The BAL tokens held in the old Aragon entity have recently been moved into our new Gnosis Safe Multisig, and can now be used to bolster our treasury via incentivized liquidity provision on Balancer Finance.

The mStableDAO is proposing to use these BAL tokens now held in the Asset Management subDAO to provide liqudiity on the Balancer Finance platform, and regularly harvest and compound the extracted BAL tokens to maximize capital efficiency and profits for the DAO.

Specification

This proposal suggests that the 13,210 BAL currently held in the Asset Management subDAO be put into a Balancer Finance liquidity position in order to begin accruing BAL from the 80/20 BAL/WETH pool.

In the process of commencing with this opportunity on Balancer Finance, the 13,210 BAL would be provided via single-sided liquidity, and consequently split up into the allocation described above.

Liquidity rewards will be claimed and compounded back into the suggested pool position on a regular basis at the discretion of the Asset Management subDAO, which will consider and weight operational costs against accumulated rewards in the contract to make an informed and economically sound decision on the correct timing of these operations.

Successful passing of this proposal will allow the Asset Management subDAO to continue with this opportunity until the incentivization on Balancer Finance ends, or a different proposal be made to change the method or utilization of the tokens in question.

Rationale

This proposal aims to:

  1. Provide maximum capital efficiency for our idle tokens in the treasury
  2. Increase TVL of the treasury over time & diversify token allocations held
  3. Generate a future revenue stream with the accrued rewards by participating in fee sharing once this gets activated from the protocol of the governance token in question
  4. Have a potential say on proposals & the decision-making processes in the suggested protocol by holding their native governance token custodied in the mStableDAO treasury

Further discussion points

  • It should be noted that if this proposal is successful, the BAL contributed would be subject to impermanent loss, and will be split up into the tokens of the pool Meta Governors decide upon

This proposal is only asking if BAL should be deployed for liquidity provision, but does not ratify on which pool exactly. Please discuss & vote for the actual pool to provide liquidity for in MDP23.2, which is concerned with the actual strategy of the deployment.

Pending no significant objections, this proposal will be taken to a public Snapshot vote on the 13th of September 2021 and will remain open for 5 days to give adequate time for a concurrent discussion here on the forum.

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I think that makes a lot of sense. Using the $BAL productively and diversifying into ETH a bit. No Objections from me!

Thanks for the feedback everyone, and the proposal has now made its way to our Snapshot page for ratification :rocket:

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The BAL tokens for MDP23 have now been successfully deployed on Balancer Finance.

Over time, we’re going to compound these positions and create a top-notch yield-generating venture for the Asset Management subDAO :smirk_cat:

We will keep the community up-to-date about these liquidity provision ventures via our quarterly treasury reports. The first one including the performance of these two positions should be available at the end of January 2022.

If you got any further questions or concerns regarding this, then please feel free to reach out here, or directly via Discord.

Onward and upward! :rocket:

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