It is suggested to diversify the mStable Treasury with a governance token swap with Gro Protocol, as they exist in the same vertical as mStable. This would be done in order to diversify risk, grow affiliation with a protocol that will likely utilize mStable in some way in the future, and put idle capital of the treasury to use due to the suggested long-term commitment of the other party involved.
In an effort to diversify both treasuries, it is suggested to swap a set amount of MTA for GRO in order to stake these tokens in the respective 80/20 pool on Balancer v2. It is further suggested to stake the resulting LP tokens in each others’ staking contract for additional rewards.
This action allows for the swapped amount to be diversified into 20% ETH, while also allowing for long-term token accumulation of the native governance tokens MTA & GRO respectively.
With this collaboration, both protocols would perpetually compound rewards back into the position for at least 24 months.
It is suggested to consider between 125,000 and 250,000 mUSD worth of native governance tokens for this endeavour.
Both the mStable and Gro Protocol Treasury consist largely of their own native governance tokens, which make them hard to utilize in a capital efficient way. With this proposed swap, both protocols would be able to put a portion of these assets to use, while at the same time hedging a part of the received tokens into ETH, which is arguably a save long-term bet to make.
Furthermore, this would allow for rapport to be built between mStable and Gro, and create further collaboration opportunities down the line. Swapped tokens would be ensured to remain in responsible custody for the agreed term, with the upside that any rewards would also be kept by the protocol and not immediately sold on the open market.
This could be strengthened by agreeing to perpetually keep these tokens in custody, and therefore effectively remove them from the open market, while also gaining a trustworthy member in the respective DAO that could participate in each others’ decision making & governance processes, and leverage the expertise.
- Diversify the mStable Treasury with a pool token that consists of both GRO and ETH that also generates further GRO rewards
- Hedge risk by allocating native tokens into another protocol that might very well utilize mStable’s technology in the near future & vice versa and thus benefit from this exchange on a fundamental level
- Build rapport with the Gro core contributor team and its community in order to enable further collaborations down the line
- Gain the ability to hold the native governance token of Gro (and vice verse for Gro with holding MTA), which might be utilized in beneficial ways in the future (i.e. directing Gauge rewards, Boosts etc…)
- Gro is still relatively new, and thus not as established as other protocols, and thus carries additional risks with it
- High Fully Diluted Value relative to the current Market Cap / Tokens in circulation
It is suggested that both communities comment on this RFC in the coming days, and bearing no significant opposition or change in ideation, we would move ahead with this RFC in the coming weeks and create a formal draft proposal on Github to be used for review.
Meta Governors are encouraged to provide as much feedback as possible until then, so we can create the best possible outcome for mStable and its users.