✅ [RFC] Treasury DAO Charter

In the proposal to create the TreasuryDAO it is stated that the TreasuryDAO will “make discretionary decisions in allocating capital assets in line with discretionary powers granted through governance, including allocating treasury assets in whitelisted protocols up to a defined value to build a productive treasury, and approving funding for pre-approved DAO expenses. A complete record of discretionary powers should be created as part of this restructure.” Proposal There are both many details to work out in this vein as well as bigger questions which need to be addressed. The aim here is to get to consensus about approach rather than specifics. Then greater focus can be placed on the tactics of an individual strategy. Enumerated are key treasury strategy design choices. Listed underneath each design choice are specific examples or further questions.

  1. Is the treasury’s purpose to secure funds in order for the protocol to be self-sustaining (e.g. pay for future protocol development)?

    • If this is the case, much more detail is required about the operational costs. It would greatly influence the treasury’s need to secure stable coins and thus influence its approach.
  2. Should the treasury ever be used for incentivising users to use the mStable product?

    • This could be in the form of MTA emissions or boosting imUSD yield by holding mUSD or incentivizing mUSD/3Curve or holding CVX and voting for mUSD/3Curve.
  3. What tokens does the Treasury have interest in accumulating?

    • Governance: MTA, BAL, AAVE, CVX, CRV, FXS, SNX.
    • Stables: mUSD, 3Curve, sUSD, GHO, Frax, FPI.
  4. What token distribution does the Treasure aim to achieve?

    • 50% Stables: 25% 3Curve, 15% mUSD, 5% sUSD, 5% GHO.
    • 50% Governance: 25% MTA, 10% AAVE, 10% CVX, 5% FXS.
  5. What rate of accumluation is appropriate?

    • If currently 10% stables and 90% governance, should the Treasury acquire 75% Stables, 25% Goverance until it is closer to the desired 50/50 split?
    • Should the Treasury use a TWAP to determine whether it is a good time to acquire Goverance tokens? (e.g. if Gov tokens are below 60 day TWAP 55% Gov/45% Stables etc.)
  6. Does the return on investment impact the desire to hold a given Governance token or stable?

    • mUSD/3Curve can yield high yield in CVX and CRV
    • CRV can yield high in CVX, CRV, and 3Curve
    • FXS can yield high in CVX, CRV, and FXS
    • stkAAVE can yield AAVE ~6%
    • stkAAVE will be collateral for GHO
    • GHO will likely have a Curve LP
    • Frax has many pairings available but is less desirable because only partially collateralized
    • staked MTA can yield MTA ~30%
    • locked CVX can yield CVX ~4% and CRV (plus bribes)
  7. Does the treasury want to focus on expanding DAO to DAO relationships?

    • ROOK usage of mSave
    • Balancer token swap
  8. What will be the whitelisted protocols for available for usage? What will the process of adding or removing them be?

The focus at this point should be developing questions such as those enumerated. These design questions can then be honed to develop a charter for the TreasuryDAO. Then a priority can be established for specific types of tactics and the protocols used for them. The trade off of yields, risk, and marketing can then be discussed and more dynamic.


I think this is a great conversation starter and there are indeed many questions that are not easy to answer.

This would come back to the overall mission of the TreasuryDAO, maybe it would make sense to codify them in a proposal, so we have clarity about the topline level. And from there the other question you posted are then also easier to answer with the mission in mind.

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We actually have a mission statement from a while ago that we publicized internally and on our Medium. With the new restructure and signers, of course some parts are outdated.

Maybe we can use this as a starting point, and then iterate on this to create a new document that we can then codify and put on IPFS?

In general, I think this is a great idea, and will make decision-making processes a lot leaner and smoother overall!

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@Jeshli, I loved the questions, and I think they bring good points on what we are optimising it for.

imo the treasury main priority of the treasury is to secure funds to not only be a self-sustaining protocol but also think about scaling and expanding the product range.

I believe that token incentives should be seen as a customer acquisition cost. With that in mind, the TreasuryDAO must make smart decisions on how that product on how much value the product is generating and what’s the ROI there.

This brings me to another question that is who owns this? I believe in the past majority of these proposals were done by the core contributors but now we have very interesting and smart people becoming a singer for the TreasuryDAO. I really don’t believe in “it’s everyone’s responsibility” because in the end is no one’s responsibility. (@mZeroNine :wink:)

It could be an interesting topic for the next governance call.

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Very helpful link. Especially since the Funding subDAO and the Asset Management subDAO are being merged into the Treasury DAO. Most of my questions were essentially about how we should manage assets because I was interested in ideas where can be overlap in incentivizing users and growing the treasury (e.g. farm CVX => vote mUSD => increase save yield). However, the funding aspect is becoming much more interesting to me because we need to manage all the existing and projected costs for maintaining and growing the product. Understanding the financial requirements of the Treasury greatly influences the investment horizon and thus the types of investments possible and the amounts that can be allocated to them.


That’s fair and makes a lot of sense. Let’s connect via DM to see on avenues we can take to formalize these steps and then get back to the community with a more concrete rollout of this.

I’ll also try to get some core team members into a chat so we can align from both sides and find a proposal that will suit and make sense for the entire ecosystem.


Count on me to join this convo :slight_smile:

CT has been applauding the work and approach of the MakerDAO Risk Teams. Some of the types of risk have overlap with the way Vaults will need to be reviewed.

  1. Smart contract risk
  2. Oracle risk
  3. Price risk
    • Low Market Cap and Trade Volume Risk
    • Token supply risk (Vesting Supply, Unlimited Mint)
    • Multisig Risk (AUM, Unlimited Mint)

I would want @trustindistrust for 1, 2, and Multisig risk assessment. If we can assign risks to some primatives it can both aid the Treasury DAO in decision making and simplify the risk assessment of Metavaults which use these pre-evaluated strategies as legos.

Price manipulation (of low market cap and trade volume tokens) has been used in several exploits and is a vulnerability that can be researched without deep knowledge of smart contracts. For a long time, everyone knew that LUNA daily trade volume was no where near large enough to withstand 16 billion UST worth of LUNA being minted and sold. A post mortem can be conducted on UST as a demo case and Frax is a simple next step where 10% of redeemed Frax is converted into FXS. The question is then whether there exists enough FXS liquidity/trade-volume to absorb the hit of burning all the Frax. This would impact the Treasury’s desire to hold FXS and given that it is a dynamic system, the Treasury could divest or continue to accumulate according to the current state.

There is also already most of the information needed for FXS and Terra analyses available. What would be desirable is to have a process which produces many commonly used metrics for any token. This would begin the automation process and could be leveraged by the vault strategy risk evaluators. Automating the production of as much information about risk as possible for a given vault strategy would increase a builders or evaluators desire to use mStable vaults over another.

Here is a proposal for a Frax Dashboard that is likely to get rejected. Snapshot I plan to review this dashboard proposal and the metrics it suggests are insightful and create a python script which will enable us to generate similar DUNE queries for any token.

I propose the Treasury seek to secure 10x current expenditures in Stable Coins. If we were to assume a 10% return on investment, that would enable perpetual funding (assuming nominal costs remained the same).

Similarly, it would be appropriate for the Treasury DAO to be able reject Protocol DAO requested funds if the costs were not sufficiently details nor sustainable. If the Treasury DAO is tasked with providing perpetual funding, it needs to be able to influence expenditures.

This raises some really important questions that should be discussed and clarified.

The goal stated here seems to take the view that the project is primarily running as an investment fund with an objective of sustaining itself through investment returns.

I take a very different view that the primary purpose of the project is to build a valuable product, which eventually generates enough revenue to cover costs and create a profit. In this case, the primary role of the TreasuryDAO is simply to custody funds and ensure liquidity for project spending. Of course any returns on idle capital are a useful revenue source too, but the basic assumption must be that the most profitable way to invest capital long-term is to invest in product development and growth (otherwise we should stop building and simply run an investment fund).

I assume that when you say “ProtocolDAO requested funds” that you mean “subDAO requested funds”? The ProtocolDAO expenditure will basically be limited to signer payments and protocol gas fees. All other expenses would be funded through a subDAO.

A couple of points here:

  • Firstly, I don’t think that the TreasuryDAO (as in the signer group) should really play a role in influencing expenditure; it is the role of Meta governors to approve subDAO funding requests. The role of the TreasuryDAO here should be to execute on the will of Governors and to monitor performance of subDAOs to ensure that funds are spent in line with requests and that deliverables are being met.

  • Secondly, taking your two statements together, this would seem to advocate cutting current project funding by over 80% to bring it below 10% of treasury assets.

To me, the most important considerations for Meta Governors around treasury management are:

  • How aggressively should the project invest in growth? Is the expenditure proposed by subDAOs reasonable in relation to the overall treasury size? Put another way: what runway length should be maintained to have the best chance of reaching profitability?

  • What target weights of various assets should be targeted to best support this strategy? Eg. ratios of MTA, liquid stablecoin deposits, and longer term/strategic investments

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A super interesting discussion here. Just quickly wanted to chime in and say that most likely we will continue these discussion here until after the signers have been swapped, and all assets been moved into the TreasuryDAO.

I also say it’d be imperative that all new TreasuryDAO signers join in on this conversation, as it should be part of the charter to steer the treasury in the right direction with this move.

Since it’s a deep topic that will most likely go down a deep rabbit hole, we could agree to have a regular meeting with all signers and other interested ecosystem participants, until we find a good soft consensus on the direction the mStableDAO Treasury should be taking for the next months and years to come.

Super excited to see this process unfolding, and how we can make the magic happen so to say :sunglasses:

Yes when I said the ProtocolDAO, I meant the protocol development funding and not the protocolDAO.

A key element in the sustainability of expenditures that I forgot to include is protocol revenues allocated to the treasury in the calculations of sustainability. So sustainable expenditures = Treasury DAO returns + protocol revenue allocated to Treasury.

The statement “seek to secure 10x expenditures” (now with the caveat of less revenues allocated to treasury), does not necessitate immediately cutting expenditures. However, if eating in the Treasury faster than it grows is required indefinitely then the product is unsustainable and everyone involved in decision making would be doing a disservice not to state that a haircut to expenditures is required. If we wait until TreasuryDAO cannot make it’s required payments to the protocol developers, the TreasuryDAO has failed at its most basic of requirement. My experience at the GrantsDAO taught me that this is the exact type of fundamental topic that must be clarified immediately because it can produce insolvency.

Although you state the focus of the Treasury DAO is asset management, expenditure requirements are upstream in the decision making process. Every dollar that the Treasury DAO allocates to governance tokens is Funding Runway which is put at risk. One of the key elements of risk is not just the chance of governance tokens going to zero but the risk of having to withdraw governance tokens at an inopportune moment which can be at a great loss.

After reviewing the Treasury balance the $3.1m in stables is only earning 2.3% in yield because it is either not allocated anywhere or is not allocated efficiently. In terms of Treasury management, this is the lowest hanging fruit where consensus would be easiest.

For effective Asset Management:

  • The TreasuryDAO must estimate protocol revenue
  • The TreasuryDAO must estimate investment returns
  • The TreasuryDAO must estimate expected expenditures
  • The TreasuryDAO must ensure funding runway for a yet to be agreed upon time frame

Once protocol revenue exceeds expected expenditures then asset management would simply be maximizing returns and investing in protocols which share mStable’s values. That sounds much more fun. I will plot v1 revenues ASAP and will similarly design v2 revenue data capture the moment that it is possible.


I agree with both @Jeshli & @soulsby.

This makes total sense. The protocol should be investing back into itself first and foremost.

However, there is indeed idle capital that could be put to work. I fear that creating another SubDAO with a smaller multisig to handle investments further fragments DAO responsibilities and creates one extra step of bureaucracy.

In my opinion, if governance wills it, then the Treasury DAO multisig is large enough (and presumably all signers now active enough) that idle capital investment decisions can be quickly executed.

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Thanks @Jeshli , I agree with all of your post above.

Agree that it’s critical that the DAO accurately models and tracks these metrics. This is an area where things can be improved to allow better decision-making and transparency.

The last item on the list is a key area for discussion as there are more subjective considerations around the best strategy.

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TreasuryDAO Charter

Quick Summary

This document should serve as a basic pre-draft for the upcoming codified TreasuryDAO charter for the next 12 months (from Governance Resolution of this Charter) under which the TreasuryDAO signers will operate and stand by.

Every sector of the treasury has a particular goal in mind, and a Treasury Charter ensures we are accountable for, and execute on this prescribed goal setting in an open and transparent way.

The document will contain four major sections, describing in detail the purpose, key activities, additional responsibilities, and relevant sub-committees in detail.

It is imperative we bring forward a document that can stand the test of time in any kind of market condition, as well as serve as a bookmark of reference if anyone wishes to observe the legitimacy and correct execution of the operational functioning of the DAO in the wider mStable ecosystem.

Comments and feedback is highly encouraged, and a highly fine-tuned charter will make the life of all participants easier, more enjoyable, and showcase the professionalism under which we steer the Treasury forward.


The following section will outline the purpose of the TreasuryDAO, as well as some guiding principles under which the signers base their decision-making process on when it comes to managing funds, securing runway, as well as ensuring the appropriate custodianship over the mStableDAO treasury side.

It is the mission of the TreasuryDAO to secure runway to ensure that the mStableDAO Operations are sufficiently funded while investing a portion of its assets into key opportunities in the ecosystem if the budget permits.

As one of its primary goals, the TreasuryDAO wants to conservatively and sustainably grow mStable treasury assets in its custody.

To achieve this goal, the TreasuryDAO will follow specific strategies thereafter mentioned “Key Activities” in order to turn the process into transparent and easily verifiable actions by all stakeholders and otherwise interested parties.

It does this by maximizing the potential of the assets the treasury owns and receives to ensure the protocol can grow sustainably with risk aversion in mind.

As an overall guideline, Capital Preservation takes priority over Capital Generation, due to the importance and requirement to have a perpetual runway available to continuously and easily fund the operational side of mStable.

It is proposed to have the TreasuryDAO review the Treasury Charter once per fiscal quarter to account for the fast-paced nature of the overall DeFi and crypto ecosystem, during which any amendments and changes will be communicated via our official forum and are subject to a veto process by all participants. Due to the unavoidable lag induced with this, the Treasury will do their best to rely on mainly passive strategies that only require compounding as a primary means of action.

Key Activities

This next section outlines the Key Activities the TreasuryDAO performs on a day-to-day basis and highlights the means and ways in which those activities are to be governed and steered when making decisions relating to capital preservation and capital generation alike.

The key activities of the TreasuryDAO can broadly be divided into three categories (General Strategy | Investing | Reporting), which are then further divided into Capital Preservation (securing runway) as well as Capital Generation (Investing into the DeFi ecosystem).

Treasury Strategy

The following section outlines in detail the strategy that the TreasuryDAO is proposing in order to manage the available funds in the Safe Multisig for both Capital Preservation, and Capital Generation alike.

For the purposes of this section, runway is defined as the number of months that the project can continue to fund operations with a specific pool of funds, based on projected monthly burn-rate. The funds required to achieve a specific length runway will be calculated by multiplying the number of months by the projected burn rate, taking into account subDAO funding proposals, projected protocol expenses and TreausuryDAO and ProtocolDAO operational costs, and conservative revenue estimates.

I. Secure immediate runway (minimum 12 months) (Capital Preservation):

It is proposed to secure at the very least 12 months of operational runway in a risk-minimized USD based stablecoin, as well as secure a sufficient ETH bank for funding core operations via the Builder subDAO and cover protocol based gas costs for 12 months.

These funds are to be held either in the TreasuryDAO multisig wallet or be deposited in trusted and long-standing DeFi protocols. These funds should be invested in non-volatile strategies since they will need to be accessed in the short term.

II. Low risk investments for mid-term runway (12 - 30 months) (Capital Generation):

It is proposed to secure an additional 18 months of runway consisting of USD based stablecoins and ETH which are free to be invested in one of our previously whitelisted protocols (in a diversified way in order to reduce smart contract risk) as long as they adhere to the stablecoin and ETH requirements defined above. Given the longer time horizon, there is scope for slightly more volatile investment strategies since there won’t be pressure to sell these assets in the short term.

The role of MTA in the Treasury

MTA plays a crucial role in the mStable ecosystem and with the recent movement of all remaining Emissions Controller MTA into the smart contract, the treasury now only custodies non-earmarked MTA, except for the MTA reserved for Market Making originally defined in TDP 31.

As part of these custodied MTA, the Treasury should engage in deployment strategies that will further the mStable ecosystem. Treasury will deploy MTA into liquidity positions in order to earn additional revenue and stabilize MTA price. The exact amount of MTA deployed and price bands set will be determined by the amount of USD and ETH in runway and the price of MTA at the time.

Treasury MTA is the lender of last resort for mStable developers and infrastructure. The Treasury is committed to not selling MTA, however it will have to examine the runway of the project and take actions to ensure the longevity of the protocol.

Treasury Investing

This section outlines the behaviour in which the TreasuryDAO is committed to investing via the above described strategy. This serves to account for the treasury maximizing the potential of the available ETH gas bank to cover 12 months of operations, as well as to remain efficient and precise when executing their asset management manoeuvres.

This ensures that assets are being bought when the market is behaving at a time that is beneficial to acquire such assets, as well as doing so at a time during which the purchase itself is economically sound and valuable to the mStable ecosystem.

By doing so, the TreasuryDAO is also positioned for an eventual return of an increase in value of ETH and other tokens, by which time a purchase with be economically unsound and result in a net negative value return for the project.

Lastly, the TreasuryDAO also is committed to manage it’s own liquidity that is owned by the protocol, or have this liquidity managed by an active liquidity management project like Gamma or Arrakis if the value proposition outweighs the time commitment of manually performing this task.

Treasury Reporting

This section is concerned with the reporting behaviour of the TreasuryDAO to inform stakeholders, community members, and core team members of the actions performed on a monthly basis.

The treasury will utilize both the official forum, as well as provide a Dune Analytics Dashboard, showing the current runway of the project.

Runway is defined as Treasury Holdings / (mStable expenditures - mStable revenue) and it is the duty of the mStable Operations Manager to provide the treasury with a report of expenses which can then be subsequently uploaded into DUNE (Only expenses that can be tracked on-chain will be part of this).

DUNE can be used to calculate protocol revenue and track the value of the mStable treasury, and given that expenditures and revenue are variable, estimates will be derived from historical numbers and the methodology will be approved by the mStableDAO.

The dashboard can be divided into four sections:

  1. Historical revenue and expenditures
  2. Current multisig wallet holdings in USD and ETH
  3. Current treasury investments based in USD or ETH and what yields each investment is producing.
  4. Other assets
    i. A list of every asset held and its allocation in the holdings and its average purchase and sale price.
    ii. A description of additional yield and/or produced by the non-ETH or USD investment.
    iii. An overall summary of treasury growth for this tier.

Sub Committees

This last section outlines the sub committees to reside within the wider TreasuryDAO signer group in order to create a point of contact for each of the above tasks, and be able to leverage subject matter experts within the DAO to have their primary workloads directed towards the topics they’re best suited for.

The TreasuryDAO is committed to schedule a meeting once every fortnight for an official Treasury Call during which each sub committee will present their findings for the epoch, and advise the rest of the group on potential next steps forward and decisions to be made as a whole.
It is therefore proposed to have one team lead for each committee (Investing / Reporting / Strategizing) elected internally, that will serve as a main Point of Contact for any related queries or issues during these meetings.


Copyright and related rights waived via CC0.


This is an opportunity for the community to question, probe, critique, or add to the current proposal for the Treasury DAO Charter.

Thanks @Jeshli @mZeroNine and others who helped put this draft together. I am very supportive of simplifying and codifying the TreasuryDAO’s strategy in this way. A couple of discussion points or areas that could be elaborated on:

  • MTA strategy: how should the TreasuryDAO balance holdings of MTA vs. other assets by buying/selling MTA at opportunistic times depending on MTA price and Treasury balances?

  • How should funds allocated to liquidity provision be reconciled against the mandate to secure immediate and mid-term project funding? This is related to the above question as MTA liquidity provision naturally implies some reallocation between MTA and other assets.


Thanks, @Jeshli for publishing this and @mZeroNine for your help in coordinating all the work from the backstage
I think these guidelines make a lot of sense to enable smooth decision-making inside the Treasury DAO while keeping it accountable to MTA holders

I agree with @soulsby that MTA strategy is a core piece of the Treasury Mandate and should be closely managed as it will represent a significant chunk of the Treasury Value. We want
As of now, given the current market situation, my take would be to lean towards LP positions (vs. Bond for instance that are public offerings useful in case of ) as they involve two assets and can smartly benefit from MTA change in price
Something interesting for the Treasury could be to have a target selling price for MTA should it want to diversify

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Nice piece of writing ser. Very well structured and it’s nice to have some charter to align signers and the wider mStableDAO behind a common goal.

I think this goes into too much detail about the execution. This charter should remain high level, so the actual implementation can be checked against the points in the charter.

It’s a charter, like a constitution.

One note from me:

  • Would we want to add as a third point a strategic allocation of assets in support of mStableDAO goals? i.e. investing in some tokens to strengthen partnerships, collaboration, or assets that directly benefit our product, such as Aura in order to vote on our pools?

This might be the least important goal, but as long as the self-preserving ones are met, I see no issue in engaging in those activities.

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I agree that we shouldn’t go into too much detail (eg. LP strategies vs. selling bonds is definitely implementation) but I think there is room for alignment on how we should generally think about the ratio of MTA vs. other assets in the Treasury and when is the right time to buy or sell MTA.

To you point on allocation for strategic purposes, I think the idea here is that this wouldn’t really happen until a sufficient runway length was secured as the Treasury doesn’t want to be forced to sell these types of assets at inopportune times to fund operations. Hard to know exactly what timeframes makes sense here though.

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