[RFC] - DAO Governance over Treasury Actions and Strategy

2. [RFC] Request for Comment
#1

[RFC] - DAO GOVERNANCE OVER TREASURY ACTIONS AND STRATEGY

  • Yes, Support Enhanced DAO Governance for Treasury
  • No, Allow full discretion to Treasurer / Founding Team (no change)

0 voters

Scope:

This RFC examine the proposal made to create limitations on Treasury Investments such as capital allocation risk limits, and also DAO approval on actions such as token voting delegation.

Link to previous [DAO Discussion]: “[DAO Discussion] - Defining Stronger DAO Control Measures on Treasury Management”

Objective:

This proposal aims at enhancing DAO control over:

  1. Illiquid Investment Activities
  2. Voting or Voting Delegation (exerting voting power on other protocols)
  3. Risk Limits

1) Re-Allocation of liquid Assets to Illiquid Assets

The DAO should decide whether liquid assets (such as USDT, USDC, MIM, WBTC, WETH, etc) can be turned into which illiquid assets, which includes non-liquid staked tokens or VC investments. These are decisions that TM (or anyone) should not be making unilaterally.

If this proposal isI suggest explicit DAO approval (YES/NO) is obtained through an official vote and if passed, to vote on item 1A and 1B below.

    A) For example, should have CVX been staked into vlCVX? I would propose that we would vote on this retro-actively as there are un-staking events in July and August. (YES/NO) <- This will be a WIP X.1

    B) A VC Allocation headroom (excluding current ones) should also be voted for. This can be for example max 5.0% of the Treasury before a TM would seek for more headroom for example. (YES/NO) ← This would be WIP# X.2

2) Voting or Voting Delegation

Currently, this is directly related to vlCVX voting, but this may apply to other situations. A TM (or this protocol) should not acquire assets for the sole purpose of influencing a vote in another protocol. A key control factor is having the DAO to determine the voting or vote delegation action.

The two questions to be asked here is:

    A: Should the DAO determine through a vote on how WL should vote with held tokens. Such voting direction request should come from the TM ?

    B: Provided the answer to 2A is favorable, should the vlCVX votes be delegated to Votium and to the Bribe Pool Optimizer with the earliest possible Gauge Vote ?
    Note that the previous vote into Votium would have yielded US $380,000 by my calculations and votes occur every two weeks.

3) Risk Limits

Should the DAO give certain risk limits over % of asset holdings in its Treasury as proposed below ?

Provided this proposal passes, below are the proposed risk limits:

  1. Non Stable-coin Directional Exposure 30% of Liquid Assets (BSGG Excluded)
  2. Stable-coins risk:
    a. USDT 25% (about 52 mm USD)
    b. USDC 30% (subject to temporary raise for redemption)
    c. DAI 25%
    d. MIM 25%
    e. Combination of all others (or any) 15%, and among these max individual limit 10%

With these DAO decided limits, the treasury manager will have better guidelines to limit conflict of interest, and manage risk. wMEMO holders can be also rest assured that material changes to the liquidity or risk profiles would have to be proposed to the DAO for approval.

Business and/or technical requirements of the implementation of the proposal:
None are needed.

Since an RFC is a “work in progress” Proposal, not all of these points need to be filled out from the beginning. They can be added over time as the RFC evolves into a mature Proposal.

2 Likes
[DAO DISCUSSION] Defining Stronger DAO Control Measures on Treasury Management
#4

I support this concept but I would not vote for it as it is currently written.

I would suggest the DAO should be approving proposed treasury strategies/parameters and then allowing the TM to operate freely within those strategies.

For WL this may require a healthy debate about “what kind of DAO/protocol is WL” in the first place.

1 Like
#5

Look, its not perfect. But we can make an attempt at it on another go to make it better.

Governance IRL aren’t set on day 1, but are living items, changing as the times see fit, and others can write / create better solutions.

2 Likes
#6

Sorry for sounding like I just stepped out from under a rock, but where the fuck is our TM going “in a couple of weeks”? Was it something I said? :nauseated_face: :anguished: :frowning_face_with_open_mouth: :sweat:

Seriously though, is this because the 90-day window is expiring? I think this should have an auto-extension unless the DAO specifically votes to terminate, in which case we must have someone or some entity lined up to step in. Perhaps we consider turning to professional hedge fund to outsource our treasury management roles to?

#7

As an aside, you can throw your hat in the ring as an replacement!

Nonetheless, TM’s may at their on choosing not want to continue for a variety of reasons. Its not an obligation. I think if I asked for an extension, I had a good chance of another appointment.

I’m a good defense player (and I’m generally a perma-bear). But with the markets already rekt, or near full rekt, I don’t pick up things cheap as I should. Its time for me to kick the ball to the other side of the pitch you know.

#8

There are clear pros to each option. Why not split the treasury into two parts. Part A requires full DAO governance. Part B can be freely managed by TM. The DAO can vote at anytime to change the split between the two sections - for example it might start as 75% Governed and 25% TM, but that can change overtime by the DAO voting to move assets from governed to TM or vice versa.

3 Likes
#9

Considering what’s happened recent with other DAO’s we should consider a hybrid where TM has a free hand over some assets up to certain limits over which DAO voting will be required. Again we must consider the dynamics of the market and not stymie our capacity to move quickly in order to take advantage of time bound opportunities.

2 Likes
#10

Agreed. Just adding my 2 cents.

1 Like
#11

Love this idea. Easy “yes”

2 Likes
#12

I’m not sure with this. Maybe I’m not understanding, but is the proposal to give control over to general DAO instead of a qualified TM?

No offence to the investors here, but in my opinion we voted for a TM, over a fairly long and slow period I might add, based on their qualifications, investment history, basically we voted for someone who knows their shiz to control the treasury.

Now we’re handing over that control to general opinion, which, if anything like my own, is dangerously underqualified to be managing a treasury of this size, in a bear market when quick timing is everything, and we’re proposing (and it looks like a lot of people voting FOR) tying up action for Wonderland Treasury in long and lengthy, often ill-informed (Sifu FUDsters I’m looking at you here) discussion and debate, talking for ages instead of doing something?

I’m all for this DAO and democracy in general is great and good and fair and blah blah blah blah…but let’s not forget Brexit as an example of where Democracy can maybe be…let’s say misdirected?

I think my point here is that it doesn’t make sense to me to tie up our investments in long-discussions where then potential-opportunity is missed.

Hire someone qualified like SkyH or just do the SifuVis thing and let the masters do their work. Leave it to the pros I say.

1 Like
#13

This is a nice middle ground

#14

Not at all. It is more about providing some guidelines to the TM (or the DAO in the absence of a TM) on how Wonderland is expected to be managed.

For example. with these risk limits, a TM can’t go all in on BTC without asking the approval from the DAO. Right now, there is no indication that a TM can’t have the whole treasury in one asset. It’s also putting a limit on how much of the treasury should be spent on VC deals and asking the DAO to decide on certain votes coming from tokens held/locked.

The CVX bribe/vote being a good example of currently being used in a way that resulted in significant losses for Wonderland where there is a conflict of interest. Having the DAO vote on those would remove the conflict and put the responsibility on the DAO.

1 Like
#15

Nice, thanks for clarifying @NalX

I think it’s good if the responsibility returns to the DAO. I think the concern still stands that this might limit the TM.

We already voted to define Dani’s role, I wasn’t aware of another conflict of interests or loss because the TM was left to do their thing. If anything, isn’t that kind of how Wonderland was born?

Imagine if we’d tried to put guidelines on Dani and Sifu in the beginning, I think we wouldn’t have been where we are now.

That said, this sounds progressive, and I don’t pretend to understand the complete ins and outs, so having the opportunity for the DAO to have their say, as long as we don’t go all ‘Brexit’ with big propaganda busses, I can see how it would be a good thing for WL moving forward

1 Like
#16

SkyH, that’s an honest point and I respect your pragmatism. Your other suggestion however is insane. You don’t want a degen ape as TM. Sometimes, that’s what is needed, but then a bulk of the time, a defensive posture is golden. Makes me realize the wisdom behind a suggestion made way back that having a diversity of managers should be considered.

But the oversight and risk management needed to monitor a multi-manager platform would be formidable, and true risk oversight would require a UI and tools which do not yet exist, in the absence of centralized liquidity pools. Hybrid EOA’s might work, but we only really need at most 2 or 3 PM’s each with similar allocations and mandates for follow on allocations based on performance. In addition to that, we should implement, through a single TM/or DIO (DAO Investment Officer), fully algorithmic, 100% systematic strategies with some discretionary oversight afforded the DIO specifically for adjusting each algo models allocation weighting using tools like machine learning, as has been suggested, (not discretion to go balls to the wall long ETH on a knife catching mission) Balls-to-the-wall trades can be quantitatively addressed while allowing for some offset of concentration risks.

When the only correct strategy is accumulating a huge line in specific coin(s), allowing for an algorithm to handle sizing based on advanced tools borrowed from institutional trading, looking at real time liquidity, assigning a score to liquidation overhang, AMM depth, OTC trades, ability to hedge in seconds to avoid transient external shocks, selling of ITM covered volatility (options) to generate cash flow from inventory and distributing that cash flow to token holders… that could take up the bulk of available funds, of which a minimum amount is kept in highly liquid yield bearing assets, so that they may be quickly deployed as VC investments…

Some options to keep this edging more and more towards a highly professional, highly profitable, and highly automated DAO that makes all of us disgustingly wealthy.