One way to grow the treasury size and have more liquidity for future growth for Liquity, is to do a weekly DCA into ETH / BTC.
Benefits: Long term treasury size increase.
Increased value accrual for LQTY stakers… think MSTR, but decentralized.
If there is sufficient interest in this proposal, I can make a formal proposal with the contract that can purchase stETH / wBTC periodically using BOLD. The main reason to start this thread is to take feedback from participants on the nature of such a contract.
DCA Asset Purchase program(stETH / wBTC) with BOLD
Usage of the funds received
The contract will purchase wBTC(50%) / stETH (50%) at set intervals using the BOLD available.
As the contract may have more BOLD in the future, anyone can trigger the purchase of the assets as soon as a threshold BOLD balance, has been met. So instead of using funds all at once and increasing the price of assets, the contract can buy the assets periodically.
Impact for BOLD
While this is purely speculative, it has the potential to increase the long term value of assets held by LQTY stakers, thereby allowing more capital for long term funding, as well as increased value for LQTY stakers.
Threshold & Target
There is no minimum threshold, we can start with 1% of fee paid going to this initiative, and increase as we see fit.
If we have to be aggressive, we can start with 5% of fee paid.
Blackrock recommends an allocation of 2% for Bitcoin.
Impact Measurement, Tracking and Key Metrics
DCA into assets, thereby growing the treasury.
Increased value for LQTY stakers
Reporting
The contract will be decentralized, so anyone can audit what’s going on in the contract.
Practical Information
About the recipient: Will be provided after initial discussion and positive feedback.
Nature of the wallet (EOA, Safe, Contract): Contract, with multisig - to release funds when they are needed. Details to be worked out. A more formal proposal will be made after preliminary feedback on this proposal.
While I agree that getting exposure to crypto assets is interesting from a DAO treasury POV, the fact is that in the actual configuration of liquity governance there is no treasury.
The current model (and nonyan can stop it) work on a pure cashflow basis, aggregating the fee in the governance contract during the week and distributing it at the end of the epoch, so it is in fact way too early for any kind of talk 'bout asset repartition in the treasury.
Lastly, as for my personal opinion, I believe that any BOLD is better used imediatly outside the protocol to keep growing and talk about setting up a treasury are useless, if someone seek funding for a bigger project they can “just” publish an initiative.
Why is it not a priority? And who decides there ought to be a treasury or not and it’s priority?
I believe it’s better to setup a treasury with reserve assets right away rather than wait for the best time to do it. Btw, what would you suggest your friend the best time to buy Bitcoin / Ethereum? The answer obviously is a few years ago right? Or would you tell them that it’s tomorrow or the year later?
Further:
LQTY stakers don’t get anything from fees, that is a major drawback.
The second major drawback is that the forks don’t offer any incentives for LQTY stakers. And, they only allocate around 4% of token incentives for LQTY ecosystem, which is meagre.
LQTY stakers have to wait for bribe markets to develop- which may or may not and no one knows how much bribe will be offered. It’s uncertain at this point.
This proposal is a meaningful way to increase the value for LQTY stakers.
The concept of the idea is good and make sense as we can see by various companies that have been doing it more recently and having a positive outcome. But WBTC no, please !
WBTC despite being the largest Bitcoin token in DeFi market it is pretty much centralized and to make it worst last year it changed its management in a way that brings up many doubts about the future of this token and risks involved.
As the nature of Liquity being unstoppable and well decentralized, just replace the WBTC in the proposal for tBTC from Threshold Network which is truly decentralized, permissionlessly mintable and redeemable and the BTC that backs it is not held by a central intermediary, but is instead held by a decentralized network of nodes using threshold cryptography. It has a current supply worth $450M.
1% seems a bit conservative. I would say to start with something as 5%.
In general I would agree that any BOLD can be better used immediately, but that it not the case all the time and there may be opportunities to grow that capital by this proposal.
