The purpose of this post is to gauge community sentiment on treasury diversification.
It would take place as diversification of a portion of the $IDLE held by the Governance into stablecoins for strategic partners – with this initiative, our protocol can accelerate its growth via more diversified liquidity management and an enhanced partner ecosystem.
This diversification would give IDLE governance a more stable treasury of assets. The protocol treasury now holds about 4.5M IDLE, representing 99% of the treasury composition – this could lead to a limited span of action that the community can effectively pursue with the treasury. Therefore, a more diversified treasury would introduce a number of benefits with a small change for the overall protocol.
The Idle reserves are composed of the following pools (at the time of writing):
- Ecosystem Fund: 1.7 million $IDLE
- Long Term Fund: 2.6 million $IDLE
- Treasury League multisig: 13.7k $IDLE + 2.5 $ETH
- Smart Treasury: 161k $IDLE + 50 $ETH
- FeeTreasury: 17 ETH + various tokens (~$20k)
- FeeCollector: 35 stkAAVE + various tokens (~$17k)
- Sushi LP Staking Contract: 914 SUSHI (~$11k)
Inspired by PoolTogether, BadgerDAO, Synthetix, and most recently Balancer, we propose securing operational capital that would provide more stable resources to enhance our long-term scaling plan and unlock new frontiers for the protocol.
The diversification of a small part of the Governance funds would bring the following benefits:
- Capital efficiency, by partially or totally deploying the stablecoin reserve into Idle pools;
- Fund expenditures such as rebalancing and protocol maintenance costs using a non-volatile asset.
- Long-term sustainability and risk mitigation in order to continue to thrive, even during non-favorable market situations.
- Venture League set up an investment arm that would use part of the resource to fund strategic DeFi projects and teams in their early stage. This unit would work towards sponsoring deeper DAO2DAO relationships, allowing Idle to become an active participant in other protocol’ ecosystems.
- Improve brand and reputation in the DeFi landscape, standing out with the backup of additional solid strategic partners.
This operation would impose a vesting period similar to current seed investors’ one, with a 6-month cliff and full vesting over 2 years.
Taking the PoolTogether treasury diversification as a reference, the IIP would transfer tokens to investors’ relative vesting contracts and transfer stablecoins (DAI/USDC) in the FeeTreasury before the on-chain vote execution.
The size of the deal can range between 5m$ and 10m$, guaranteeing resources for League scaling over the next 2-3 years. This proposal would move the $IDLE reserves from 99% share to 80-90%.
We expect to onboard proactive contributors, such as partners that can guide mutual integrations between protocols, introduce analysis/proposals and act as a bridge between DeFi and B2B/D2D partners or institutional capital.
The ideal strategic partner would possibly commit to use a portion of tokens to provide liquidity on DEXs (once vested) and also to be part of the liquidity network for Idle’s strategies.
Upon passing a signaling snapshot poll, we may begin diversification discussions with interested parties. As allocations are agreed upon and undertaken, they will be shared on Idle forum and channels.