$IDLE Treasury Diversification through Strategic Partners

Summary

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.

Motivation

The Idle reserves are composed of the following pools (at the time of writing):

  1. Ecosystem Fund: 1.7 million $IDLE
  2. Long Term Fund: 2.6 million $IDLE
  3. Treasury League multisig: 13.7k $IDLE + 2.5 $ETH
  4. Smart Treasury: 161k $IDLE + 50 $ETH
  5. FeeTreasury: 17 ETH + various tokens (~$20k)
  6. FeeCollector: 35 stkAAVE + various tokens (~$17k)
  7. 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.

Technical Specifications

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%.

Strategic Partners

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.

Next Steps

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.

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I would love to see the “Venture League” managing and including oneIDLE in it’s Treasury diversification strategy.

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Treasury diversification is sorely needed. However, I’m not sure I understand the concrete actions and parameters being proposed here. Is this about OTC sales of IDLE reserves for stablecoin to select strategic partners?

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@unicorn thanks for the input – if this diversification will happen with eg USDC, the Venture League would have an assigned fund denominated in that token. If the Venture League’ members will foresee a utility in using oneIDLE to fund projects that would be a good fit into Idle’s ecosystem, I believe it could be something possible.

@idal thanks for the feedback – correct, that would be the concrete execution of this initiative, where strategic partners deploy stablecoins into Idle Treasury and receive IDLE with the aforementioned vesting period.

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Hi Teo, I’ve bought over 200k USD worth of IDLE on the open market in the last 2 months (happy to prove this). I would love an opportunity to buy IDLE at discount with a lock-in period.

Would this be possible?

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Hi @mrpqzm – definitely glad to hear about your commitment to IDLE! It could be possible. As this Treasury Diversification is directed to strategic partners, I think our community would like to understand more about the strategic value-added you think you can bring to the protocol and its tokenholders!

As per the discount, there’s no mention of that in this post :slightly_smiling_face:

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Ahh yes. Forgive my presumptuous postulation. I blame it on the amateur Pre-sale investor in me.

As for strategic value… I’m an individual, I don’t have deep crypto connections, I don’t have a “crypto fund”, and don’t I have a large say in other protocols… But I do have a social circle made out of non-crypto-initiated well-to-do friends. Each who could easily put 3-7M USD of AUM into the IDLE Ecosystem (lending, staking, holding, and LPing). Does that count as strategic-value?

If there is however a discount in exchange for the lock-up… I do believe that it’s fair that everyone (not only businesses) should get access to the opportunity. This is open finance after all. Anyone can be an LP, stake, write code… Also, I believe a composition of 100 users who each put in 50k USD, is superior to a single strategic entity that puts in 5M.

Just some thoughts, I hope they make sense, happy to hear feedback.

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Thanks for sharing more context, and I believe our community would be able to see your value-added via the contribution you can bring to the forum with structured proposals and initiative and participating in conversations that help to shape out the future of the protocol, like this one. Bringing a liquidity network, as stated in the initial post, is another way to bring strategic value.

I resonate with your point about open finance. Ethereum exists to re-shape the financial ecosystem, and a big chunk of its strength comes from community members. There are other mechanisms we could consider using that are more openly and widely accessible. However, we wanted to bring this to the governance because this proposal enables us to diversify to known parties (which can totally be anonymous but need to bring their commitment and reputation in the DeFi and crypto space to the table), with eventual vesting (due to the expected large amount of IDLE involved), and in an expedient way. Additionally, these parties should bring unique and proven expertise that we believe will accelerate protocol growth. More open methods (like a dutch auction) don’t allow these upsides.

With that being said, I’d like to hear more feedback on this and other opinions from our community.

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Thank you for the color.

I’m curious to learn… who are these known parties? And what specifically will they do (i.e. what is this thing they will do for IDLE with their unique and proven expertise which will accelerate protocol growth)?

Don’t get me wrong… there are definitely players who can make a disproportional impact. Just that I (and I believe many IDLE holders) would be curious in knowing who they are and specifically they would do for the protocol?

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This thread serves to inform the community about this initiative and to gauge its sentiment on it. Known parties are yet to be defined. As reported by the initial post and you elegantly summed up, they would need to provide unique and proven expertise which will accelerate protocol growth.

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A signaling snapshot poll has been initiated for the Treasury Diversification through Strategic Partners :ballot_box:

The purpose of this poll is to gauge community sentiment and move forward with deal specifications and partners’ contact.

The community can cast its preference on one of the following options:

  • FOR: Proceed with this initiative
  • AGAINST: Not proceed with this initiative

:calendar: The poll will last until 2021-06-18T10:30:00Z

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The signaling snapshot poll is over! The voters unanimously agree to move forward, and the Leagues will proceed to identify strategic partners and start the fundraising phase :handshake:

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