This proposal considers UMA as a strategic partner to help facilitate and deliver the treasury diversification needs for IDLE. This is a follow-on from the proposal discussed in the
$IDLE Treasury Diversification through Strategic Partners thread.
UMA has a combination of treasury management solutions built using audited DeFi native contracts to enable treasuries to diversify their assets under terms favorable to the DAO’s longevity.
Here is a broad overview of the various tools that UMA has to offer:
- Range Token allows the treasury to create convertible debt, which enables it to borrow against its balance sheet today, with a guarantee of paying back the debt at a future date. The benefit of the range token over other DeFi debt tools is that there is no risk of liquidation on a position in the event of a downturn. This is achieved by using a PUT option to create a floor price - the effect of this is that the DAO has downside protection.
- A success token, which instead of being a debt instrument, is more akin to an equity sale and thus gives the buyer of the token more potential upside and exposes the investor to the downside. The benefit of the success token for the DAO is that you are able to sell part of your treasury today with a locked vesting schedule and give the buyer.
This is a simple overview to introduce the token types, and more details of how they work can easily be added.
Explainer of each token if more detailed is needed:
Reasons to consider UMA as a partner:
- The flexibility of setting the parameters of any of the above tokens (such as price, duration, ranges, strikes, etc.) is entirely in the control of the IDLE team and community.
- IDLE finance is a DeFi protocol and should use a DeFi solution to achieve the treasury management goals.
- UMA has the infrastructure to create, mint, and redeem any of the tokens with no development time needed from the DAO’s side. In fact, these tokens can be launched in a matter of 30mins.
- The UMA team has experience in creating terms that align with the DAO’s needs.
- UMA used the range token and successfully raised $2.6M.
The next step:
This proposal should be taken into consideration alongside other alternatives and be thoroughly discussed with the IDLE community. The suggested discussion forum is naturally the forum thread, but having a community-based AMA option is also an option. Previous discussions around treasury diversification are well received using the AMA format.
The choice between which token type and what terms of the token will like
Chandler | UMA team