PIP-3: Yield Generation on Anchor Protocol

Author:
Core contributor of PathDAO

Summary:

15M USDC is currently sitting in our treasury with no yield. Given that it will take many months to fully deploy our dry powder, we propose allocating a maximum of 5M USDC to UST on Anchor Protocol on the Terra network, for its 19% APY. This will generate up to 1M UST a year for the treasury.

Abstract:
Currently, PathDAO has more than 15M USDC sitting in the treasury. As it takes many months to fully deploy the dry powder, it is important to look for ways to generate yield and enhance the capital efficiency of the now-idle assets. That said, the risk level of any yield-farming strategy should be minimal as the mandate of PathDAO is to create alpha in the Metaverse / blockchain gaming space.

Anchor protocol is a savings protocol that offers 19% APY on Terra stablecoin (UST) deposits. It has a Total Value Locked (TVL) of >10bn UST, backed by the likes of Delphi Digital, Alameda Research, Dragonfly, Pantera and Hashed. More information here: https://docs.anchorprotocol.com/

There’s a fine balance between yield optimization and Protocol Risk (i.e. hacks / rug pull). Given the excellent track record and the prominence of its backers, we propose allocating a maximum of 5M USDC to UST on Anchor Protocol. In the event that the team comes across any exciting investment opportunities, the funds deposited on Anchor will be withdrawn and invested accordingly.

Voting options:
• In favor (Yes): Allocate a maximum of 5M USDC to UST on Anchor Protocol
or
• Against (No): DO NOT move USDC to Anchor Protocol

Rationale:
Maximum annual yield of ~1M UST to enhance the capital efficiency of the now-idle assets

Budget:
No budget required apart from minimal gas fees, moving USDC from ETH chain to UST to Terra chain

Process:
PIP-3 will proceed in the following manner:

  1. This proposal will be open for discussion until 30th December 6AM EST
  2. After the discussion concluded and any possible adjustments have been made, the proposal will be up for voting on Snapshot. This link will be provided in due course
  3. The snapshot voting will last for 24 hours after it goes live
  4. After the voting concludes and if the proposal is accepted by the token holders, the proposal will be executed
3 Likes

Hello, this is sad we are discussing to grow treasury. This is not because of content. I really like that protocol and %20 apy for stable coin is really good. (There are higher apy solutions for stables but this one is the safest one as far as i know.) Anyway this is not the topic. I see that we are still in crisis. There is no hype. Community is not active the reason behind is treasury not correlated or even related with Path DAO’s marketcap. Which means topping up treasury, growing treasury means nothing to us. Path is currently so high inflationary token also can not project me Path’s treasury means something for Path token value which i hodl for long term. So this proposal is meaningles…
If Path tokens shows my share in DAO, Path marketcap always should be treasury + future expectations. Right now our future expactations are bigly negative. We need to buidl trust first. I invested in copper launch and sold Path’s with a huge loss and worried about my future community rewards value.

Thanks.

1 Like

Hi. I respectfully disagree. Topping up the treasury does have value to the DAO, perhaps not straight away but eventually will. I think your definition of long term is different to mine. To put things into perspective, the token was released a couple of weeks ago. PathDao is still in its early stages. I do agree that we need a better roadmap and more exposure but ‘hype’ is reserved for pump and dump tokens in my opinion.

3 Likes

What’s your time horizon for long term? If you’re in it for the long term then growing the treasury is absolutely important and it’s not nothing.

2 Likes

This doesn’t look good . Why not buying BTC ? instead of this futile discussion you should fix tokenomics by locking high unsustainable apr rewards as soon as possible or your reputation is flushed down the drain with your token price.

3 Likes

Seems sensible, though I’m not familiar with the protocol and it’s safety. Is it worth taking out some insurance via another protocol and / or diversifying the deposits? I.e: split 50% into Anchor and 50% into another protocol to hedge against hacks. Yields might be lower but to lose 30% of the treasury in a hack (while chasing a 20% yield which is a nice to have but not critical) would signal the deathknell for the project.

2 Likes

I think having a steady income stream would be helpful.

I feel like there should be a plan/budget for the revenue.
Not sure what the costs are for the DAO but I feel that whatever revenue we get from this, we should reserve some of it from being spent so that it compounds.

1 Like

What’s your justification for buying btc instead of stablecoin yield farming?

Looks like the comments in here are going only downhill with each proposal. The first guy being all that agressive and such and doesnt even own the token, except for some community rewards, what a joke.

I think this is a good proposal, although I do think a hack could hurt us a whole lot if we have everything in one basket. Is there any insurance on these funds regarding hacks? I know that some Defi protocols offer that, but I am not familiar with ankor.

Maybe a 50/50 split with some other protocol would be good.

2 Likes

I agree with you that it’s a good proposal and the team is aware of protocol risk. So I imagine they won’t do voting and swiftly exit their position if there’s any rumor of any risk lol

Anchor smart contracts were audited by Cryptonics and Solidified. They also have 2 bug bounty programs. At least we get the impression that they take security seriously.

3 Likes

Sorry this is a digression, but I do think the first commenter has a point in their concern.
There were many who came in at a high PATH price point so there is a sentiment for the token value to grow.
Brushing aside these feelings would only leave them feeling more alienated.

It might be useful to outline a basic high level strategy for creating “value”.
Treasury fund amount alone is a pithy KPI.
Having dollar amounts as north star is a little directionless.

Defining tangible goals and KPIs might serve to help us evaluate these proposals a lot better since we can mark its value against them.

These actions right now don’t really feel cohesive and feel very ad hoc.
As someone who also came in high, I do understand the anxiety of the drop in portfolio value.
However, I feel like an overall strategem would boost a little more confidence and corral better participation from the worried.

I’m new to DAOs so I’m not sure how it works here. But traditional companies have CEOs that serve as the visionaries and steer the ship.
We’re kind of lacking that kind of focus.

3 Likes

I agree with some form of a 50/50 split if there is another protocol they trust

1 Like

Value will come with a good structure for the DAO, and having a good protocol to put some of your treasury is part of this. Merit Circle and other DAOs also do this.

There is no way around that to build more trust from the community and get better value for the token we need a strong ecosystem and proposals like this are the foundations of it. No point sobing about price now, lets just be patient and help the team build and things will go back up naturally.

2 Likes

my biggest fear here is that its being held in USDT, rather than USDC. As i understand it the company behind USDT (tether) is still under investigation by the DOJ in the USA. here is an article from this year: Bloomberg - Are you a robot?

in my view holding 1/3 of our treasury in USDT would be a big risk, if tether is found out to be guilty of any issues, then expect a run on USDT, if its locked in a protocol it could create a big issue for us.

i am however all in favour of utilising some of the treasury to generate yield. just not USDT.

1 Like

It’s gonna be UST (TerraUSD). Not USDT (Tether). I would be against it too if it’s USDT. UST also flipped DAI recently in market cap.

2 Likes

This proposal will surely wait. The next proposal supposed to be about locking in rewards.

3 Likes

Agree. Another digression here too (but we know the team will be reading these comments): I would really like to see more info flow please and to understand more about a) what has been achieved in the last 3 weeks and b) what is coming next. I see posts about new collabs and partnerships, but you don’t explain what they are. What have you agreed with these partners? What are the forecasts? What value does each one add?

Furthermore, re PathDAO team:
What is the team structure? Who is doing what? What are the main focusses to drive revenue in the next Q?

Would really like some solid communication around our strategy for the next 6 months. I agree, I’m afraid, with the previous comment that this all feels very reactionary.
‘Locking treasury funds into a yield farming vault’? This would have been on your original plan surely, so why are we putting it to a DAO vote 3 weeks after funds are received? This should have been in your roadmap anyway and it feels like you are putting this to the DAO vote ‘in the absence’ of anything better or more decisive to vote on.

We need a solid strategy and clear comms if we are going to make this work guys.

4 Likes

In favor (Yes): Allocate a maximum of 5M USDC to UST on Anchor Protocol

2 Likes

I agree that growing the treasury is most likely the most important part of the project as it will allow us to grow cash reserves to invest in newer opportunities. I also think that this will become more apparent once the dashboard is released. If you look at other DAOs, they often trade at 3x,4x,5x their treasury value at least. If we are below that amount in terms of market cap (which I believe we are), that will directly correlate to an increase in price and value to all holders as people will bid up the price if we are trading at near treasury value.

I also propose that we look into allocating capital to the popsicle finance protocol as this is also a great platform for APY generation on stables or assets if we choose.

Thank you

1 Like

Even though Popsicle is indeed a nice protocol they were hacked not long ago. Kinda scary to put even half of this kind of money in there.