[1IP-92] Optimizing Treasury Yield via Lending

Overview

This proposal seeks community authorization to allocate 2,000,000 USDC from the 1inch DAO Treasury multisig (0x7951c7ef839e26f63da87a42c9a87986507f1c07) to the Aave V3 USDC market on Ethereum.

Currently, the treasury maintains a significant balance of idle stablecoins that are not generating yield. Total idle stables currently sits at $4,472,803. Building on the precedents of 1IP-27 (initial USDC allocation to Aave) and 1IP-41 (DAI allocation to benefit from the DSR), this initiative aims to further optimize the DAO’s capital efficiency by converting non-productive USDC into yield-bearing aUSDC.

Current Treasury Status

The 1inch DAO Treasury is responsible for various functions, including providing capital for grants, research, community initiatives, and other DAO-led developments. A core component of the DAO’s financial responsibility is the effective management of its reserves to ensure that the purchasing power of the treasury is preserved and, where possible, enhanced through low-risk DeFi primitives.

This is especially true due to the continuous decline in treasury value since 2024.

Operating revenue is also entirely lacking, meaning the treasury is not a beneficiary of direct protocol growth and usage. Since the pause of swap surplus fees in 2023, the DAO has almost entirely relied on non-operating income from its lending market positions. We intend to buffer this lack of operating revenue by calling for the pursuit of further yield through lending USDC.

The treasury's total liquid value across the multisig wallet and active DeFi positions is approximately $8,845,682. It currently holds $1,154,276 on Aave V3 and $1,126,493 in sDAI.

Treasury Allocation Summary (Feb 2, 2026)

• Idle USDC (Wallet): $3,975,684 (44.9%)

• ETH/WETH (Wallet): $1,174,238.14 (13.3%)

• USDC (Aave v3): $1,154,276 (13.0%)

• sDAI (Maker): $1,126,493 (12.7%)

• Other Idle Stables, USDT/DAI (Wallet): $499,234.23 (5.6%)

• 1INCH (Wallet): $454,333.17 (5.1%)

• 1INCH/WETH (Uniswap V3 LP): $310,036.02 (3.5%)

• WBTC (Wallet): $151,388.15 (1.7%)

Nearly 45% of the treasury’s total total holdings ($3,973,299) currently reside in the multisig wallet as non-interest-bearing USDC, with an additional ~$500k in other idle stablecoins, making the total idle stablecoin holdings equal to about $4.47M.

In the current market environment, where Aave V3 consistently provides a competitive APY for USDC, leaving nearly $4.5M stables in a stagnant state results in a significant opportunity cost. By failing to deploy even a portion of this, the DAO is effectively losing the ability to generate six-figure annual returns that could otherwise fund DAO-based initiatives.

Active Treasury Programs

1IP-27: USDC to Aave V3 Performance (May 2023 – Feb 2026)

The initial 1,000,000 USDC allocation to Aave V3 has been active for approximately 2.75 years.

• Initial Allocation: $1,000,000.00

• Current Value: $1,154,276.00

• Absolute Return: 15.43%

• CAGR: ~5.36%

1IP-41: DAI to Maker sDAI Performance (Oct 2023 – Feb 2026)

The 1,000,000 DAI allocation to the Maker Savings Rate (via sDAI) has been active for approximately 2.33 years.

• Initial Allocation: $1,000,000.00

• Current Value: $1,126,493.00

• Absolute Return: 12.65%

• CAGR: ~5.24%

Initiative	Asset	Tenure	Total Gain	Realized CAGR
1IP-27 (Aave)	USDC	2.75 Years	$154,276	5.36%
1IP-41 (Maker)	DAI	2.33 Years	$126,493	5.24%
Total Impact	—	—	$280,769	~5.3% (Avg)

Over the past ~2.5 years, the DAO has made over $280k through activation of stables in lending markets.

Future Allocation into Aave v3

This proposal calls for increasing 1inch DAO’s USDC supply on Aave v3.

Below is an overview of Aave’s primary USDC market.

• Current Supply APR: 3.53% (24h Average).

• Market Depth: With 4.16 Billion USDC supplied and 3.53 Billion USDC borrowed, the market shows healthy utilization. This high organic demand from borrowers ensures that the yield is sustainable and not dependent on temporary inflationary incentives.

• Yield Consistency: The 1-year performance chart reveals that while supply rates are dynamic, they have consistently stayed above a ~1.8% floor, with an average rate of 3.71% over the past year.

Adding this $2M USDC tranche to the current $1,154,276 already deployed creates a total working balance of $3,154,276 in USDC. At the current 24-hour average supply APR of 3.53%, this combined position is projected to generate approximately $111,345.94 annually in organic revenue.

The below table allows the community to visualize how the treasury's yield-generating capacity scales as market demand for USDC fluctuates. The analysis is based on the $3,973,299 in currently idle USDC held in the multisig wallet.

Allocation %	Allocation Size	2.00% APR	3.00% APR	3.53% APR (Current)	4.00% APR	5.00% APR	6.00% APR
25%	$993,325	$19,866	$29,800	$35,064	$39,733	$49,666	$59,599
50%	$1,986,650	$39,733	$59,599	$70,129	$79,466	$99,332	$119,199
75%	$2,979,974	$59,599	$89,399	$105,193	$119,199	$148,999	$178,798
100%	$3,973,299	$79,466	$119,199	$140,257	$158,932	$198,665	$238,398

We propose a risk-adjusted allocation of $2,000,000 USDC to Aave V3, establishing a middle-path strategy that optimizes capital efficiency while preserving immediate operational flexibility. At the current average supply APR of 3.53%, this $2M position is projected to generate $70,600 in annual revenue for 1inch DAO. Even in a conservative market scenario where rates dip to a floor of 2.00%, the position would still secure approximately $40,000 in passive income.

The $2M figure represents a rounding of the 50% idle USDC threshold ($1,986,650 in the sensitivity table), resulting in an allocation of 50.3% of the treasury's idle USDC, or 44.7% of its total consolidated idle stablecoin holdings across USDC, USDT, and DAI. By deploying this additional $2M USDC, the DAO still maintains a robust liquidity buffer of roughly $2.47M in non-deployed stablecoins, ensuring sufficient runway.