[1IP-09] Collect 1inch DAO Treasury Revenue in 1INCH Token in Addition to USDC

Simple Summary

This proposal seeks to modify the 1inch Network DAO Treasury’s revenue collection strategy by enacting the following changes:

• Switch from buying USDC with Swap Surplus revenue to buying 1INCH when the price is lower than $1.30.
• Switch from buying 1INCH with Swap Surplus revenue to buying USDC the price of 1INCH is greater than or equal to $1.70.

Abstract

Currently, the Swap Surplus revenue stream is collected in varying tokens and swapped to USDC before it is then sent to the 1inch DAO Treasury. Once enacted, this proposal will instead swap these tokens to 1INCH as long as the market price of 1INCH is below the $1.30 to $1.70 range (see the Specification section for a detailed explanation). All swaps will be done using the 1inch Aggregation Protocol to ensure the best pricing.

Motivation

Benefits to the 1inch Network DAO include:

• Investing the DAO’s revenue stream into the protocol’s governance token while the governance token is lower than it was previously valued.
• Potential upward pressure on the 1INCH token as the DAO Treasury will be a net buyer of cheap 1INCH.
• When the token is trading at higher valuations, the Treasury will automatically de-risk by collecting revenue in stable coins.
• Holding 1INCH within the 1inch DAO Treasury will allow the Treasury to scale its value with the performance of the token.

Specification

This proposal serves as a signal from the 1inch Network DAO to 1inch Labs. Once passed, the 1inch Network DAO calls for 1inch Labs to modify the fee collection strategy with the following changes:

• When the price of 1INCH moves is below $1.30, Swap Surplus revenue shall start to be collected in 1INCH.
• When the price of 1INCH moves above $1.70, Swap Surplus revenue shall be collected in USDC.

Once the modifications have been made and tested, 1inch Labs shall deploy them. All future modifications to these will need to be done by a 1inch DAO Governance vote.

Rationale

This proposal aims to purchase 1INCH with treasury revenue when the price is lower than ~$1.50. $0.20 bands are used on either side of this buying point in order to dampen the impact that market volatility could have.

This price point of 1INCH that triggers the switch can be changed in the future via a governance vote.

Considerations

Market Risk

The USDC stablecoin composition of the 1inch DAO Treasury puts the Treasury in a very good position during any bearish market cycles — the Treasury constantly grows in dollar value while, in contrast, projects that primarily hold their own token, have had the real value of their Treasury shrink in the last 6 months.

Adding 1INCH to the Treasury composition will increase both the potential risk and potential returns. This proposal dampens the volatility by maintaining a mix of risk-on and risk-off assets.

Added Complexity

If enacted, this proposal will add complexity to the Treasury Revenue collection strategy.