Strategic Treasury Diversification into Ethereum with $3M ETH Purchase

Author: Dr. Wagmi (16635) Quorum Requirement: 20% (9M) Vote Duration: 7 Days Reference Material: Aavegotchi DAO Treasury Report: https://docs.google.com/document/d/1u-hODswpYcLSJhCh4y6SNoR-17rClwenenmU71Ag9Og/edit#heading=h.2gazcsgmxkub

Proposal Summary: The proposal recommends the Aavegotchi DAO to diversify its treasury by purchasing 3,000,000 DAI worth of ETH. This acquisition would be executed through Cowswap on the Ethereum blockchain, divided into six weekly tranches of 500,000 DAI each.

Current Treasury Composition: • GHST: 16,223,059 ($16,098,141 @ $0.9923) • DAI: 8,886,873 • USDC: 3,756,276 Total Value: $28,741,290

Post-Purchase Treasury Composition: • GHST: $16,098,141 (56%) • USDC: $3,756,276 (13%) • DAI: $5,886,873 (21%) • ETH: $3,000,000 (10%)

Benefits:

1. Enhanced Portfolio Diversification: Acquiring ETH introduces a high-potential asset, reducing overreliance on stablecoins and GHST.
2. Reduced DAI Exposure: Decreases dependency on a single stablecoin, mitigating specific stablecoin risks.
3. Hedging Against Inflation: ETH, as a non-fiat asset, offers a hedge against USD inflationary pressures.
4. Capital Appreciation Potential: ETH has historically shown significant growth potential, offering possible higher returns compared to stablecoins.
5. Access to DeFi Opportunities: ETH holdings can be leveraged for staking or other DeFi instruments, potentially generating additional revenue.
6. Simple Execution: The proposed method of acquisition is straightforward and can be executed with relative ease.

Additional Benefits: • Liquidity and Market Depth: ETH, being a major cryptocurrency, offers high liquidity and market depth, facilitating easy entry and exit. • Community Engagement: Participation in a major blockchain like Ethereum could enhance community engagement and visibility.

Potential Risks and Challenges:

1. Market Volatility: ETH is subject to high price volatility, which could significantly impact the value of the DAO's treasury.
2. Accessibility of Funds: Allocating a portion of funds in ETH may complicate treasury access, as proposals would need to clearly specify fund origination requiring additional transactions by the Directors.

Conclusion: This proposal aims to strategically diversify the Aavegotchi DAO’s treasury by leveraging the potential of Ethereum while being mindful of the associated risks. If this proposal is accepted by the Aavegotchi DAO, a separate, second proposal will be produced to consider staking acquired ETH on Lido. Additionally, I will compose a third, separate proposal to supply stablecoins to Aave to generate passive yield.

Dr Wagmi