BIP-107: Beets Treasury Framework v2

Purpose

The Beets Treasury exists to safeguard the long-term stability, sustainability, and growth of the protocol. This framework defines strategic goals and risk classifications to guide treasury management. It establishes clear priorities, allocation limits, and operational processes to ensure responsible stewardship of DAO assets:

1. Every treasury allocation must serve at least one of the defined goals
2. Goals with priority tag must be filled before allocating treasury to other use cases
3. All treasury assets are categorized under a risk level based on the risk framework
4. There are maximum allocation limits for each risk level
5. Treasury allocation will be reviewed at least every six months, with adjustments made as needed to remain within this framework

Main changes compared to the previous treasury framework:

• Updated risk classification system with additional descriptions and examples
• Updated and simplified treasury strategic goals
• Included treasury management guidelines & rules

Definitions

Beets Treasury contains both assets fully controlled and manageable by the DAO and assets with specific limitations and/or restricted use cases. Based on this, the following definitions are used:

1. Total Treasury – All assets present in Beets Treasury wallets, including the Sonic tokens used for the Beets validator self-staking.
2. Active Treasury - Subset of Total Treasury, which excludes treasury held BEETS tokens and any asset with restricted use.

Allocation limits expressed in this framework are based on the Active Treasury.

## Risk Classification Treasury assets are categorized under four risk levels, each with a maximum allowable allocation. If a higher-risk category is not fully utilized, the unused portion may be reallocated to lower-risk categories.

Risk level 0 (Minimal) - Assets with minimal exposure to smart contract risk and minimal attack surface. Max allocation: N/A Examples: Assets in DAO multisig, assets earmarked for grants, lending on Aave

Risk level 1 (Low) - Simple or yield-bearing assets with low composability risk. Max allocation: 50% Examples: Non-boosted pools on Balancer/Beets, Balancer concentrated liquidity pools (ECLP, reCLAMM), lending on established protocols, sGHO, stS, wstETH

Risk level 2 (Moderate) - Assets in more complex yield strategies with moderate smart contract exposure. Max allocation: 30% Examples: Boosted pools with proven track record, Aave umbrella, liquidity providing on external protocols

Risk level 3 (High) - High-yield, experimental, or leveraged strategies with significant risk exposure. Max allocation: 20% Examples: Pools with experimental boosts, multi-strategy contracts, leveraged positions

Strategic Goals

Beets Treasury management is defined based on the following goals:

Goal 1 - Bug Bounty Safeguard & Liquidity Reserve (Priority)

Objective: Maintain sufficient liquidity to fund a critical bug bounty payout as per BIP-26. Amount: 200,000 USD Allocation: Native stablecoins (Risk level 0).

Goal 2 – Core Contributor Funding & Retention (Priority)

Objective: Ensure funding for 6 months of core contributor and infrastructure expenses (per BIP-92, BIP-40, BIP-56). Subject to change with future BIPs. Amount: 327,000 USD (based on current expense structure) Allocation: Stablecoins or pools composed of only stablecoins (up to Risk level 2).

Goal 3 – Protocol-Owned Assets on Beets

Objective: Utilize protocol-owned assets on Beets to generate revenue and/or promote protocol growth. Amount: N/A Allocation: Assets on both Sonic and Optimism deployments. Can be staked on external protocols (e.g., AURA) to maximize returns.

Goal 4 – External Protocol Revenue Generation

Objective: Deploy treasury assets into external protocols (non-BPT assets) to enhance revenue. Amount: N/A Allocation: Every new protocol must be whitelisted by DAO vote.

Treasury Management Guidelines & Rules

Review Cycle: Treasury composition will be reviewed at least every six months by the Music Directors, with rebalancing as required.

Emergency Action: Music Directors may exit positions immediately if risks are deemed unacceptable.

Treasury rebalancing: Music Directors may reallocate up to a maximum of $200k per month of the treasury balance. This would include entering and exiting liquidity pools, moving funds cross chain and/or adding to existing deposits. Any reallocation greater than $200k will require a treasury vote.

Protocol whitelisting: Music Directors are required to raise a governance vote the first time they seek to deposit assets into a new protocol. That proposal shall define the maximum exposure the treasury will have to that protocol's smart contract risk.

Transparency: Transaction hash with a short description will be provided on Discord for transaction from Beets treasury wallets:

• Sonic: https://debank.com/profile/0xc5E0250037195850E4D987CA25d6ABa68ef5fEe8
• Ethereum: https://debank.com/profile/0xea06e1b4259730724885a39ce3ca670efb020e26
• Optimism: https://debank.com/profile/0x2a185c8a3c63d7bfe63ad5d950244ffe9d0a4b60

Operations: Music Directors ensure the timely payment of governance approved expenditures and bug bounty claims.