BIP#38: Divert an amount of protocol interest revenue towards the Treasury for bad debt reserves

Summary

This proposal is proposed to divert an amount of the protocol’s revenue until we reach a bad debt reserve of 200 ETH, supplementing what is already available in the Treasury.

Background

According to the rules of community governance:

• Phase 1: Idea or Draft
  • Minimum number of supports: 10 - Pass
  • Discord Idea: https://discord.com/channels/897709643948761148/1125165210718715975
• Phase 2: BIP
  • Minimum number of voters: 10 - Pass
  • BIP#38: https://governance.benddao.xyz/t/bip-38-divert-an-amount-of-protocol-interest-revenue-towards-the-treasury-for-bad-debt-reserves/499
• Phase 3: On-chain voting
  • Voting Quorum: Approximately 98M veBEND (20% of the total supply)
  • Pass Rate: Over 80% Approve.
  • The voting will last for 7 days.

Motivation

This is the time for the community to enact measures to show the strength of the DAO to weather this period. The implementation of a bad debt reserve will help to enhance the BendDAO’s financial stability by providing a mechanism for absorbing potential losses. It is a common practice in traditional finance to have such a reserve, which acts as a financial buffer and provides an additional level of security to the protocol users.

Specification

Based on the Discord discussion, this proposal suggests:

• Diverting an amount of the protocol’s revenue until we reach a bad debt reserve of 200 ETH, supplementing what is already available in the Treasury.
• Following the accomplishment of this initial goal, a subsequent vote will be held to discuss whether we should decrease this allocation to 25% or 10% until we accumulate a reserve of 300 ETH or another agreed-upon amount.

Next Step

The next course of action is to determine the initial allocation percentage for this proposal. The first phase of the target reserve size will be 200 ETH as the community discussed.