[DIP 4] Treasury Strategy Part 2 - Full Plan

Initial Proposal:

https://snapshot.org/#/degendwarfs.eth/proposal/0x4af51decd9dfad9de11380e831d78c5070bbcbc6f65dada0f3834c6c6df587ce

General Info

Treasury Funds: 12.73 ETH to be used in the strategies below Contract Funds: 1.449 ETH to be added in full to the treasury and kept in naked ETH, used as long term fund to reimburse transaction costs (contract deployments, multisig operations, etc)

In general, strategies will be executed during low gas periods to minimize initial up front costs. Gas costs will be reimburse from the 1.449 ETH of contract funds, not the 12.73 ETH earmarked for the strategies below.

Summary of Allocations

Alchemix received the most votes as well as being a large allocation strategy, so it receives the full allocation. CVX received the 2nd most votes, so it will be the 2nd largest strategy - but kept at a ~25% allocation due to not being as popular as Alchemix. A CRV twist has also been introduced to the strategy. tALCX was the next highest vote, and is given a portion of it’s maximum allocation. Some ETH is earmarked for FXS strategies, which will likely include CVX vaults - therefore size is kept smaller to not be overly invested in that ecosystem, and to keep more exposure to ETH. Lastly, a small amount of ETH is put into the next-up asset, looksrare. The strategy is simple to execute and therefore is acceptable for a small position. The risk is also minimal to give the treasury exposure to the potential growth of NFTs and potential demand for more decentralization / alternatives to OpenSea.

Strategy 1: stETH vault

Link: https://app.alchemix.fi/vaults Size: 6 ETH Execution Strategy: Await whitelisting permission. Despot 12 ETH into Alchemix v2 stETH vault. Take loan for 6 alETH. Swap 6 alETH to 6 wETH or ETH. Expected yield: ~12% on 5.5 ETH remaining in the vault

Strategy 2: CVX Autocompounder AND CRV

Link: https://llama.airforce/#/convex/flyer Size: 3 ETH Execution Strategy: Purchase CVX with 2 ETH. Vote lock the CVX. Join the union. Delegate vlCVX to union. Separately, purchase CRV with 1.5 ETH. Lock in cvxCRV to earn APR but have an exit option. Evaluate the market after products like Paladin’s Warden or StakeDAO once bribes are live. If either solution works, CRV is undervalued by ~2-4x in terms of governance power, so arguably a similar magnitude on price. Should neither solution work, CRV would likely remain around its current valuation relative to CVX. Expected yield: ~50-75% APR on vlCVX, mostly from bribes. Uncertain yield on veCRV, likely less than CVX to start then if the market is somewhat efficient, CVX yields will drop, veCRV yields will increase, and CRV price will increase.

Strategy 3: tALCX purchase and staking

Link: https://app.alchemix.fi/farms Size: 1.5 ETH Execution Strategy: Purchase 1 ETH worth of tALCX. Stake in Alchemix. Expected yield: ~50% APR on ALCX

Strategy 4: FXS Stuff

Link: https://app.frax.finance/staking# Size: 1.5 ETH Execution Strategy: Purchase 1.5 ETH of FXS. Deposit into Vesper at 5% APR. Deposit ensuing LP token in Frax farm for 28% APR paid out in FXS. Expected yield: ~33%.

Strategy 5: Looks Rare

Link: https://looksrare.org/rewards Size: 0.73 ETH Execution Strategy: Purchase 0.5 ETH of LOOKS. Stake in the standard staking vault for LOOKS + ETH rewards (note the other vault isn’t higher APR, it just displays APY instead of APR). Expected yield: 60% in ETH, 60% in LOOKS

Season 2 Mints

The ETH earned for the treasury from Season 2 Mints will not be automatically deposited in these strategies. Instead, there will be separate governance taken to determine which strategies to increase allocation to, if any strategies should be exited, and if any new strategies should be utilized.