Currently, $1 worth of $FBA is being minted for every $1 Firebird earns as revenue, so while the balance is stabilized, the downside is that growth is limited and depends entirely on volume, generated fees and general market sentiment making it hard to effectively diversify with the current model.

By tweaking the balance to a certain degree (small enough to be able to control, but not big enough to create massive inflation), we believe the previously stifled growth of FBA could be alleviated.

We therefore propose the following:

• A new mechanism to grow the Treasury: for every $FBA minted, an extra 20% will be minted to the Treasury, fully controlled by the stakeholders of $FBA. The $FBA in this Treasury will be used for many purposes. Some examples include but not limited to: selling OTC to partners, funding community development, funding trading competitions to increase trading activity and any other use cases/opportunities that the future may bring. The key goal here is to make Firebird as flexible as possible.

• The current FBA/USDC pool at Beets.fi has $450k in liquidity, most of which is lying unused. Even with ~$350k, the liquidity will be deep enough to cover our current trading volume comfortably. In order to achieve our goal of growing the FB Treasury and increase treasury desirability, we propose taking out $100k ($50k worth of FBA and $50k USDC) from it and sending it to the Treasury.

Benefits:

• A sustainable, diverse treasury that can be used on-demand to benefit FBDAO stakers as well as Firebird as a whole when advantageous opportunities present themselves.
• Help further drive demand for $FBA by creating a more robust ecosystem which is more closely tied to staking.

Risks:

• Sentiment around additional minting could cause short term negative price action
• Having a diverse treasury has standard risks around maintaining asset values vs stable assets

Risk Mitigation:

1. Since the majority of FBA holders chose to max lock their FBA we can make a strong case for the same being true for FBDAO
2. Inversely, a more diverse treasury also has equal upsides. As assets increase in value, so does the treasury - something a pure stable treasury cannot do.
3. Firebird remains a resilient protocol despite historical previous negative impacts to the overall crypto market

Reference to FBDAO: https://blog.firebird.finance/2023/02/02/firebird-governance-a-new-chapter/