HIP-005 Approval for putting treasury funds to work with our treasury investment contract

Background

The most important element of what is called ‘DeFi 2.0’ is protocol owned funds. Our treasury is significant, but the team of Hector DAO has found a way to grow treasury funds on top of the growth already provided by bonding. We believe that protocol owned funds should be put into good use (from a protocol level) for a better efficiency of the entire (eco)system. The Hector protocol has shown incredible strength and growth over the last few weeks, now resulting in a large amount of protocol owned assets and liquidity nearing a total value of the treasury of 100M. Hectorians, you guys are amazing. We believe it is now time to put the treasury funds to work, as the more treasury funds Hector DAO owns:

• The more HEC tokens Hector can mint
• The higher the staking APY for participants
• The more protection treasury value ensures

Solution

We want to turn our treasury funds, specifically the stablecoins in our treasury (USDC, DAI, MIM, FRAX) into treasury bearing assets. Over the last week we have worked hard on a treasury investment contract, carefully protected by multi-sig (5/8). You can find this contract here https://github.com/Hector-DAO/hector-contracts/blob/main/treasury-manager/CurveGaugeAllocator.sol. The source code is verified on Ftmscan as well https://ftmscan.com/address/0x344456df952fa32be9c860c4eb23385384c4ef7a#code. Everybody can check the investment contract and feel free to do so! We will separately audit the investment contract.

The investment contract is integrated with the protocol and the base stable swap pool in Curve (CRV) so our USDC and DAI stablecoins can grow the treasury with interest bearing investments. As mentioned, the investment contract has a fund usage limit which can only be adjusted by 5/8 multi-sig and under a timelock protection, to ensure the investment contract can only send a limited amount of treasury funds to the Curve farming pool. Rewards for farming on Curve can only be accrued by the treasury, so no funds will remain in the treasury investment contract and there are no functions to transfer treasury funds anywhere else.

Curve is one of the oldest and largest dexes from the earliest stages of DeFi. Their protocol currently has 20 billion TVL. The simplicity in the Curve protocol makes it relatively safer than other projects, in our opinion. Also, the pool we will integrate with is a native stablecoin pool of USDC and DAI, so there are no other intermediate risks introduced from outside the scope of Curve, USDC and DAI. The pool is currently offering annually roughly 1%+ exchange fee, 2%+ crv reward and 4%+ wftm reward. See https://ftm.curve.fi/.

We will develop more investment contracts with the safety of funds as the number one priority.

Proposal

We propose to use the treasury investment contract to farm USDC and DAI on Curve, so we increase the overall capital efficiency of our treasury and make the entire system create more value that can benefit our community and token holders, allowing us to take larger steps towards becoming a major financial centre on the Fantom chain.