JBP-186 - Launch Treasury Management

Title: Treasury Management Launch
Author: Mr. Goldstein & VJ
Date: 5/8/2022

Thesis:

By utilizing part of its $11M treasury, the JuiceboxDAO will be able to generate yield and increase the longevity of the DAO as well as fund ecosystem growth

Abstract:

The JuiceboxDAO currently holds $11M of ETH on its balance sheet that is not productive. These funds can be generating yield to further ensure the longevity of the JuiceboxDAO and fund ecosystem growth. We propose launching Juicebox Treasury Management in three phases each divided into a separate proposal as follows:

• Phase 1 - Establish a Treasury Management Committee, Initial Staking Allocation, Initial Ecosystem Experiment

• Phase 2 - Develop Robust Juicebox Grant / Ecosystem Program

• Phase 3 - Create a stablecoin allocation

Through this proposal we ask the community to approve:

• Establishing a Treasury Management Committee & electing members to move this area forward in the DAO

• Initial allocation of ETH for stETH which will be allocated within 2 months and pending technical development

Motivation:

Utilizing the treasury will allow us to:

• Ensure the longevity of the JuiceboxDAO through market cycles

• Cover costs and grow asset base

• Supports and grows our ecosystem by investing in promising projects

• Strategic partnerships and investments in DAO tooling infrastructure protocols

• Diversify our asset base

• Demonstrate JBX leadership in DAO treasury management. Can eventually productize for projects on our platform

Operational Specification:

We propose to establish a Treasury Management Committee. The Committee will be responsible for proposing policies to achieve Juicebox’s strategic treasury objectives. The Committee will closely collaborate to adjust capital deployment targets / methods and will have a quarterly community meeting to review allocated capital.

Additionally, the committee will maintain a monthly reporting cadence providing the DAO with visibility into Treasury Management performance and risks.

Initially, we propose the Committee to include the following 5 members: VJ, Mr. Goldstein, Filipv, Tankbottoms, Jango

It’s important to note that the committee will be operating as an advisory capacity only for the DAO, and will not be able to control direct capital allocations. Once a proposal by the committee was accepted the JuiceboxDAO multisig will be executing the funds allocation.

Note on Treasury Redemptions

• Using V2, the Juicebox Treasury will be able to account for stETH for the purposes of bonding curve redemptions

• In case the ETH redemptions from the JuiceboxDAO Treasury accede the ETH available, redeemers will be able to receive stETH

Execution of all Treasury Management activities will commence with the following sequence:

• Staked ETH - upon proposal approval with manual portion starting first; full deployment is pending technical implementation (1 - 2 months)

• Creation of Treasury Management Committee - upon proposal approval

• Ecosystem Fund & Strategic Investments - upon separate proposal approval

• USDC - upon separate proposal approval

Initial Capital Allocation Specification:

The committee will be following an endowment capital allocation methodology, focusing on capital preservation vs. yield. On following is representative of endowment sample allocations:

For JuiceboxDAO to follow a similar capital allocation structure, we recommend the following allocations:

At launch, the Treasury Management Committee proposes the three following allocations as part of the overall strategy:

• ETH liquid staking - 75% of total ETH balance or 56.2% of total treasury

  • Lido (30%): staked ETH generates 3.7% (post merge will be high single - low double digits by end of the year). Initially to be implemented manually

  • Rocketpool / Lido / Stakewise (70%): staked ETH generates 4.03%. While Lido is the leading player with $10B of ETH staked, adding other providers such as Rocketpool / Stakewise can reduce protocol risk while maintaining liquidity

  • stETH, rETH, and sETH have significant liquidity with ETH

• Ecosystem Grant / Fund - $100K [separate proposal to follow]

  • Initial allocation of $100K to seed projects on Juicebox

  • Over time, launch formal grants / ecosystem fund with application process and committee review

• Stablecoin yield- 50% of USDC balance or 9% of total treasury [separate proposal to follow]

  • Over the next 6 months, we will be looking to sell ETH for USDC programmatically to achieve 2 years of runway and generate yield on half of the balance

Overall, between ETH staking (post merge) and stablecoin yield, we believe we can generate $750-1M of yield which would cover half to 2/3 of our annual opex of $1.5M

Risks:

• Smart contract failure risk

  • Mitigant: All protocols needs to be audited and are supported by a strong investor base

• Working capital management / liquidity risk

  • Mitigant: JBX can cover operating expenses with revenue. 2 year runway with USDC. Also 80%+ of treasury is liquid

• Operational security

  • Mitigant: Control remains with the multi-sig

Timeline:

The treasury has an infinite time horizon and exists to serves the JBX ecosystem in perpetuity.

Copyright Disclaimer:

All proposals must be in the public domain.

Copyright and related rights waived via CC0.

---

Discussion Thread | IPFS