Should We Use the Treasury to Farm Yield?

The Opportunity:

Our roadmap notes that we’d like to deploy our treasury to start farming yield. We currently hold around $8.4 million in MIM that could be used for a decent and low-risk APY (~10-30%). We propose utilizing treasury funds to start earning passive income via Banker Joe and StakeDAO (allocations noted below). Since these funds are in stablecoins, there is no risk of devaluing our treasury through market fluctuations. Other risks are addressed below.

Proposal:

We’d like to deploy our Main Treasury ($8.4M) in the following allocations:

• 33% of MIM deposited for lending on Banker Joe (earning around 9.44% APY in MIM + 2.82% APY in Joe = 12.26% Total APY)
• 33% deposited as USDT for lending on Banker Joe (earning around 8.86% APY in USDT + 1.12% in Joe = 9.98% Total APY)
• 33% staked in the StakeDAO Passive Aave USD Strategy (earning around 29% Total APY in USDT / USDC / DAI / AVAX)

Total expected rewards from this strategy with our current treasury are: $1.43M per year

Rewards from farming may be utilized to buy back and burn MAG, grow our treasury, or reward MAG stakers. We will hold a separate vote on the distribution of these rewards.

Security / Transaction Details:

• We will utilize the highest security possible to handle these treasury funds with our MultiSig.
• We will utilize Curve to swap MIM for the necessary USDT, USDC, and DAI funds.
• Both Trader Joe and StakeDAO have a strong community presence, trusted development team, high TVL, and a history free of exploits.
• If we decide to do buybacks, they will be done randomly by the team to prevent frontrunning.
• We will utilize a smart contract to move the funds and ensure they are accessible easily if the need arises.

Potential Risks and Mitigants:

As with any DeFi application, yield farming has its risks. Banker Joe or StakeDAO could be exploited and the funds could be lost.

Banker Joe has been audited by Paladin and is an incredibly popular lending platform with nearly a half billion in TVL.

StakeDAO has been live since January 2021, is internally audited by their team and DAO community, their contracts are public and has worked with the Avalanche Foundation to be included in the Avalanche Rush program. At the time of writing they have over $403 million in TVL.

In addition, we are diversifying the funds across 2 different protocols and 3 different pools.