TAP-18: DAI Savings Rate Deposit

Summary

Deposit $77M DAI into the the DAI Savings Rate Earn Strategy

Motivation

MakerDAO recently increased the DAI savings rate (DSR) to 1% as a result of the revenues earned by their Real-World Asset (RWA) activities. Olympus Treasury being one of the largest DAI holder, should take advantage of the new savings rate to increase its revenues.

Risk Assessment

The DSR contract has been live since November 2019, was audited by Trail of Bits, has held at its peak usage over $350M of DAI holders assets and to this date has not suffered any exploit. This makes the Dai Savings Rate smart contract one of the oldest and most battle-tested set of code in the Defi ecosystem. Due to the time in production and significant TVL over time the DSR contract is seen as a low risk contract by the treasury team.

The allocator contract is developed by Olympus, and is an adapted copy of the same allocator contract that is used for all other treasury assets held in allocators (Fraxswap, CVX, Aave etc). The Olympus allocator has been used for a long time with significant value. The risk of asset loss is seen as low by the treasury team. However, this specific allocator deployment is not audited and therefor we suggest that the significant treasury reserve deposit is done in two tranches. It is proposed that a first deposit of 1M DAI is done to encourage potential exploit of the allocator contract. After 2 weeks this is followed by the main deposit.

How Does the DSR work?

• Dai holders can lock their Dai into the DSR smart contract at any time. Once locked, Dai continuously accrues to the users balance, based on the current DSR.

• Dai holders can earn savings automatically and natively while retaining control of their Dai. The DSR smart contract has no withdrawal limits, deposit limits, or liquidity constraints

Source: https://github.com/makerdao/community/blob/master/faqs/dsr.md

In regards to Treasury assets needed to conduct market operations under RBS, note that:

• Deposit and withdrawals can be done at any moment. There are no lock-ups and no fees for using the Dai Savings Rate.

• Twice the total of DAI used by RBS for the last completed month will remain unstaked in the Olympus Treasury.

Initially, the RBS contract/ new Treasury would be replenished when/if needed by executing withdrawals manually from the DSR contracts.

Eventually, RBS contract will be able to interact directly with the DSR contract which would remove the need for an intermediary manual transaction.

Execution

Deposit 1M DAI from reserves to DAI Savings Rate module via Olympus Allocator.

After 2 weeks follow up with the main $76M deposit.

References

The Olympus Dai Savings Allocator is currently deployed:

https://etherscan.io/address/0x0EA26319836fF05B8C5C5afD83b8aB17dd46d063#code

Allocator Code:

https://github.com/OlympusDAO/olympus-contracts/blob/allocators/contracts/allocators/DSRAllocator.sol