Community Proposal: Allocating Treasury Funds for Low-Risk Yield Farming

We propose that Savvy DAO approve a portion of our treasury funds for yield farming activities to help bolster liquidity and the treasury’s ability to buy back SVY until a council is established to oversee and make decisions regarding the DAO’s assets. The funds will provide liquidity in pre-approved, low-risk decentralized finance (DeFi) protocols, specifically through liquidity provision (LP) in carefully selected pools.

Background

Savvy’s Treasury wishes to create some exposure to ecosystem projects and their governance tokens alongside the opportunity to farm ARB and generate yields. Today, it would make more fiscal sense for our treasury to be exposed to Arbitrum Ecosystem protocols awarded the Arbitrum STIP grant, which increases the overall yield APY’s Savvy can receive and provides the Savvy Treasury with more access to ARB tokens for governance power. When providing LP to long-tail assets, impermanent loss is a crucial concern for us. The Savvy Treasury will work to mitigate these risks. We have curated a list of pre-approved DeFi projects and pools offering low-risk IP to no risk of IP (single-sided vaults) and reduced smart contract risk.

Proposal Details

The team has selected a list of DeFi projects and pools with a track record of low risk for impermanent loss and offer reasonable yield opportunities. These projects and pools have been carefully vetted and approved for participation by our treasury funds. The following project list is final.

Projects

Trader Joe, Timeswap, Silo, Gamma, Balancer, Camelot, Jones DAO, Umami, Beefy, Dolomite, GMD, Uniswap, Curve, Radiant, Curve

Stable Assets

USDC, USDC.e, FRAX, DAI, USDT, axlUSDC, sFRAX, sDAI, sUSDT, GRAI, LUSD, eUSD, jUSDC, GMDUSDC, crvUSD, GHO, gDAI

Volatile Assets

WBTC, tBTC, BTC.b, ETH, WETH, frxETH, sfrxETH, unshETH, rETH, wstETH, GMDETH, GMDBTC

Pool Parameters

To be considered, the pool must meet the following criteria:

1. Cannot have IL, must be single-sided vaults or no IL pools
2. The size of TVL must be at 100K minimum or higher
3. Cannot be more than 20-25% of pool LP
4. Treasury position must not have more than 2X leverage
5. The project must be audited, and the audit must be published.

Implementation

Treasury shall deposit funds into the pre-approved DeFi projects and pools. Proper risk management over these assets shall be established to control risk.

Seeding Liquidity

Initial liquidity may be sourced from the Treasury, the Savvy Sage contract, or both sources. This approach ensures that our treasury funds are deployed cautiously and within our community risk tolerance parameters. The core team’s project lead, Roman, and the special advisor, The Ferengi, will create a plan to help yield optimal yields with as little risk exposure as possible. Approval allows the core team to move funds into and out of projects as the group sees fit, provided the rationale can be stated clearly and expressed to the community.

Governance Structure and Council

Our DAO will establish a council to oversee our assets’ treasury and governance. The committee will consist of community-elected representatives responsible for making critical decisions. The election process will occur within a 12-18 month window following the passing of this proposal.

Criteria for Council Members

To ensure the council is comprised of individuals who best represent our community, the following criteria will be considered when selecting council members:

Active participation in the community. A strong understanding of DeFi and blockchain technology. Demonstrated commitment to the DAO’s mission and values. A record of responsible and ethical conduct within the ecosystem. Transparency and accountability in financial matters.

The election process will be designed to be transparent and inclusive, allowing all community members to participate and vote for their chosen representatives.

Impact on Protocol

This proposal will enhance the protocol by increasing yield and treasury purchasing power. The yield created via treasury deployment will deepen liquidity for SVY-WETH pairs and allow the protocol to buy more SVY from the market. Your vote will shape the future of our ecosystem. We encourage all community members to participate in the governance process and vote according to their beliefs and interests. Let’s work together to optimize the use of our treasury funds for the benefit of all DAO members.