TRC#52: Treasury Management - Transitioning Part of Timeless DAO's WETH Holdings to Liquid Staking Tokens

Author(s): @mcfly

Contributors:

Status: TRC

Date Applied: 2023-05-25

Date Updated: 2023-05-30

Date Ratified: yyyy-mm-dd

Vote Start Date: 2023-05-31 12:00 UTC

Vote End Date: 2023-06-03 12:00 UTC

Timeless Discord Gov Thread Link: https://discord.com/channels/986277978776420413/1111282538351165502

Summary

This TRC suggests a reallocation of a portion of the Timeless DAO’s existing WETH holdings into liquid staking tokens (LSTs), specifically stETH, rETH, and swETH, as a measure to enhance yield. Presently, the DAO holds 364 WETH, with half of this amount being committed to the dividends deal, as per TRC#33. The proposal sets forth the conversion of 30% of the uncommitted WETH holdings (≈ 110 WETH), where the distribution among the selected LSTs is to be guided by their respective market shares at the time of writting, minus 30 WETH set aside for the swETH allocation, aiming at getting an exposure to the Swell Voyage Program. The proposed transactions can be executed directly following a successful Snapshot vote, under a TIC.

Motivation

This proposal is fueled by the aspiration to boost the annual yield accrued by the Timeless DAO. At present, the DAO's WETH holdings do not generate any yield. Transitioning a part of these holdings into an assortment of LSTs, coupled with a quarterly reassessment of new WETH allocations considering the DAO's cash inflow, the yield could see significant amplification.

Another motivator is the potential qualification for prospective airdrops from LST protocols, such as Swell, while also fortifying partnerships within the Timeless ecosystem. For reference, see the ongoing TRC#43 discussion here #"TRC 43 - Timeless Treasury Diversification Strategy".

Retention of WETH

This proposal advocates for the retention of 20% of the DAO’s uncommitted holdings as WETH. This approach provides room for the incorporation of additional decentralized LSTs in the future, thus furthering the potential for diversification and yield optimization.

Next Steps

1. Gather community feedback and arrive at a consensus.

2. Initiate a Snapshot vote.

3. If the Snapshot vote results in a majority FOR, proceed to publish a TIC with a payload allocating the following amount of WETH to the respective LST according to their market shares (source Defillama)

• So first, let's subtract the 30 WETH reserved for swETH from the total of 110 WETH. This leaves 80 WETH to be allocated among stETH, rETH, and sfrxETH.

• The allocation would then be:

• stETH: 73.57% of 80 WETH = approximately 58.856 WETH

• rETH: 7.66% of 80 WETH = approximately 6.128 WETH

• sfrxETH: 2.47% of 80 WETH = approximately 1.976 WETH

• swETH: Fixed allocation = 30 WETH

Conclusion

By reallocating a part of the Timeless DAO’s WETH holdings into different LSTs, the DAO stands to increase its annual yield and strengthen its ties within the ecosystem. This proposal presents a strategy that not only escalates yield in the immediate term but also accommodates opportunities for future diversification and yield optimization.