CIP: 28
title: Should CoW DAO send its profits to the CoW Treasury Core unit to generate extra revenues?
author: karpatkey
status: Draft
created: 2023-07-14

Simple Summary

This proposal aims to direct the profits generated by the CoW protocol to the Treasury Core unit 1. The intention is to utilize these otherwise idle funds in DeFi strategies to generate yield and farm rewards, thereby creating additional revenue streams for the DAO, particularly while further Protocol investment projects are not ongoing. These revenues can be reinvested into CoW development, funding projects, providing grants, executing $COW buybacks, and more.

Motivation

The CoW DAO has the opportunity to leverage its profits more effectively. By directing excess liquidity from profits to the Treasury Core unit for active management, the DAO can engage in yield-generating DeFi strategies, which can significantly increase the DAO’s revenue. These additional funds can be used to accelerate the growth and development of CoW and enhance the overall value proposition of the CoW ecosystem.

For instance, consider a scenario where a portion of the funds, say 300-400 ETH ($550K-$750K), is used to provide liquidity in ETH-based yield farming strategies. New strategies can be deployed with these funds, as the initial balance of the DAO Treasury focused on maximising capital utilisation. These strategies can average an APR of 7%, which could result in an extra yearly revenue stream of approximately $50K. Here are some potential strategies:

Staking in Lido and holding stETH, which at the time of writing yields around 4% APR. Depositing in stETH/ETH or rETH/ETH pools and staking on platforms like Convex or Aura, which can offer an APR of approximately 7%. Depositing in pools with other assets such as $BAL, $AURA, $CRV, $CVX, $COW, which can potentially yield 15%+ APR. These strategies not only provide a significant boost to the DAO’s revenue but also diversify the risk across different assets and platforms.

It’s worth noting these funds can be returned to the CoW DAO as needed - with an indicative SLA of 10 days. While a more fundamental discussion is due about the management of protocol revenues, we want to ensure the DAO is maximizing its capital efficiency in the meantime. Those funds would still be accounted for as protocol revenue and be up for future DAO decisions.

The allocated profits currently arise from two sources, namely:

Surplus from the protocol operations - Safe 2 - which would be redirected by the CoW Core team upon successful passing of the proposal, on a monthly basis; Rebates from MEVBlocker - Safe 1 - which would be redirected by the CoW DAO upon successful passing of the proposal, as a single time transaction.

Proposal

That the profits generated by the CoW protocol are sent to the CoW DAO Treasury Core unit: That the CoW Core team redirects idle (W)ETH from the solver rewards safe (eth:0xA03be496e67Ec29bC62F01a428683D7F9c204930 2) to the treasury safe (eth:0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669), monthly on the first week of the month; That the CoW DAO redirects MEV Blocker rebates (eth:0xCe91228789B57DEb45e66Ca10Ff648385fE7093b) to the treasury safe (eth:0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669); That the CoW DAO Treasury Core unit actively manages these funds to generate extra revenue for the DAO.

Payload

Send 213 ETH and 237 WETH from Solver rewards

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  "chainId": "1",
  "createdAt": 1690277469777,
  "meta": {
    "name": "Transactions Batch",
    "description": "",
    "txBuilderVersion": "1.16.1",
    "createdFromSafeAddress": "0xA03be496e67Ec29bC62F01a428683D7F9c204930",
    "createdFromOwnerAddress": "",
    "checksum": "0x827cec7aa7ef053394607302303d3cd8814836913c7ca483ae32495a829ffef5"
  },
  "transactions": [
    {
      "to": "0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2",
      "value": "0",
      "data": null,
      "contractMethod": {
        "inputs": [
          {
            "name": "dst",
            "type": "address"
          },
          {
            "name": "wad",
            "type": "uint256"
          }
        ],
        "name": "transfer",
        "payable": false
      },
      "contractInputsValues": {
        "dst": "0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669",
        "wad": "237000000000000000000"
      }
    },
    {
      "to": "0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669",
      "value": "213000000000000000000",
      "data": null,
      "contractMethod": null,
      "contractInputsValues": {
        "guy": "",
        "wad": ""
      }
    }
  ]
}

Send 70 ETH from MEV Blocker rebates

{
  "version": "1.0",
  "chainId": "1",
  "createdAt": 1690277622927,
  "meta": {
    "name": "Transactions Batch",
    "description": "",
    "txBuilderVersion": "1.16.1",
    "createdFromSafeAddress": "0xCe91228789B57DEb45e66Ca10Ff648385fE7093b",
    "createdFromOwnerAddress": "",
    "checksum": "0x85ddc766cd28f01a0042eab961d3a2d694088791843cf09af6ee13211eaa3250"
  },
  "transactions": [
    {
      "to": "0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669",
      "value": "70000000000000000000",
      "data": null,
      "contractMethod": null,
      "contractInputsValues": {
        "guy": "",
        "wad": ""
      }
    }
  ]
}