FWB Treasury Diversification

Authors: Evan Fisher, Cooper Turley, Amit Mukherjee, Holyn Kanake

Summary

Allocate 1.5M USDC from the FWB treasury into the aUSDC Aave Curve pool.

Abstract

FWB has ~10M USDC in its treasury, which is meaningfully more than its monthly working capital needs ($427K in October and $338K in September).

This proposal looks to a) create a FWB vault on Enzyme Finance, and b) allocate $1.5M of the idle stablecoins to aUSDC in Aave Curve pools.

Earnings from these saving instruments will be added to FWB treasury as working capital within approved departments and reinvested back into the DAO.

Motivation

Idle stablecoins carry an opportunity cost. Optimizing the FWB capital structure would provide the community with additional financial resources to reinvest into the DAO.

Yield farming with Treasury funds demonstrates that FWB is active across the wider DeFi ecosystem, and provides confidence to members that funds are always being put to use in the best place possible.

This proposal aims to a) set up the infrastructure needed to invest stablecoins and, b) set an initial investment strategy for the community.

Based on current APYs, the recommended allocation in this proposal is expected to generate an additional ~$120K of USDC over the next year.

It is recommended that the community re-evaluates its investment allocations and strategy as APYs shift and new protocols emerge.

We believe in community governance, and we hope this sets the precedent for future proposals to continue deploying the FWB treasury.

Specifications

If successful, this proposal will allow the Gnosis Multisig operators to establish a FWB vault on Enzyme. Enzyme is non-custodial, decentralized asset management infrastructure. The platform gives access to a range of DeFi products in one place, which simplifies tracking of assets and performance reporting to the community. Through the newly created vault, the multisig can execute treasury management strategies on behalf of the DAO. Any adjustment of allocations beyond this proposal must be voted on by the community.

Additionally, if successful, this proposal will allocate $1.5M of stablecoins to the Aave Curve pool within Enzyme. Aave is a non-custodial protocol to borrow and lend assets with stable or variable interest rates. The current APY on its USDC pool is 7.5-8%.

Benefits

• Create an additional source of cash to the DAO to fund operations
• Improve capital efficiency of treasury (idle USDC has an opportunity cost)
• Demonstrate FWB’s leadership in DAO resource management
• Set up infrastructure and process for additional treasury diversification proposals

Considerations

• Smart contract failure risk (Mitigant: All protocols used have been audited and are supported by a strong investor base)
• Working capital management (Mitigant: $8.5M of USDC remaining in FWB’s Gnosis will cover 1-2 years of runway)
• Operational security (Mitigant: Control remains with the multisig)

Vote

• Yes - Approve proposed treasury diversification plan
• No - Do not approve