Rari Foundation

Author: Autonomous

Reviewers: Addie Giese, Jana Bertram, Elika Mahdavi

Abstract:

This proposal outlines the treasury diversification plan for the DAO aimed at strengthening its financial position and fostering sustainable growth. The plan involves reallocating a portion of the treasury into stablecoins and generating yield through safe investment vehicles, facilitated by the Rari Foundation.

Rationale:

Diversifying the DAO’s treasury mitigates exposure to market volatility and enhances financial resilience. By allocating funds into stablecoins and yield-generating strategies, the DAO can optimize returns while minimizing risk, ensuring a solid foundation for future initiatives.

Motivation:

The motivation behind this proposal is to secure the DAO’s financial stability and flexibility. Through strategic diversification and prudent investment, the DAO aims to generate additional income, reduce reliance on volatile assets, and position itself for long-term sustainability by ensuring at least a 4 year cash runway target.

Steps to Implement:

• Foundation Facilitation:
  • The Rari Foundation will execute treasury diversification on behalf of the DAO using its strategic partnerships.
• Stablecoin Allocation:
  • Swap 25% of the DAO treasury (excluding the Legacy treasury) into stablecoins over the next 12 months, utilizing the Foundation’s OTC partners and on/off-ramp solutions. Larger deals with institutions can also be considered on a case by case basis to assist with this process.
  • The total tokens that will be swapped is RARI 1,564,216 (25% of DAO treasury). The total quantity of stablecoins to be received will vary depending on the token price, but the strategy will include a VWAP as well as a floor price over a set period.
• Yield Generation:
  • Invest stablecoins in carefully selected, well-researched on-chain and off-chain yield-generating vehicles to maximize returns while prioritizing security, risk mitigation and transparency.
  • The majority of the stablecoins will be included in on-chain yield generating vehicles to ensure transparency, but off-chain vehicles will be used as supplemental.
  • Refer to below pros and cons to note why a mix of both on-chain and off-chain solutions are important.
    • On-chain pros: Transactions and investment holdings are transparent, immutable and secure. All transactions can be seen in an instant by all community participants.
    • On-chain cons: Transaction fees can be costly, smart contract risks and track record not as mature as for traditional investments.
    • Off-chain pros: Ensures diversification from on-chain investments and reduces smart contract risks. Longer proven track record. Reduced transaction fees.
    • Off-chain cons: Less transparency and timely process.
  • Yield generating strategies can include for example some of the below:
    • Ondo - Yield generation (On-chain)
    • Franklin Templeton - Yield generation (Off-chain)
• Risk Management:
  • Conduct thorough due diligence in selecting stablecoins and yield-generating options.
  • Monitor market conditions and adjust the allocation strategy as needed.
• Transparency and Accountability:
  • Regularly communicate diversification progress and yield generated to the DAO community.
  • Establish a transparent reporting mechanism for the Foundation’s execution on behalf of the DAO.
• Parameters
  • None of the investments to be locked for more than 12 months
  • Vehicles used will have no early liquidation fees
  • Funds can be requested from the DAO if needed
• Examples
  • Treasury diversification is considered a prudent strategy in the ecosystem
  • Arbitrum
  • Gitcoin
• Dedicated multisig wallet
  • A dedicated multisig wallet address has been created which will be used only for Treasury diversification purposes. Address: 0x47e358E461C1d005aEC65E63F01fa5447f7f139c

Timeline:

Commence the treasury diversification process immediately, with the goal of completing the 25% stablecoin allocation within the next 12 months.

Experience on Treasury diversification plans:

Autonomous works on various Foundation’s treasury diversification strategies, as we are contracted directly with the Foundations in providing day to day administrative services, rather than through a publicly executed proposal. These strategies are discussed with the Foundation team members and approved by the Board of Directors and then executed by us to ensure the Foundations have a sustainable cash runway for future expenses.

We have been delivering these services for various Foundation companies since 2022 through our experienced team of professionals. Refer to our website for more information on our team and services: https://autonomousprojects.co/

Budget:

The budget for this proposal includes the costs associated with executing the treasury diversification plan, such as fees for OTC trades and potential investment expenses.

Conclusion:

By entrusting the Rari Foundation to execute this treasury diversification plan, the DAO aims to optimize its financial holdings, reduce risk, and ensure a solid foundation for future initiatives. This strategic approach aligns with the DAO’s commitment to responsible financial management and transparency.