Treasury Working Group Allowance Refresh

Summary

Forum post: https://forum.inverse.finance/t/treasury-working-group-allowance-refresh/171

Refresh Treasury Working Group (TWG) allowances in order to continue optimizing the management of Inverse Finance DAO’s treasury assets. The TWG endeavors to provide long-term value and support to the DAO and DOLA ecosystem.

Notable previous TWG allowance proposals (with links):

Create a Treasury Working Group (March 2022)
Treasury Working Group Allowance Refresh (May 2022)
Proposal to grant TWG allowance for the purchase of emission-controlling tokens (October 2022)

Background

The TWG was formed in early 2022 in order to optimize the management of treasury assets, giving the DAO the ability to engage in DeFi actions that were otherwise impossible (or very challenging) to interact with via on-chain governance (due to 5-day proposal delay, inability for signing (snapshot), etc).

We encourage DAO members to view the historical actions performed by the TWG, it’s recorded on-chain for all to view:

Transaction history (Gnosis UI): https://app.safe.global/eth:0x9D5Df30F475CEA915b1ed4C0CCa59255C897b61B/transactions/history

On-chain history (etherscan): https://etherscan.io/address/0x9D5Df30F475CEA915b1ed4C0CCa59255C897b61B#tokentxns

The TWG Multisig requires 3 of 4 signatures to execute transactions, with the signers being:

@Cryptoharry (Head of TWG)
@Nour (TWG & Founder)
@Edo (Head of Risk Working Group (RWG))
@Karm (RWG)

At the present time, some particular DAO assets are being stored on the TWG multisig for optimized management. Please view the debank profile for an up-to-date view: https://debank.com/profile/0x9d5df30f475cea915b1ed4c0cca59255c897b61b

Comments:

vlAURA ($254k) - Accumulated via purchases and farming rewards from INV/DOLA on Aura. The cost is significantly lower than the current market value. Tokens are used for voting towards DOLA gauges on Balancer. Votes need to be placed every 2 weeks (snapshot), as well as token relocks (on-chain).
vlCVX ($323k) - Accumulated mostly via Yearn Fed revenue purchases and farming rewards from various DOLA pools on Convex. The cost is lower than the current market value. Tokens are used for voting towards DOLA gauges on Curve. Votes need to be placed every 2 weeks (snapshot), as well as token relocks (on-chain).
INV/DOLA on Aura ($600k) - Accumulated via OP bond program (migrating Sushi LP into Balancer, then staking on Aura). Currently staked on Aura farming rewards profitably (see the proposal here) which are then converted to vlAURA.
DOLA-bb-a-usd on Aura ($350k) - DAO stablecoin holdings that are currently farming rewards while staked on Aura.
DOLA-FraxBP on Convex ($350k) - DAO stablecoin holdings that are currently farming rewards while staked on Convex.
Inverse Finance Frontier Assets ($400k) - Stuck ETH, wBTC, YFI from Frontier, received directly from users interacting with bad debt repayment contracts (see the proposal here). For accounting purposes, these assets will eventually be repaid from the April 2nd exploiter’s (0xeA0c959BBb7476DDD6cD4204bDee82b790AA1562) borrow balance.

The TWG also operates on Optimism (transaction history can be viewed here), please view debank for up to date view of assets held: https://debank.com/profile/0xa283139017a2f5bade8d8e25412c600055d318f8

veVELO ($207k) - Accumulated for a very low cost (~$28k) relative to market value, growing with further investments and the Velo Fed. Used for voting to incentivize DOLA pools on Velodrome Protocol (constant relocks required to maximize voting power).

Allowance Request

The TWG requests allowances for treasury assets to enable their management and ability to execute on opportunities (often at short notice), such as OTC deals. Allowances will often seem large, however, this is because they are used very quickly when executing regular DeFi actions. Below we will outline the allowance request, with a short explanation of intentions; however, please note that opportunities often emerge at short notice (ie liquidating loans on Rari pool to save the DAO $260k - https://discord.com/channels/790157548845924352/945047917020991578/1023933374739529758), thus the TWG reserves the discretion to use allowances for reasons not stated within this proposal to the benefit of the DAO.

Up to date status of current allowances on the multisig can be viewed here (not all TWG allowances are depleted and need refreshing).

We encourage readers to review the linked proposals scattered above for more detailed information related to various allowance requests.

DOLA

TWG requests an allowance of 1,500,000 for liquidity rebalancing, emission-controlling token purchase and bad debt repayments

DAI

TWG requests an allowance of 500,000 for liquidity rebalancing, DOLA peg defence and bad debt repayments

USDC

TWG requests an allowance of 500,000 for liquidity rebalancing, DOLA peg defence and bad debt repayments

INV

TWG requests an allowance of 11,000 INV for bribes towards DOLA pools, please see the breakdown below.
TWG requests an allowance of 4,000 INV for OTC deals and liquidity rebalancing/deepening.

CRV

TWG requests an allowance of 100,000 (gained via profits from Frax Fed) for vote locking, to further incentivize and support DOLA

CVX

TWG requests an allowance of 10,000 (gained via profits from Frax Fed) for vote locking, to further incentivize and support DOLA

BAL

TWG requests an allowance of 100,000 (gained via profits from Aura Fed) for vote locking, to further incentivize and support DOLA

AURA

TWG requests an allowance of 500,000 (gained via profits from Aura Fed) for vote locking, to further incentivize and support DOLA

INV-WETH (Uniswap)

TWG requests an allowance of 1,000 for liquidity management/rebalancing

INV Bribe Allowance

Over the past few months, all liquidity incentivization has been moved off Frontier and done via external markets such as Curve (Convex) and Balancer (Aura). In order to bring reward incentivization to DOLA pools on these platforms, voter power is needed which is often bribed for. This has proven significantly more capital efficient than rewarding LPs directly with INV on Frontier, due to $1 in bribes leading to greater than $1 in rewards and far more exposure to the wider market of LPs.This does however mean that a large INV allowance is required for the TWG to execute weekly bribes to continue the support of DOLA. The current breakdown of INV bribes (subject to change for further optimization):

DOLA-FraxBP (Curve) - 450 INV per week
DOLA-INV - 200 INV per week
DOLA-a-bb-usd - Currently 75 INV per week, but expecting to ramp up to ~200 INV per week in the near future
Total = 850 per week, 13 weeks in 3 months, 3 months = 850 INV * 13 weeks = 11,050 INV

As laid out in a previous proposal, a long term goal is to significantly reduce INV token emissions/spend on liquidity incentivization through the purchase of emission controlling tokens. Good progress has already been made, with millions in DOLA liquidity able to be incentivized using the treasury’s vlAURA, vlCVX and veVELO. It is however important to keep INV bribes high in the short-medium term while DOLA bad debt remains high, and in order to support a successful launch and operations of Inverse Finance’s soon-to-be-launched lending protocol, FiRM. This is because deep liquidity is required for efficient stableswaps and resilient peg control (controlled by the various market Feds).