CIP-23 Treasury Management Strategy & Phase 1

In the documents below, we have outlined a proposed management strategy phase 1 for the treasury.

Please review both documents and voice thoughts and opinions below.

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Generally supportive, I think Ribbon is a good option for Yield on ETH. Would love to just be really diversified across strategies. I wish there was a tool we could deposit into and it aggregates across dozens of things (ribbon, curve, yearn, alchemix, etc)

I think Alcx are working on something like this actually.

I have been talking with them and they would like to help us out but there platform doesn’t support contract wallets yet.

V2 coming out in January will and that will be phase 2 of the management strat.

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These look fine to me.

Something to keep in mind: we have to pay taxes early next year. We don’t yet know how much that will be (should determine ASAP) but we don’t want to hit a bear market and have to liquidate a large percentage of our ETH at very low prices.

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I understand that you will need to sell ETH to pay your bills/your employees etc. But just try to minimize that sale because 2022 will be a huge year for ETH. Saying this with both my trader and investor hats.

Yes. I was on the call and heard the details. I support this.

If the DAO has ambitions to become a network city/state, a strategic reserve allocation to BTC makes sense. A zero allocation to BTC and all reserves in ETH and USD doesn’t fit the ambitions of this project imo.

maybe, but it needs to be very small. Bitcoin is going to be like gold - maybe valuable medium term, but in a non-generative and passive way. doesn’t reflect the potential of this community

Any chance that we could put some portion in the Staking services like Lido or Rocket Pool? This chould provide stable yield in the long run

I agree and support.

Seems good. From risk management perspective, i think we should get %50 of the treasury stable coins fast. And set deadline (a short one) for the remaining %50.

Market seems on edge, it can go both ways at the moment, priority of treasury streategy should be not loosing money. So yes i think stable coin treasury is the way.

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I appreciate the proposal. It is indeed necessary to hedge our portfolio against a market backdrop. Although I understand that most community members are pro-cryptos, if we zoom out, we see that ETH’s value increased by 20x in a span of just one year. I would personally be for a more aggressive DCA strategy and consider having half of the portfolio in stable coins within the next 3-months (also hedge the fx risks and stable coin unpeg risk). Whilst I am not worried about the crypto market as fundamentals are very strong, the wider economy is well at risk, with inflation hitting an all-time high (along with debt). If the equity market were to tank, risk-on assets (like cryptos) would be the first to suffer.
We need to ask ourselves, what is the risk/reward of Ether currently. Is it more likely to hit $20k or go down to $1k?
I believe the objective of the DAO should be to preserve wealth instead of maximizing it and putting the treasury at risk.

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Agreed with @0xL0uis. We should be a bit more aggressive selling ETH for USDC–the project is already synthetically long ETH in many ways. Also agreed 100% with “All the execution strategy is developed for risk mitigation as opposed to maximizing gain. CityDAO is not an active trading DAO.” from the doc.

As for yield-generating strategies, I’m strongly opposed to using Ribbon vaults. There is a lot of hidden risk in the covered call strategies that Ribbon does a great job of obfuscating. There are also lots of fees passed on to the vault by the rebalancing of on-chain options with low liquidity. Lending ETH or USDC, or staking ETH, will have a risk profile that is more aligned with the DAO.

Thanks @lyons800 and team for putting a concrete proposal together. This is a great first pass.

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Excellent material and starting point.
As feed-back, my first reaction was to think how will this work? is there a governance system? What happens if the treasury decisions do not lead to the wanted result ?(I assume not all actions and trades will be voted on).
What mechanisms do we have to react to shocks or other black swans? How do we ensure that we can balance voting and fast decision making in such scenarios?
How often will we vote to change strategy or board team members?

I would maybe start defining with our community a vision, charter, governance system, voting model and then decide micro-details about trading strategies. I have a feeling we rush into decision without yet having the framework for deployment. Maybe just my feeling but happy to get some feed-back and clarity.
Thanks.

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It says that “- Treasury management board.
The DAO can select members to make decisions on their behalf on when to sell ETH based on TA and market sentiment.”

I’m very interested in this. I believe I can put my charting skills to good use, if the position is still open, of course.

As for the staking options, I believe Terra offer pretty lucrative yield, though that possibly requires bridging. I understand if most of us do not want to move assets to another chain.

You could create a own garden in Babylon.finance.
A garden is a actively managed portfolio strategy using several assets and plattforms.

I like and feel the idea of a treasury management team is necessary both as a check on risk and a way to spread risk at the same time. Additionally, I think we need probably 7 members with 4 on the core team, 2 who are ‘citizen members’ and one founding citizen. (With the goal to roll off core team members for a balance of citizens within the first 3 years.) The first citizen should be able to sit ex officio on any board at his leisure. However, ( I’m going to ping @lyons800 on this) I am concerned about us building these boards from the ground up without a codified set of procedures when it comes time to cobble the disperse processes into a ‘charter.’
We just either need to keep track of this or discuss some sort of backed CMS that allows us to codify these laws and keep track of all the CIPs we pass. If we don’t keep track, it’s a guaranteed way to have some unintentional consequences down the line, loopholes people can exploit, and conflict.

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As a position trader my analysis shows, it’s a terrible time to sell ETH. Wait until late march and re-evaluate. It seems you do not have a trader/chart analyst in your team.

First of all, I actually disagree with your analysis and think you should re-evaluate. I don’t know what methods you’re using but based on mine, and other much more experienced analysts, we will probably see a correction long before then (early feb- early march).

Secondly, your analysis is entirely subjective. If it was a case you could time and give certain advice like that then you would be famous.

Finally, If you have read the strategy, you will understand that our goal is to mitigate downside risk for CityDAO. We will always have ETH reserves, however we need stable coins & FIAT to operate, hence the necessity for the sell.

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