SAIP #52: Deployment of $5 Million from DAO Treasury into sDAI, Stargate USDT, and Stargate USDC Farming

Governance Proposals Voted Proposals
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SAIP: Deployment of $5 Million from DAO Treasury into sDAI, Stargate USDT, and Stargate USDC Farming

tldr: Deploy $5 million DAI in the treasury into sDAI, Stargate USDT, and Stargate USDC to increase DAO revenues.

Summary

This proposal seeks to deploy $5 million from the Abracadabra DAO treasury into farming opportunities, specifically allocating $1 million to sDAI farming, $2 million to Stargate USDT farming, and $2 million to Stargate USDC farming. The objective is to leverage the current opportunities in these markets to generate additional yield and enhance the financial stability of the DAO. Currently, most of the treasury assets are not deployed in any farming strategies, missing out on important revenues that could be pivotal in the future.

Background

Abracadabra Money has continuously aimed to explore and utilize diverse yield-generating opportunities to benefit its stakeholders. Stablecoin farming, particularly with DAI, USDT, and USDC, has proven to be a low-risk, high-reward strategy within the DeFi ecosystem. Deploying funds into sDAI, Stargate USDT, and Stargate USDC farming will align with our goals of capital efficiency and risk management.

Motivation

The motivation behind this proposal is threefold:

  1. Yield Generation: Farming with sDAI, Stargate USDT, and Stargate USDC offers competitive returns, which will contribute to the overall growth of the DAO treasury.
  2. Risk Mitigation: Utilizing stablecoins like DAI, USDT, and USDC minimizes exposure to volatile crypto assets, ensuring more predictable returns.
  3. Strategic Positioning: Establishing significant positions in these farming opportunities can position Abracadabra as a key player in the stablecoin farming market, potentially unlocking further opportunities for strategic partnerships and collaborations.

Specification

Steps to Deploy Funds

  1. Treasury Allocation: Allocate $5 million from the DAO treasury for this initiative.
  2. Conversion to Stablecoins: Convert the allocated funds into DAI, USDT, and USDC if not already in these forms.
  3. Farming Platform Selection: Identify and select reliable and high-yield farming platforms for sDAI, Stargate USDT, and Stargate USDC.
    • sDAI: Spark currently pays 8% on the normal DSR.
    • Stargate USDT: Stargate v2 USDT farm.
    • Stargate USDC: Stargate v2 USDC farm.
  4. Deployment: Deploy the funds into the selected farming platforms:
    • $1 million into sDAI farming. (8% APR)
    • $2 million into Stargate USDT farming. (18% APR)
    • $2 million into Stargate USDC farming. (16% APR)
  5. Monitoring and Management: Implement a monitoring system to track the performance of the investments and manage the funds actively to maximize returns and minimize risks. Multiple profitability reports will be generated if requested upon on the forum. Further updates to the current weights can be executed with 24 hours voting.

Benefits

  • Increased Treasury Value: The expected yield from farming will grow the DAO treasury, providing more resources for future initiatives and developments. With the current yield and exposure, the farming deployment will generate significant returns annually.
  • Community Confidence: Demonstrating prudent financial management will build confidence among community members and stakeholders, while starting to properly deploy the stablecoin treasury.

Drawbacks

  • Platform Risk: The selected farming platforms could face issues such as hacks or operational failures, which could impact our investment. Considering we are using the DSR for sDAI, these risks are lowered by the reliability of the Savings Rate Infrastructure.
  • Opportunity Cost: The $5 million could potentially be utilized for other investment opportunities or projects within the ecosystem.

Vote

To proceed with the deployment of $5 million from the DAO treasury into sDAI, Stargate USDT, and Stargate USDC farming, please cast your vote:

  • For: Approve the deployment of $5 million into sDAI, Stargate USDT, and Stargate USDC farming.
  • Against: Do not approve the deployment of $5 million into sDAI, Stargate USDT, and Stargate USDC farming.

Conclusion

Deploying $5 million into sDAI, Stargate USDT, and Stargate USDC farming is a strategic move to enhance the financial health and stability of the Abracadabra DAO. The expected returns will support our ongoing and future initiatives, ensuring sustained growth and community benefits.

Voting

Voting will be live in 24 hours and can be found here. Voting will last 48 hours.

If approved, the funds will be deployed quickly into the respective farming platforms.

The proposal passed.