MetaCartel Treasury Proposal #1

Action proposed:

Move 250 ETH (about 50k USD) into 50% USDC and 50% tokensets (ETH/USD) to act as a hedge against current market sentiments and to guarantee 6-9 months of MetaCartel budget.

  • 50k USD for 6-9 months for MetaCartel’s activities
  • USDC for bearish view on $ETH / hedge on current price
  • Token sets for continued exposure to ETH

Why

$ETH price fairly stable right now, future market conditions volatile. Want to take advantage of this while we can at the moment to weather proof 6-9 months of MetaCartel’s activities.

tldr scenarios:

No warren buffet here but:

  • $ETH price rises:
    • then we have funds to deploy & most of our treasury rises regardless.
  • $ETH price goes down:
    • We are safe with a budget to work with for the next 6-9 months to explore next steps (if markets continuously crash or for crypto to recover)

What we will use to manage these funds?

  • Multi-sig/aragon DAO to manage funds amongst trusted MetaCartel DAO individuals
  • Matching funds based on DAO Shares proposals? (this eliminates any extra additional governance from this process)

Next steps

Will be putting proposals on-chain ASAP and to discuss this at further length at the next week’s meeting. Making a call here to value time vs. process - market won’t last.

At the least, if folks don’t agree - we can vote ‘No’ on the proposal and move on with our day.

Note to self: Should of have had DAO Shares ready to be RQ’d the moment market timing was right

Proposals

Will run this movement of funds in two separate DAO proposals

2 x proposals (223 DAO Shares @ 0.56 Share price = 125 ETH ~)

3 Likes

First proposal is live (with the DAO Shares assigned to an address controlled by me)

Second proposal is live (with the DAO Shares assigned to an address controlled by @META_DREAMER)

In my opinion we should not do this there are to many questions and risks.

We are working on eth application layer, eth is trending up and really shouldn’t we be vested in eths success. Shorting eth is a signal we do not believe in it. Where are you hearing negative market sentiment? I only see positive sentiment in my personal echo chamber. Do you know something the rest of us do not?

Why USDC and not dai or cdai, or chai? At least something interest bearing.

Why an Aragon multisig? We would basically be removing 1/2 the governance power of all our members, removing ability to rage quit and putting the funds in the wallet of a few. It would be less efficient and more risky. Even worse during the migration all funds are in the power of one. I trust you guys but do not know your process of key management, your keys could be compromised or you could just fuck up by accident.

And this is all for speculation on a market down turn? We have never been about speculation, seems to go against some of our core values. I do see the benefits of some treasury management but do not like this approach.

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And to offer a potential alternative:

MIgrate to MolochV2 and use minions to do non custodial trades through proposals. The migration process is a little painful, requiring everyone to RQ and reapply for their matching shares but we did it at RaidGuild and it was not that bad.

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We are working on eth application layer, eth is trending up and really shouldn’t we be vested in eths success. Shorting eth is a signal we do not believe in it. Where are you hearing negative market sentiment? I only see positive sentiment in my personal echo chamber. Do you know something the rest of us do not?

We can only expect extreme volatility in the coming months. I believe we should hedge against this.

If we don’t hedge:…

  • The price goes down back down in the next 6-9 months (to a price of ETH @ $120 USD)
    • We would have 846 ETH = ($101,520)
    • Depressed market viability for further donations/pledges
    • Would burn easily through 30-40% of funds fairly easily before price recovers
  • The price goes up 200% within the next 12 months (to a price of ETH @ 400 USD)
    • We would have about $338,400 in value worth of funds

If we hedge:…

  • The price goes down back down in the next 6-9 months (to a price of ETH @ $120 USD)
    • We would have 600 ETH @ ($72,000) + our reserves (about )
    • Guaranteed waterproofing for several months
  • The price goes up 200% within the next 12 months (to a price of ETH @ 400 USD)
    • We would still have our stable reserves + 600 ETH (240k)
    • The opportunity cost would be less than 50k USD

Why USDC and not dai or cdai, or chai? At least something interest bearing.

I chose USDC for simplicity sake of communicating the plan, if we want to use cDAI sure.

Why an Aragon multisig? We would basically be removing 1/2 the governance power of all our members, removing ability to rage quit and putting the funds in the wallet of a few. It would be less efficient and more risky. Even worse during the migration all funds are in the power of one. I trust you guys but do not know your process of key management, your keys could be compromised or you could just fuck up by accident.

Aragon multi-sig because we can easily add more community members into it to manage it. Yes, there is always a risk with funds migration. I don’t see this being a blocker however as we can rageuit the funds and handle them piece by piece until they are safe (don’t need to ragequit all at once.)

And this is all for speculation on a market down turn? We have never been about speculation, seems to go against some of our core values. I do see the benefits of some treasury management but do not like this approach.

I believe we will be facing a high uncertain and volatile environment and that this hedge will be to our benefit. We are not speculating to make money, we hedging.

When is this ready? I want us to hedge ASAP, its fine if they are funds held in a multi-sig for now

My POV is: We can afford to lose out on some of the upside, we can’t afford to miss this window of opportunity.

I agree that we need to hedge ourselves better against market conditions. I think that TokenSets are a good balance of retaining ETH exposure while also having a level of protection if the market goes bearish, without having to make governance decisions on when to buy or sell which IMO would never work and would just cause strife and blame (i.e. “it was this guys idea to sell/buy and now we lost money, this guy sucks”). The yield sets will let us earn interest as well when its bearish

We can also keep some pure stablecoins if we really want to lock in some funds at the current ETH price if we anticipate a sharper short term downward price movement, however the potential opportunity cost of that is likely higher than tokensets. It would be moreso trying to time the market vs tokensets being more of a “hedge” for if and when ETH starts trending down.

@Dekan Your concerns about trust/risk of moving funds in this way are valid, I think it’s just about how fast we want to move on this. If there is a better way to do this while still allowing us to act fast, I’m all for it.

I don’t think it’s feasible to get everyone to move over to a V2 moloch, RaidGuild was a smaller group with tighter comms and coordination than MetaCartel, and there’s a lot more overhead to doing so and keeping track of everyone’s balances and making sure everyone is making the right votes etc. It’s a lot of effort by all members, and the result isn’t a good solution either IMO. Trying to manage treasury by DAO votes to make manual trades is a recipe for disaster IMO, it’s hard enough to trade as an individual without losing money, and trading by committee will just cause a lot of strife and blame and would be a distraction / waste of our time and effort.

TokenSets takes all of that away. We don’t need to manually manage trades and timing the market and governing decisions etc. Much simpler and cleaner, and will likely outperform any manual trading we try to do, and also outperform holding just DAI or just ETH. We don’t need to do it with all our funds, just some of them to have some level of downside protection.

Been thinking about this for a minute…

  • Agree that it’s important to diversify and the capital strategy seems to make sense.
  • Agree that DAO votes for DeFi is cumbersome. Nothing worse than having all your capital stuck in limbo because vote 2 out of a 3 vote process is stalled.
  • Don’t quite feel good about moving DAO assets into a multi-sig. It doesn’t feel very “DAO.” That being said, it’s only a limited portion of funds (less than 1/3), and the idea is to make a trade and then move them back into the DAO’s vault, so that’s seems reasonable.

Alternative suggestion: what if we put the funds into a DAO, but assigned permissions to a “treasury manager?” Could be a single key, multi-sig, or even another DAO - but recommend a single key or mutl-sig in this context. Then the DAO still holds/controls most of the shares, but some people have the ability to quickly perform financial transactions faster than others. This is very similar to the DAO + external multi-sig approach, however you can (if you want) introduce staking requirements to perform certain actions, the ability for DAO members to block transactions, and/or the ability for DAO members to rage-quit before (atomic) transactions execute (say a 24hr window or something). This would take a min to design and setup so it’s not feasible for this scenario, but it might be something to think about…

Today, however, if we do feel like moving fast is required then I think this makes sense. I trust @pet3rpan and @META_DREAMER to steward funds responsibly. Since 250 ETH is less than a third of the MetaCartel treasury it seems like a reasonable amount to squirrel away as a hedge.

Note: since MC shares are worth a little over half an ETH each the total shares being requested is 446, not 250.

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Overall I like the sentiment here but this plan feels rushed and risky. I’d like the community to weigh in more because this is a big one.

So for me this is a :-1: but will follow the will of the community if it passes.

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Treasury management is super important, and during the past few years we’ve seen projects, companies & communities burn themselves because of blind faith in the ‘number go up’ strategy.

At the same time, I resonate strongly with Dekans point:
“We are working on eth application layer, eth is trending up and really shouldn’t we be vested in eths success.”
Agree, and I think as one of the strongest communities in the Ethereum ecosystem, we have some level of responsibility in how we point our signal around price speculation. Focusing on the long term value proposition and vision.

When weighing it up, taking some level of stablecoin exposure for the DAO to ensure sustainability makes sense, especially when looking at the exponential growth of what we’re building over the past ~12 months. Ensuring we have the budget to continue to build these experiments is key :key:

Thoughts on the tokensets/aragon DAO/MolochV2 discussion are that this does seem like a pretty appropriate time to migrate to a DAO that can technically handle us making these types of decisions. But also follow note that timing & execution is important here. I wonder if an interesting middle-ground is to deposit the DAI into a MolochV2 (MetaCartel v1.5) Where we can issue shares 1:1 based on MetaCartel DAO ownership then deposit remaining ETH whenever makes sense? This solves a couple of questions around governance, ragequit math, etc.

Keen to discuss on tomorrows townhall :synagogue:

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After discussing on this week’s townhall, there was soft consensus on the above ideas.

Good points raised on both sides, one of the key takeaways was the idea of using this as an opportunity to migrate (at least partially) to a Moloch v2 - This would allow us to actually make these decisions without having to rely on centralized fund management & flatten out a number of governance questions.

Assuming the proposal passes:

  1. We convert some/all of the ETH to DAI/rDai/USDC.
  2. Then deposit this stablecoin into MetaCartel Moloch v2 (which will need to be summoned).
  3. We then issue shares 1:1 in the new MetaCartel Moloch v2 DAO.

There’s also an open question here about migrating the DAO as a whole - Which isn’t actually that much work for individual DAO members, more a central DAO migration person. As always, keen for discussion & feedback on these ideas, this just seems to make the most sense in terms of managing funds, governance & DAO ops.

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Personally, I am absolutely fine YOLOing with ETH as that is the campfire we all joined around here to support and collaborate towards growing, and am concerned at the signal this sends to the larger ecosystem that we would act out of fear instead of faith. That said, I fully understand and support the community’s wish in moving some ETH into more stable assets as a smart move to diversify risk for all reasons stated here by Peter and Hammad. However, I feel like the method(s) in the proposal suggested would remove the power from current members to ragequit their proportionate stake at any time, which to me feels like a dealbreaker. So, I’m voting this one down for now.

I am also aware of current market fears, so for sake of diligence/diversification of risk, I agree we should accelerate toward a more decentralized path to split some funds into stable assets/pools/that allows members to maintain relative power over their funds, some of which were mentioned by Dekan and James.

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I would also prefer to yolo on ETH. It is the simple solution and that usu is the best.

I understand the value of hedging, its not a bad idea… its just not easy to implement with our DAO while also maintaining our core values… While prudent… ITS A SLIPPERY SLOPE!

If we want to play this game… I would have a VERY strict policy about what to do with the funds that are moved out of the DAO.

I would suggest that funds are converted into some PRE-SPECIFIED balance of cDAI/Chai/aDAI and the only authorized action for use is to buy ETH and send back to the DAO’s vault following PRE-SPECIFIED guidelines… The funds taken out for hedging are only used for hedging!

Sending the ETH back could be done on a Scheduled Time Basis (e.g. 10% a month on the 15th of every month for 10 months)… or as money is spent by the DAO (e.g every time a vote passes, that same amount of ETH is sent back into the DAO within 1 week of the vote passing)

This plan get passed around, hashed out, rough consensus is formed and voted on… the normal process and then it happens… whatever the price is.

DAOs are slow… Fast alone, far together as is said… If we want faster governance decisions around this we can make a role for financial manager and give them some allowances… I think there are a lot of creative solutions here, and I’m excited to see how it goes :popcorn:

2 Likes

I voted no… and sort of regret it… mostly cause i do trust Peter, James and the crew to prioritize making a plan around this that we could all get behind.

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I see largely see myself as accountable to de-risk these problems for the DAO.

If the group does not wish to see this happen so be it.

I personally feel annoyed that, this call to do this wasn’t trusted despite all my previous work for the DAO. But anyways, fair enough.

2 Likes

The missing piece for me was the completion of the hedge… What happens with the money that is taken out of the DAO? It sits as a stable token or whatever… but then what?

How does money go back into the DAO? When? Is the money that is held to be hedged used for anything else?

It was just an incomplete proposal.

I still think its a worthwhile idea to try to hedge a little… I have been a part of projects that can point to the failure to hedge into a stable currency as the primary reason they failed. Makes sense…

Hopefully this one helps to paint a clearer picture!

“I understand the value of hedging, its not a bad idea… its just not easy to implement with our DAO while also maintaining our core values… While prudent… ITS A SLIPPERY SLOPE!”

Agree 110%