Written by: @cryptoharry and @n3bs (with assistance from many others!)
Summary
90-day trial of Treasury Working Group within the Inverse DAO to address a range of treasury-related areas currently unaddressed.
Background
Inverse Finance is looking to grow organic demand for DOLA across all chains. With the launch of Inverse Plus, the Inverse DAO Treasury is expected to grow rapidly due to increased bonding. However, today there are few ways for the Inverse DAO to utilize this capital to take advantage of the many opportunities that arise.
For example, there have been numerous high growth opportunities for DOLA on Fantom as well as other chains such as Avalanche (that we have yet to officially expand to). There is significant demand on these chains for DOLA borrowing, but Inverse Finance has not been able to take the opportunities due to low AMM DOLA liquidity in these ecosystems. This low liquidity is due to Inverse not being able to incentivize people to hold DOLA LP positions as we can on Ethereum. This means that if there were to be a large influx of DOLA borrowing, there would be a high chance of DOLA losing its peg to the dollar on these chains.
It is recommended that a Treasury Working Group (TWG) is formed to optimize the management of the Inverse Treasury assets to create the best environment for DOLA to grow into a leading stablecoin.
Objectives:
- Optimize Inverse DAO revenue through treasury assets’ capital allocation such as cross-chain liquidity.
- Create optimal conditions for Inverse Finance to grow DOLA’s use in the DeFi ecosystem, particular cross chain.
- Assist with and execute potential OTC deals and DAO swaps that bring value to the Inverse DAO.
- Bring dedicated finance talent to leadership areas within the Inverse DAO.
All responsibilities (outlined below) will be carried out using a dedicated TWG Multisig. It should be noted that a Multisig is required as the majority of the actions (discussed in the responsibility section below) would be impossible to implement via governance votes alone due to the time delay and being restricted to the Ethereum blockchain only. The DAO will grant allowance approvals to the multisig, which allows the TWG to pull out funds from the treasury to execute on responsibilities up to the cumulative value of the allowance approved. These allowances can be revoked and changed by the DAO at any point through an on-chain vote, ensuring decentralization. The allowances assigned to the TWG Multisig are meant as maximum limits for the Multisigs, and all funds will remain in the Treasury unless transfers are made by the Multisig in the future. Any time the TWG conducts any kind of asset rebalancing, the allowance for that asset will decrease. The size of each allowance the TWG is initially requesting to work with will be outlined below.
The Ethereum Multisig will require unanimous approval in order to execute any transactions. This means every member of the TWG has veto rights, so if a single member disagrees on a transaction then it will NOT be executed. This ensures full accountability from every TWG member for each transaction that gets executed.
On the Ethereum blockchain, NO assets will be held in the TWG Multisig. After transactions are complete, ALL assets will be transferred back to the Treasury wallet. The TWG Multisig wallets on other chains (such as Fantom) will require m-n approva (less signatures required than total number on the wallet) in order to execute transactions. This means that there is no single point of failure when returning funds back to the Treasury on the Ethereum blockchain if 1 signer were to lose access to their wallet. Currently the plan for cross-chain Multisigs is to require a 3 of 5 quorum to execute transactions, with 2 of the signers being “safety” signers who are there for the purpose of returning funds back to the treasury in the case of one of the main signers losing access to their wallet.
TWG Allowance Approvals Justification
Treasury actions are expected to be fluid and dynamic as opportunities arise for Inverse Finance to act on.
Below we provide examples of actions to be taken by the TWG
Deploying Additional Liquidity to Fantom
As part of the objectives TWG needs to optimize cross-chain liquidity.
Today there is only ~$750K liquidity on DOLA-2Pool, of which nearly 100% is owned by Nour personally, thus there is no protocol owned liquidity on FTM. If Nour were to withdraw this personally owned liquidity, the DOLA ecosystem on Fantom would be decimated.
To address this TWG intends to do the following
- Replace existing DOLA-2Pool liquidity with protocol owned liquidity
- Add additional liquidity on DOLA-2Pool
This will initially require $1MM in DOLA and $500K in DOLA-3Pool LPs, resulting in ~$1.5MM in protocol owned liquidity.
Act on Backlog of OTC Deals
As part of the treasury objectives TWG (after working with risk) will have the power to execute OTC deals favorable to the treasury on behalf of the DAO. see below
Today there exists a backlog of potential OTC deals, these deals need to be vetted and executed, and sufficient liquidity set aside for future deals. see below
To address this TWG requests approval for $0.5MM of INV to facilitate current and future deals.
Rebalancing of Pools and Adding Liquidity
As part of the treasury objectives TWG must ensure proper balancing of protocol owned liquidity across all chains.
- Rebalancing is likely to cause a lot of approval churn
- Approvals only track outflow, e.g. if TWG were to move $1MM DOLA in and out of the treasury 3 times, it would count as needing $3MM of approvals
- TWG needs the option of adding additional protocol owned liquidity to pools such as INV-DOLA
Due to the points above, TWG needs sufficient approval across all pool related assets including DOLA, DOLA-3Pool LP, INV and INV-DOLA SLP. TWG requests the following approvals for each asset to allow sufficient flexibility in rebalancing and adding liquidity as needed
| Asset | Amount |
|---|---|
| DAI | $75K |
| DOLA | $0.5M |
| DOLA-3Pool LP | $1M |
| INV | ~$0.5M |
| INV-DOLA SLP | ~$1M |
Rewards
To fulfill responsibilities of compensating ad hoc community contributors and repaying their gas, TWG requests an allowance of 500 INV.
Compensation
To back pay cryptoharry and N3bs for work carried out in March, and then pay N3bs on an ad-hoc basis going forwards for 90 days (paid by the hour, rather than a set figure), TWG requests an allowance of 17,500 DOLA.
No more than 5000 DOLA will be compensated in a single month, and this is a maximum; the actual amount paid is likely to be less.
Approval Totals
Responsibilities for the TWG:
Capital Allocation
- Analyze/monitor current LP pairs on Ethereum and cross-chain in order to optimize allocation to provide support for DOLA’s expansion and stability.
- Analyze new LP pairs in order to accelerate growth. For example, supplying protocol-owned DOLA liquidity on chains such as Fantom and Avalanche will allow Inverse Finance to expand into previously “out of reach” lending markets.
- Identification and execution of Whale Extractable Value acquisition opportunities (WEV definition: Features & Applications - Inverse Finance )
- Diversification of treasury assets to maximize utility.
OTC Deals and DAO Swaps
- OTC Deals - complete thorough analysis on OTC Deal requests and execute on terms favorable for the Inverse Treasury.
- Small to medium OTC deals related to personal swaps will be negotiated and serviced by the TWG team, with other departments such as risk will be involved before execution (likely executed using a 3rd party escrow smart contract).
- Larger OTC deals, especially ones that can be categorized as VC deals will require collaboration with other Inverse DAO departments (Growth, Risk, Marketing etc) to be part of the negotiating and process in general. These deals will likely need individual DAO gov proposals in order for TWG to execute to increase the INV allowance approval for the deal.
- DAO Swaps - assist and analyze potential DAO Swap transactions with protocol partnership that bring value to the Treasury working closely with Risk and Growth teams.
- DAO swaps will likely be common when partnering with new lending protocols (when DOLA Fed is added to the supply side of a lending market) to solidify the partnership between the DAOs. While this ultimately will be executed by TWG, the GWG owns the negotiation and discussion while utilizing the TWG as support.
Financial Reporting
- Creation of regular reports on the treasury activity (revenue, costs, growth etc).
- Forward looking forecasts of treasury growth.
Inverse Community
- Providing updates to the DAO through written text and the regularly hosted community calls.
- Creation of TWG channel in Inverse Discord for any members of the Inverse DAO to come with any treasury or finance-related questions.
- TWG decisions will be data backed, with this information being regularly presented to the DAO in the necessary channels.
Payroll and Rewards
- The TWG will receive the fundingCommittee role for Inverse Finance’s payroll contract from the rewards committee. This allows for management of contributors on the contract.
- The TWG will be responsible for distribution of INV rewards for ad-hoc community contributions. The TWG will meet every 2 months with contributors and the community to discuss who from the community deserves INV rewards.
- These responsibilities were previously carried out via the Rewards Committee, the new TWG will replace the responsibilities previously held by the rewards committee.
Collaboration Across the Inverse DAO:
The TWG will work with other Inverse DAO departments and members as required. Particularly, with the Growth, Risk and Data Analytics groups. The TWG keeps closely aligned with other Inverse Finance departments in order to ensure maximal and sustained DOLA growth in the DeFi ecosystem.
TWG Members:
The TWG is currently being formed by @Nour, @cryptoharry and @n3bs. @cryptoharry and @n3bs will continue to contribute to the Inverse DAO on a part-time basis.
@cryptoharry will be designated as the Head of Treasury.
The Head of Treasury role does not carry any additional authority or power relative to other TWG members. The position does take extra responsibility and accountability to ensure that the TWG continues to get work done and delivered, constantly with their finger on the pulse of all Treasury responsibilities. Conversations and commitments will often be opened and led by the Head of Treasury. Using written and verbal communication, the head will often represent the TWG to the DAO. Other TWG members are individual contributors who are still expected to use their intuition and proactivity to carry out everything listed for the Head of Treasury. However, the Head of Treasury can ultimately be held accountable if the TWG does not fulfill its responsibilities (beyond TWG not reaching quorum on transactions).
There will be opportunities for Inverse DAO members to make paid contributions on an ad-hoc basis to the TWG. There also may be opportunities to expand the size of the TWG in the future. All Inverse DAO members are welcome to join when the TWG starts expanding, but members with backgrounds in finance, accounting, treasury management, liquidity, risk, and similar functional areas are especially welcome.
Actions:
- Set up the TWG Multisig wallet on Ethereum and another on Fantom. The Etherum multisig wallet will have the following signers: @Nour @cryptoharry @n3bs. The Fantom Multisig will have the following signers: @Nour @cryptoharry @n3bs @knockerton @theAlienTourist
- The Ethereum multisig will require 3-of-3 signatures for pulling funds out of the Treasury and all other Ethereum transactions. Cross-chain Multisigs will be 3-of-5 for holding capital and transactions (2 safety signers (@knockerton @theAlienTourist) included to return funds directly to treasury in the case the 1 or 2 of @nour @cryptoharry @n3bs loses access/control to their wallet unexpectedly).
On-Chain Actions:
- Set Rewards Committee multisig allowance to 0 INV
- Update payroll contract FundingCommittee to TWG Multisig from Rewards Committee Multisig
- Reduce reserves from anDOLA contract by 125,000 DOLA
- Approve allowance of 1,517,500 DOLA ($1.5175m) to the TWG Multisig
- Approve allowance of 75,000 DAI ($75k) to the TWG Multisig
- Approve allowance of 1,500,000 DOLA-3Pool LP ($1.5m) to the TWG Multisig
- Approve allowance of 31,000 INV-DOLA SLP (~$1m) to the TWG Multisig
- Approve allowance of 5,200 INV tokens (~$1.25m) to the TWG Multisig