Temp Check 🔥 - Should Radicle use Enzyme as the DeFi OS to execute its treasury management strategy?

👩‍⚖️ Governance
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Authors: @Moss & @eek637 from Avantgarde Finance

We would like to kick off this Phase 1 Temp Check with our full support for the initiative that Radicle is taking towards a more active and forward-looking treasury management, as clearly outlined in these two posts (Link 1 Link 2).

We support the formation of a Strategic Treasury Management Working Group and also the ideas of diversification among crypto assets, Real World Assets RWAs and more importantly the idea of programmatic risk management and long-term vision for the treasury, rather than short-lived proposals that do not create a long-lasting value for the DAO.

The key question this temp check want to address is: how do you enable an effective delegation (fast and efficient) while ensuring that strict risks policies are programmatically enforced (i.e. the DAO sets detailed management permissions) and that the delegation remains 100% trustless (i.e the DAO remains in control over the funds at all times)?

We believe that Enzyme is the best solution for this specific complex challenge, as it allows the DAO’s multisig to create and own a non-custodial DeFi vault, define the delegation rules and enforce them in the smart contract, letting the delegated manager operate within a “safe playground” and lastly maintaining a firm oversight thanks to a fully transparent 24/7 on-chain track record and a complete log of all vault transactions.

Proposal pic
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We also believe that using Enzyme is a future-proof solution for Radicle to implement its strategic treasury management framework, however it may evolve over time.

A few key elements to highlight:

  • Enzyme’s product roadmap includes RWAs, ability to perform DAO2DAO swaps, and also investing in other asset classes that are uncorrelated to crypto, which is in 100% in line with Radicle’s strategic goals.

  • Avantgarde (core contributors to Enzyme) can wear several hats: we can act as trustless delegated treasury manager, governance advisor and Radicle can also leverage our DeFi development arm to add new features as and when required.

  • The management delegation could be optionally delegated to Avantgarde but it may well be assigned to one (or more) members of the newly formed Strategic Working Group.

  • The Radicle DAO could easily assign / revoke multiple delegations (e.g. different members of the Working Group) all of which could have different levels of trading permissions (i.e. flexible level of granularity)

For more insights, we kindly ask you to watch the recording of the recent community demo we gave on July 28th. You can find the link to the recording here.

For all the reasons outlined above we believe Enzyme is well equipped to serve Radicle’s current needs as well as its future evolving requirements.

We’re excited to collect your feedback and continue this conversation in order to present the best possible proposal during the next phases of this governance process.

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I think this would be a great way to try branching out on treasury diversification. I like the flexibility of management features offered by Enzyme that would allow the Radicle team to safely experiment with different strategies. I would also be in favor of exploring working with Avantgarde to help us manage part of the funds.

I HIGHLY recommend watching this recording to get a better idea on how Radicle could work with Enzyme/Avantgarde. We covered a lot of details and they walked us through some of the management features/controls on Enzyme. Some brief notes from the call can also be found here.

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Hi @Moss, @noturhandle from Butter here. We’re a DAO Finance project building backtesting and simulation tools to aid treasury governance.

I’m commenting on this proposal to provide some thoughts and feedback before it goes to a vote.

I think most DAOs, including Radicle, are in desperate need of a tool like Enzyme. DeFi offers a lot of potential for DAOs in terms of financing, instruments for risk management, and investment opportunities but without controls and safety rails to navigate the market, DAOs dare not venture far beyond Gnosis Safe and Uniswap. Enzyme appears to provide a controlled environment and a safe, easy-to-use interface for DAOs to access DeFi while solving the problems you describe:

  1. Fast, trustless delegation
  2. Enforcing risk policies

However, from my perspective, Radicle DAO has a number of prerequisites to establish before it can decide who to delegate to, what risk management policies to adopt, and how to enforce them, namely:

  1. Who defines the goals of the treasury and the strategy to achieve that goal?
  2. What is the treasury management strategy?

If Radicle agreed to this proposal today and deployed Enzyme tomorrow, what treasury management strategy would be executed? And, more importantly, by who?

Enzyme solves the How problem but the Who and What questions must be answered first. The above proposal alludes to this:

  • The management delegation could be optionally delegated to Avantgarde but it may well be assigned to one (or more) members of the newly formed Strategic Working Group.

  • The Radicle DAO could easily assign / revoke multiple delegations (e.g. different members of the Working Group) all of which could have different levels of trading permissions (i.e. flexible level of granularity)

The Radicle Treasury Management Strategy Brainstorm on August 8 opened a dialogue about the strategy, but was expectantly inconclusive.

As a result, I believe this proposal in its current form is premature but could be voted on after/with the following changes:

  1. Enzyme include an explicit proposal for Avantgarde to manage some portion of the treasury with a view to expanding the relationship over time
  2. Avantgarde include an explicit proposal to form part of the treasury working group
  3. Radicle submit a new proposal to tokenholders to establish a treasury working group or lead that can then engage Enzyme/Avantgarde on this proposal
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Hi @noturhandle thanks for the comment. Was nice meeting you in the treasury working group call last week and I’m glad you’ve raised these points because I agree that the Who and What are vital here (and in the DAOverse in general). We kept those bits intentionally vague in the above with the hopes that there would be some workable guidance either in the comments or off-thread with stakeholders that we could use to hone the proposal in exactly the manner you suggest.

We’ll work on a draft to incorporate 1 and 2 - would you be interested in reviewing? If so, DM me here and we can coordinate.

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Hey @eek637, good to meet you too.

Totally understand the reasoning for keeping those points vague and absolutely happy to help with the review. I’ll DM you.

@shelb_ee is there consensus on creating a treasury working group or is this still undecided?

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