Treasury management/diversification has been a recurring hot topic over the past few weeks on the forum and IRL discussions in Paris. Although I am not an expert on treasury management myself, I feel that this is an important topic to revisit as it seems the Radicle project has matured enough to start thinking of more diverse ways to put our massive treasury to work.
Although there have been scattered proposals in the past on how to manage or diversify the Radicle treasury (see Success Token Swap, Gro Protocol partnership, ETH investment with treasury funds), Radicle currently does not have a coordinated, long- or short-term treasury diversification vision or mission. The closest thing we have to this is the Radicle Treasury Framework post from @derek back in August 2021, but this primarily focuses on early treasury uses like funding a grants program and growth initiative, both of which Radicle has already funded (Radicle Grants, Ecosystem Growth Fund).
I believe it would be highly beneficial to revisit @derek 's Treasury Frameworks post and discuss a coordinated treasury diversification/management strategy to help make more focused decisions on diversification opportunities as new proposals come in, rather than responding to each ad hoc.
This is just an idea that could be set up right away with pretty low effort. Would be open to hear other ideas on how to develop this discussion though.
What: Development of treasury strategy working group to discuss short- and long-term treasury management strategy and discuss risk management. The working group could also discuss best tools/services for us to use.
I am currently imagining this as a “powerless” group of folks working together on fleshing out a clearer treasury management strategy that can be presented to and scrutinized by the broader team. I do not necessarily think they should be able to make all decisions on treasury management/diversification at this time, I just see it beneficial to have a focused group thinking about a strategy and exploring ways that would work best for Radicle. Happy to be challenged here.
Why: As DAOs still try to figure out monetization, treasury diversification is not only a good way to grow and stabilize the treasury for now, but also provides opportunities to boosts network resilience and encourages governance participation via token swaps.
How: I discussed some of the ways other projects are diversifying their treasuries in my notes from the treasury roundtable I attended a few weeks ago. Some examples from these notes include:
- DAO2DAO: token swaps with relevant projects (share similar values/mission) boosts network resilience and encourages governance participation (see Radicle//Gitcoin Public Goods Alliance proposal from Llama)
- Decide how much of the treasury is for strategy rather than investment. This will help determine a mix of blue chips (e.g. ETH, BTC), stables (USDC), natives, etc.
- Explore ways to diversify with uncorrelated assets (e.g. data (via Ocean), real world assets (via Centrifuge), investing in related projects/startups, etc.)
There are also an abundance of projects and services out there looking to help DAOs find good diversification and investment strategies. Some of these include:
- Index Coop - crypto investment vehicles for individuals & institutions
- Element Finance 1 - provides fixed and variable yield vaults
- Enzyme Finance - on-chain asset management
- Karpatkey - treasury management outsourcing services
- Llama - provides economic infrastructure for DAOs
Who: Anyone who is interested from any core teams & beyond. It would be great to have folks with some experience or knowledge around treasury management at the table, but I believe that having interest in the topic is key.
We could also think about bringing Larry & Derek from Reverie back into the discussion, as well as any other folks that might be able to contribute to a broader treasury management strategy.
From Paris offsite: This working group could eventually potentially be absorbed by the “Budget” pillar of the “Shepherd” discussed at the Paris offsite if we decide to stick with that model.
Next steps: I suggest we host an hour-long brainstorm call to start initial discussions and signify initial interests from folks. I proposed we do this sometime in early August.
I simply wanted to get the discussion started here on a higher level. I would be really happy to hear from folks who have more experience/expertise in this area share what they think about this idea!