[GCP] Seamless DAO Treasury Diversification

General
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Title: Optimizing Seamless Protocol DAO Treasury: Strategic Allocation to OUSD and OETH

Author: @Guz_MassAdopt

Submission Date : January 20, 2024

Abstract
This proposal suggests a strategic allocation of approximately 1% of the Seamless Protocol DAO Treasury into Origin Protocol’s yield-bearing tokens, OUSD and OETH. This initiative aims to optimize the treasury’s yield generation and diversify its investment portfolio.

Specification
The proposal entails allocating about $1,301,613.75 each into OUSD and OETH, representing roughly 1% of the DAO’s treasury holdings.

OUSD (Origin Dollar) Overview:

  • OUSD is a stablecoin pegged 1:1 to USDC, DAI, and USDT, designed to accumulate USD.

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  • It generates yield automatically through various DeFi strategies, with a 0.25% exit fee on dapp redemptions redistributed to holders.

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  • Operational since September 2020, OUSD has a proven track record and has undergone rigorous audits.

  • Governed by OGV stakers, it provides a user-friendly experience with automated yield and continuous compounding.

**OETH (Origin Ether) Overview**:

  • OETH, launched in May 2023, is backed by ETH and liquid staking tokens (LSTs), targeting ETH accumulation.

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  • It yields from LSTs like stETH, rETH, and sfrxETH, optimizing APYs through DeFi strategies.

  • OETH uses an AMO strategy on platforms like Curve and Convex, and supports various ETH strategies.

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  • Governed by OGV stakers, it offers a diversified and passive yield-enhancing mechanism.

Rationale
The integration of OUSD and OETH is a strategic move to diversify the DAO Treasury’s investments and increase yield.

Estimated Return:

  • OUSD Investment: With a 6.33% APY, investing approximately $1,301,613.75 could generate between $82,362 and $82,768 annually.
  • OETH Investment: At 5.28% APY, a similar investment would yield about $68,765 to $69,109 annually.
  • Overall: The combined annual return would range from $151,127 to $151,877, offering a higher yield than low-yield strategies.

Monitoring and Reporting
OUSD and OETH positions require minimal active management due to their automated features. Real-time monitoring of OUSD’s and OETH’s APYs, strategies, and backing collateral can be found at:

Implementation
Given that OUSD and OETH are not currently supported on the Base network, the approved allocation will be converted into USDC, USDT, or DAI (whichever offers the best exchange rate), as well as ETH, and then bridged to the Ethereum Mainnet. The conversion will be executed on the respective OToken platforms. All transactions will be transparently shared with the community, including on-chain explorer links for verification.

Exiting OUSD and OETH positions will be free of lockups, maintaining full liquidity. The assets can be utilized as required by the Seamless Protocol DAO, allowing for flexibility in treasury management. Should the need arise to exit these positions, the process will be executed using the same methods as entry, ensuring ease and efficiency.

Origin Protocol References:

2 Likes
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Hi @Guz_MassAdopt ! First of all thanks a lot for pioneering the discussion and coming up with a formal proposal!

I have a one question, are OUSD and OETH available on BASE? I mean, as a DAO we shall have no limits with regard to networks, however I do believe that the Seamless philosophy - built on BASE - implies that we shall develop Base ecosystem thus primarily using its tokens.

Generally, I suppose that we could discuss exact assets to invest in at a later stage. Imho, as a first step we shall agree on how we are going to convert SEAM. As delivery_rider noted in discord we should by quite cautious when we are going to sell a relatively big portion of native tokens. He suggested doing it via VCs or OTC. I think that it is the starting point for the discussion.

The following is just my imagination… What if we as a DAO could carry out a treasury diversification round? Like attracting strategic investments but as a DAO? I fully understand that nobody has ever done this before in the industry, but it does not mean it is not possible, does it? So probably we could draft a DAO official request and send to some VCs? Naturally, one of them could be Coinbase Ventures (since they are developing BASE and SEAM is listed on Coinbase). If they are interested, then we could nominate a council that will start official negotiations. Once all aspects are agreed, then it is submitted for the whole DAO to decide (via Snapshot and Tally vote). Again, the above is purely my imagination, but who says we cannot try?

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Love the feedback and very valid questions! I’ll respond to each in order.

Are OUSD and OETH available on BASE?
In the Implementation section, I mentioned that OUSD and OETH aren’t supported on the BASE network yet. But, your point about aligning with Seamless’s ethos and exploring Base-native yield opportunities is well-taken. The main reasons for suggesting OUSD and OETH were their low counterparty/smart contract risks (thanks to extensive audits) and their attractive yield prospects.

@Pete from Origin showed interest in this idea. His insights on potential DAO-to-DAO interactions would be valuable.

Regarding deliver_rider’s suggestion about VC engagement, I’m not entirely convinced, but let’s park that discussion for now. A collaboration between Seamless and Origin Protocol, especially involving an OTC deal, seems promising. Alternatively, we could consider reducing the allocation for this experiment and then review community feedback after a set period, like a quarter or six months.

What if we as a DAO could carry out a treasury diversification round? Like attracting strategic investments but as a DAO?

This is a fascinating idea and, in a way, a distinct proposal from the initial one, perhaps even an expansion. It reminds me of MakerDAO’s MIP81: Coinbase USDC Institutional Rewards. If we could implement something akin to this on Seamless Protocol, I’m all in!

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Hey Ras, Pete here from Origin

We’re not on Base…yet at least. We have plans to launch on an L2 in the next month or so, though not sure if it’ll be Base, Optimism, or Arbitrum.

VC/OTC would be great for this, though there are also several protocols that can do this on-chain, SIZE comes to mind. Or just a TWAP/VWAP strategy over several days

I believe a few DAOs have tried this, Rook and Jade come to mind, though neither exist now sadly. Maybe CULT falls into that category, though Cult investments aren’t as much for diversification. We made a similar proposal to Rook about a year ago that included quarterly DAO investments into OUSD along with a delegated treasury team, but unfortunately the DAO shut down before the proposal made it to vote.

I’m a big fan of building new partnerships and integrations (thanks for the call out @Guz_MassAdopt) and would be happy to discuss ways we can work with Seamless. I’ll be around to answer questions on OUSD/OETH/OGV and on the greater Origin ecosystem if there are any additional that the DAO has. We also have a weekly ecosystem call at 9am PST on Monday mornings where we discuss the latest updates, upgrades, and the future of Origin - feel free to hop in and say hello

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Thank you @Guz_MassAdopt for clarifications!
And awesome to have the Origins representative here @Pete !
If we are talking about a direct OTC deal between our projects that seems really promising

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happy to be here!

An OTC deal would be possible for larger amounts using Origin’s market maker ($1m+). For smaller amounts, using the OUSD dapp or OETH dapp is typically the most cost-effective place to obtain both tokens.

2 Likes
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The proposal seems to require additional consideration and input from others. Before we can move forward, it’s crucial that we establish a foundational approach. As such, I recommend pausing any further action on this proposal until we’ve reached a consensus.

Curious if others agree with this understanding.

cc: @Ras, @richyRNG

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Agree man. I think core contributors from both DAOs could me at Denver to dig into. I hope they will reach a general understanding on how this shall be done and then we could proceed with a formal proposal to be voted by both DAOs

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I think this proposal is worth revisiting. Another potential route for the DAO to consider are DAO Treasury swaps. There are many potential projects out there looking to swap governance tokens to further create a robust and diverse stakeholder group that can help the various projects/communities navigate.

Maybe we can put together some candidates or opportunity lists for the community/contributors to reach out to? For example, I am aware that Ampleforth DAO has perhaps done some small swaps of this nature in the past.

If this sounds like an interesting (but similar) angle to the original proposal, I suggest as a community we create a list of projects we think would benefit from this sort of cross-DAO swaps (minimal impact to market liquidity AND gain more community members/experienced stakeholders to help steer governance).

Let me know what y’all think and can certainly migrate discussion on this over to tg or discord, but I do believe this topic is important and worth ongoing discussions.

3 Likes
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i’m definitely in favor of exploring this!

i think Ampleforth is a good protocol to begin discussions with (once they’re bridged to Base). But an immediate partnership or governance token swap with Aerodrome would be ideal.

I do believe we should allocate a % of the treasury to some sort of yield-bearing position (For example: Compound, at the time of writing, is yielding 16.77% yield on USDbC).

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That is a great idea. Frankly, it is a common practice for DAOs. If Im not mistaken even well known names in the industry like Compound and Synthetix (I hope my memory does not mislead me) did that.

Having said that, I support Ampleforth and Aerodrome as well.

Probably, we should try to get in touch with some leaders in DEFI sphere, like Uniswap, Sushiswap 1inch ?

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Absolutely!

I think this already is a solid list to begin with:

  1. Aerodrome
  2. Uniswap
  3. SushiSwap
  4. Compound
  5. 1inch
  6. Ampleforth

(in no particular order - besides Aerodrome).

1 Like