Thank you for the proposal, @Avantgrade.
We appreciate your efforts in advancing the DAO’s treasury management strategy, a crucial step for its sustainability. We weren’t heavily involved in the discussions for SGTM 002 and SGTM 003, but we recognize their importance and agree that further progress is necessary.
We appreciate the goal and the general idea, and let us share some questions for better clarity.
1.Following the approach in SGTM 002(for the Matching Pool), was increasing the treasury’s ETH allocation to capture staking yields considered? If this path wasn’t chosen, could you elaborate on the rationale behind that decision?
2.Regarding the USDC strategy, we would love to know how the 7.5% performance fee can be justified, especially when compared with other platforms. We also ask how the 7-15% target APY is realistic, considering the linked Enzyme vault’s current performance (~5% APY).
3.We are also a bit skeptical about the GTC covered call strategy. With GTC only ~20% of the treasury while it’s critical to include the native token strategy for other DAOs like Compound and Arbitrum, is the risk of reducing this allocation necessary? We also might need to define the target/goal of the treasury management strategy and should discuss if GTC strategy is indeed needed to meet our goals?
For instance, deploying $5M USDC out of the $7M currently held in this wallet at a 10% APY could potentially generate $500k per year based on simple calculation.
While it’s clear that income from treasury management alone is unlikely to cover all DAO expenses, this $500k could cover the majority of the estimated $609k needed for DAO operations, as detailed here.
Additionally, we face potential issues: if our own DAO initiatives significantly increase the GTC price, the strategy could force sales, conflicting with our long-term holding goals. We should also consider the risk that effectively repurchasing GTC later (e.g., through the planned put options) might not always work out smoothly or as expected.
Therefore, we should clearly define target GTC holdings and establish a minimum threshold. If our holdings fall below this minimum, it should prompt us to review and potentially adjust our overall treasury management strategy, including how we utilize options.