[TEMP CHECK] SGTM 000 - Treasury Management Strategy for Gitcoin - V1

🧙 🧙‍♀️ Ideas and Open Discussion
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TL;DR:

As we continue advancing towards our North Star goal of $50MM GMV through Allo, Gitcoin’s Foundation is spearheading a unified treasury management strategy for 2024. I’m posting this as an overview to discuss (and ensure) a few things - but notably financial sustainability.

The thinking is achieving and discussing this through multiple mechanisms, including (but not limited to) strategic asset management and partnerships, yield generation, financial governance refinement, and the potential formation of a Treasury Management Committee (GTMC).

The plan in bullet points:

  • Now: Strategic swaps are being executed across the Org workstream wallets (IN PROGRESS)

  • Shortly: Proposal to leverage the funds in the CSDO multi-sig back to the treasury with swaps and other mechanisms

  • After that: Formal proposal for yield generation facilitated by partners

  • Soon: Gitcoin Treasury Management Committee formation (GTMC) (TBD)

  • Later: Sufficient funding in the war chest for further bear markets and beyond

Context and Background:

Being bullish in the bull - let’s be prepared for future cycles. This temp check/strategy is rooted in a proactive approach, drawing inspiration from various community discussions in recent memory and over Gitcoin’s time as a DAO. The idea is to set forth a plan encompassing asset leveraging, strategic DeFi partnerships, and introducing innovative financial instruments to ensure Gitcoin’s resilience and growth while considering the full breadth of Gitcoin’s treasury and financial reporting.

Some References for Context and Inspiration:

Strategic Overview

The simple goal is to fortify Gitcoin’s assets. The initiatives proposed herein are designed to leverage those assets dynamically and engage our community in meaningful governance. These are just ideations at the moment, and further info - including risk and timeline considerations, will be built out in further posts separate from this overview.

The Gitcoin treasury currently holds ~$5,000,000 USDC and significant GTC holdings. We want stablecoin reserves to sit at a comfortable number, securing a solid foundation to support our community initiatives against potential (and inevitable) market downturns. However it’s just one aspect of our financial health.

Asset Considerations

It’s important to consider all aspects of our finances, not just a singular wallet or asset.

We are actively reviewing multiple asset sources for strategic management, including:

  • The Matching Pool
  • DAO Treasury
  • CSDO Wallet
  • Workstream Multi-sig Wallets

Further info: https://zapper.xyz/account/0x57a8865cfb1ecef7253c27da6b4bc3daee5be518

Ideation(s)

Treasury Diversification and Yield Generation:

Diversify our treasury assets through strategic swaps and yield-generating DeFi engagements, inspired by various proposals on ETH holdings optimization - considering conversations like - the last partnership w/ Index Coop [GCP-001] - PASSED - Funding IndexCoop gtcETH offering, @pete OETH proposal Citizens Innovate - Convert x% ETH/wETH into OETH for Passive Yield Generation and several others posted both on the forum and in other channels.

Strategic Partnerships and Financial Instruments:

Following discussions around leveraging DeFi partnerships, we propose exploring and formalizing these opportunities to enhance our financial stability and support for public goods. Most notable is yield generation strategy (details to follow in a formal forum post).

Proposal for Strategic Swaps

A critical component of our treasury management strategy is the execution of strategic swaps. These swaps are designed to:

  • Optimize Treasury Composition: By adjusting our asset holdings in response to market conditions and forecasted needs, ensuring liquidity and reducing exposure to volatility.
  • Enhance Financial Stability: We aim to improve our financial resilience against downturns by carefully selecting swap partners and terms.

We are actively modeling ways to go about these swaps without hindering liquidity and accounting for headcount, other partnerships, and some of the proposals mentioned herein. Big shout out to @darwinmvr and @Sor03 for your support with this. We are currently doing this at the workstream level but expect a post on leveraging funds from the treasury to expand this further.

Asset Management and Committee Formation:

Inspired by the most recent Uniswap forum proposal, I’m asking the community - should we consider the formation of the GTMC to oversee and execute our financial strategies?

This body would oversee strategic financial decisions related to the treasury, ensuring Gitcoin remains financially viable for multiple volatile market fluctuations and executing those txs effectively. The committee’s formation and detailed responsibilities will be further discussed in upcoming governance posts if this is signaled as a worthwhile initiative based on feedback.

A formal committee should not hinder some of these initiatives, and I welcome feedback on moving efficiently and intentionally without sacrificing time.

The proposed committee would be drivers of some of the items listed below:

  • Creating and reporting on the financial strategies of the organization.
  • Overseeing the diversification and strategic leveraging of assets.
  • Implementing and managing the Gitcoin Staked ETH & partnerships.
  • Coordinating with yield-generation partners to optimize treasury growth.
  • Ensuring transparency and community engagement in financial decision-making.

Why This Matters:

A coherent treasury management strategy is vital for sustaining Gitcoin’s impact in the Web3 ecosystem. By adopting a strategic approach to asset management, governance, and community engagement, we can ensure our mission’s long-term resilience and effectiveness in funding public goods.

Next Steps for Execution:

  • Formal Proposals for some of the items mentioned above: Each component of our strategy will be detailed in individual forum proposals for community discussion and voting - starting with a yield generation proposal, swaps from the CSDO wallet, further leveraging @kyle’s diversification proposal.

  • Treasury Committee Consideration: Based on community feedback, we may form a committee to oversee the execution of these strategies, ensuring transparency and effectiveness. This would be run in parallel with some of the initiatives mentioned above, and would be working alongside the Foundation to tighten up our finances and plan of action further.

Community Participation and Engagement:

I’m excited for this to be a meaty conversation and looking forward to reading comments on how we can further boost some of the more idle areas of our finances.

If you’d prefer to discuss 1:1, I’d love to hear your feedback and you can book time with me here (my door is always open) on other ideation(s) we’re missing in any areas of the org, or this overview specifically.

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Glad to see the agenda of treasury management being taken seriously.

  • Will the swaps in question be onchain or offchain operations?
  • Are there any considerations for regular OTC swaps of the native token?

As for the GTMC, the question is really if we have the expertise within the ecosystem to do this type of work. This usually requires dedicated effort unless the job of this body is to choose service providers to allocate to, in which case we can directly ask service providers to bid

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I don’t have any specific feedback but just want to say this initiative feels super important and hope there will be “meaty discussion” as advertised. Appreciate you @deltajuliet for getting the ball rolling.

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Agree with Carl that this is super important and i’m glad we’re starting to tackle how to handle and setup the DAO for long term success!

I have a few questions which might help in the framing and discussion:

  1. Why $50M? That seems like a large number given the current treasury is currently only ~$60M in total.

  2. Is this scoped to just the funds in treasury or does it include diversification and yield on the matching pool funds as well?

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Great points to surface :pray:

  • The swaps in question will all be onchain (and currently are). The goal is to also get super granular reporting on the success of these in terms of market value.
  • We currently do regular swaps for the workstreams, both out of necessity and in line with the original ask for diversification [Proposal] Withdraw and leverage (partial) USDC balance in treasury - myself, @darwinmvr and @Sor03 have been proactively leveraging workstream swaps and strategies around it over the last ~6 months to ensure we’re keeping our GTC at home while also making sure we’re set for the future.
  • RE: GTMC - completely agree. I’m not opposed to a service provider and (candidly) also love the idea of informed individuals getting excited about this, leveling up our community with their SME.

lfg @ccerv1!! Stay tuned. I’m aggregating convos and mapping out some of the logistics as they come in right now. DMs are open for any convos, join at your own risk but expect further updates. Debating calling this the ‘SGTM’ proposal series. I’m the only one that finds it amusing.

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More great points. Thanks @Jeremy for always being my maths backup.

  • I’m removing the final total goal from this and the upcoming swaps post - however noting this is a BHAG. HMW turn a small amount from our treasury into XX returns without gambling? I will outline this further in other posts when I have a comprehensive ‘lay of the land’ to share with the community and outline THIS strategy further.
  • Treasury, Matching Pool, CSDO, and Foundation multi-sigs are all considerations. Considering a holistic view of funds across Gitcoin, this post is geared towards driving conversations that incorporate ALL of these funds (vs. simply pulling from the Treasury). We have many partnerships and opportunities now and in the future, and my goal (and role) is to ensure we’re considering the sum of the parts ahead of talking revenue (which we will!).

NB: A lot of concerns are missing from this post - most notably risks, governance and metrics. This is meant to be the 00 of the strategy and start the discussion. I’m of the mind to name these SGTM (Strategic Gitcoin Treasury Management) noted above in my comment to @ccerv1 and we can defer to this initial post for reference + update as necessary as other proposals are emergent. Thoughts?

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Every Fund/Portfolio or Treasury needs diversification to minimize the systematic risk. That’s a great way to look at the Treasury’s future.
A few suggestions here:

    • List item Why can’t we Invest these stablecoins in tokenized fixed-income assets? Such as tokenized bonds & T-bills?
      That will generate a Risk-free return of 6-8% depending on the Asset.

I am the Founder of Envest - We are building an Institutional grade Stablecoin backed by Indian Bonds & T-bill with an avg. APY of 7.75%. A risk-free rate of return.

To exactly solve the diversification problems within Treasury we are launching Envest.
Happy to have a conversation ahead or share a proposal if this sounds interesting.

If the gitcoin team wants to reach out, I am at krishna@envest.money or KrishnaEnvest on TG