Expressions of Interest

Please reply to this thread if you are interested in participating in the Treasury Management subgroup. If there are particular topics/initiatives you want to see actioned in this subgroup, please provide a brief description of what you would like to see so we can build some agenda points for a call.

I will schedule a call for next week once we have an idea of how many people are interested.

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Hand-up!

Most corporate structures have an independent oversight auditor appointed directly by the shareholders and operates with full autonomy from the Board of Directors or the Executive branch. Such an auditing committee for a DAO,

a) will be elected by and answers to the Delegates and Delegates only (excluding the Directors, Stewards and Core team at TNL),

b) cannot be formed by members who are delegates,

c) cannot take any actions but only provide independent feedback on the governance, disbursement of funds (← Treasury Management), and ensure that advise if by-laws are followed (← Meta-governance).

Such an entity will (should) have no explicit vested interest in the operation monetisation of the DAO since its members can (should) not be part of the Council or the Foundation (thereby excluding them from the DAO) for the duration of the time they serve. Its utility also links somewhat to the by-laws. If ENS ends up adopting two sets of by-laws – one set of directions for the DAO working branch as Nick has requested, and another update to the Constitution/Articles to close up the loopholes we found during the EP6 process, then this auditing committee can explicitly oversee cases when conflict arises between the two sets and provide feedback when asked.

The scope of what I am proposing goes beyond treasury management though.

The Foundation has a supervisor for that purpose. Is that what you are thinking of?

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Possibly. I am not sure what precise duties the supervisor fulfils. Do they encompass the same criteria that I mentioned?

Which auditor did you have in mind? ConsenSys did one last in 2019 which I learnt a significant amount from.

Automation and digitisation. Say designing a streamlined application process for funds to be released?

Potentially outsource functions, those that are deemed ‘non-core’, to improve efficiency and achieve best execution?

Without the above two points, a notable uptake of transaction cost analysis (TCA), both within treasury and across the entire FX industry would also be necessary regarding managing economic impacts on accounts payable (I’m not talking currency straddles/strangles etc, just management of indirect Costs-Transaction Costs,

Also,

Having strong governance around best execution practices, supported by regular, independent TCA

Independent, and an emphasis on ESG aligning with Transaction Cost Analysis (TCA) would be areas Id like analysed.

I guess an analogy in process would be working towards that efficiency frontier in CAPM (capital asset pricing models)

Transaction cost analysis on whichever formal application process for funds from treasury we implement would be great. Therefore, the design of application process will factor transaction cost analysis.

I have a buddy at Deloitte where this is up his alley. If you like I can get pick his brain to assist here? Or maybe I’m over complicating things.

I don’t know, just thinking aloud.

@alisha.eth would be happy to participate

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Hi @alisha.eth, I’d like to participate.

I’d like to continue the discussion on Treasury Management Strategies and Purpose started here and here.

It seems there are a few areas where members need to come to consensus:

  • What role does Treasury Management play with respect to ENS’s mission and values?
    • Revenue-generating?
    • Cost-covering?
    • Speculative
    • Defensive
    • Conservative
    • Public Goods / not-for-profit Foundation vs Profit-seeking / For Profit

I am completely against outside money managers messing with the treasury funds.

As long as .eth names are selling, and people are still using $ETH, I don’t feel it is necessary to sweep any of the treasury into any kind of vault / LP / yield optimizer / whatever other euphemism that involves locking up or staking $ENS.

[…] I am all for DAO to DAO collaborations that could even involve things like token swaps, or even diversifying parts of the treasury so it is more resilient than would be only holding ETH, but I think locking ENS for returns is just unnecessary.

daylon.eth

  • Which strategies to employ or products to use?
    • Amount of treasury to invest?
    • Amount of capital required for ongoing operations? For how long?
    • Do we use leverage
    • Do we use decentralised instruments only or CEXes are also acceptable
    • How conservative or risky do we want allocation to be
    • Do we want to have diversified portfolio
    • How is structure of treasury aligned with broad goals of protocol
  • Who should make decisions? And How?
    • Do we have the requisite skills?
    • Should we solve this internally or externally?
  • Do we know the risks?
    • Of diversification
    • Of particular strategies
    • Of products
    • Of protocols
    • Of inactivity

Related to defi/“yield farming”, these are the risks I see:

  1. Security/Hacking Risk ENS is already exposed to hacking risk, but adding Element/Yearn/Curve/Aave/Compond/Lido stacks to the mix significantly increases those risks (every line of code in this chain increases the likelihood of a “game over” bug losing the entire investment).
  2. 3rd party Risk Purchasing yield tokens requires trust that the management teams of those tokens will always act in the best interests of token holders. The unregulated nature of crypto means there’s little or no legal accountability placed on these 3rd parties, which significantly increases risk (especially in comparison to tradfi investments).
  3. Systemic Risk Crypto is extremely volatile and subject to large shocks. Because the world of defi has countless interlocking parts, the entire system is subject to contagion should any single part fail. I don’t believe anyone can come close to accounting for these risks, let alone mitigate against them. Further, most defi products are very new and have never been tested by a bear market.
    • Regulatory Risk Decentralized lending is a negative-sum investment vehicle which fuels highly speculative bets made by unsophisticated investors. This is illegal in most jurisdictions, and we have no idea what type of legal risk this could expose to the ENS DAO. Even if we accept that defi is largely exempt from securities law, some may find it distasteful that our gains come from other crypto users’ losses (against the “public good” mission of ENS).

royalfork

I’d also be happy to prepare some materials to help aid the discussion

^ Oh hey I’m famous… Just kidding. Glad you liked what I said though.

I don’t want to participate in a treasury management group, don’t let my lame joke derail the conversation.

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Hey @alisha.eth - I will gladly raise my hand to join the subgroup. I authored this post with some initial thoughts for how ENS DAO should approach its treasury management.

It’s important that the DAO first outlines where it currently stands financially. What are the operating costs? How much capital should be held in stables to protect against price risks? How much capital is required to be fully liquid vs not? What is a target rate of return for invested capital? etc…

I feel this discussion should come first, before even considering investing any capital. Happy to help wherever I can :slight_smile: