TLDR: Deposit $2m into the Badger/rETH 50:50 balancer gauge (and then into aura) with the intention of farming yield and increasing on-chain liquidity for the Badger token.
Background
Rocket pool is a decentralized Ethereum staking pool with nearly 300,000 ETH staked at the time of writing. With the move to proof of stake being a success, having exposure to staked ETH in the Badger treasury is more important than ever. The rETH product by rocket pool can be paired with BADGER tokens on Balancer/AURA to earn fees, BAL and AURA rewards. A gauge has been approved by the Balancer governance and can now be voted on with veBAL, vlAURA or bribed through hidden hands. This deposit will also create a significant amount of liquidity for the pool to be arb’d against the existing wBTC pools.
Proposal
Deposit $2m BADGER/rETH into the balancer gauge and move into aura to allow for voting and bribing on the LP.
Metrics of Success
How long will the investment thesis take to play out?
This deposit will remain indefinitely until a better source of yield is found for the ETH or in the case it is needed for operational expenses.
What are the risks associated with each investment?
- Protocol risk (0 - 10): Likelihood of a smart contract or a system of smart contracts (protocol) is exploited or funds are lost
4: This puts funds at risk to Balancer, Aura and rocket pool, all have been audited and have a strong track record.
- Liquidity risk (0 - 10): Liquidity risk refers to how easily an asset can be bought or sold in the market.
0: There is no liquidity risk as this is an LP position.
- Market risk (0 - 10): Market risk is the risk that arises from movements in stock prices, interest rates, exchange rates, and commodity prices. Metrics to consider : VaR, skew, sharpe.
5: There market risk here comes from Impermanent Loss which is only an issue if the funds are needed prematurely or in an emergency.
- Execution risk (0-10): How long will it take to execute, how many signers on a Multisig or queue of things that must be signed first.
3: Will need to be scripted but can be done in one single tx.
