Treasury Council Decision: Balancer TCL migration to AURA
- Unstake the current Badger/wbtc deposited on Balancer and restake it on AURA. This will earn BAL and AURA instead of just bal. Currently, the APY on the pool is projected at 85%.
Badger has deployed its first 30 BTC + corresponding Badger position and is bribing 3k Badger/week on Hidden hand.
Aura has launched recently and is now adding AURA rewards as yields on top of the current BAL rewards. It is now possible to deposit the TCL balancer tokens into aura for enhanced yields.
The Proposal is to move our TCL on Balancer into Aura.
This is a rather conservative move with the main goal of farming AURA in addition to BAL.
The projection is that by moving our TCL:
- The treasury will earn double the current APY it is earning on Balancer.
Metrics of Success:
- How long will the investment thesis take to play out?
The treasury will yield BAL and AURA assets immediately.
- Will the treasury recoup funds or does an investment represent an outlay?
The treasury will be able to recoup the funds if needed (minus the IL which is smaller on 80/20 pools and should be well covered by the current rate of rewards).
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
5 - Aura is a new protocol but it is built ontop of Balancer, one of the oldest and well developed AMMs in DeFi. The Aura contracts have been audited and their community is trusted by many.
- Liquidity risk (0 - 10)
Liquidity risk refers to how easily an asset can be bought or sold in the market.
0- The TCL can be unstaked at any time.
- 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.
2 - The Market risk isn’t particularly applicable here since this is a TCL position. The Market risk is the same whether deposited in Balancer or AURA
- Credit risk (0 - 10)
The risk of loss from the failure of a counterparty to make a promised payment, this should cover airdrops expected
0 - These are both base treasury assets
- 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 -The treasury multisig will need to sign to enter/exit these positions which at the moment could take up to 1 week. Rapid withdrawal from the position during some sort of black swan event would likely be possible, but no clear processes are in place to do so.