IIP: 97
Title: Authorize the Investment Account for Beta Finance & Rari Capital Strategies
Status: Proposed
Author: @Matthew_Graham, @prairiefi, @Ahuja
Created: 18th August 2021
Simple Summary
This IIP includes two amendments to Index Coop finances. The first is to transfer MVI and DPI held within the Treasury to the Operations Account.
The second is to enable the Operations Account to interact with Beta Finance & Rari Capital by authorizing the Finance Nest (FN) to deposit assets held within the Operations Account into Beta Finance and Rari Capital.
Treasury: ‘0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC’
Operations Account: ‘0xFafd604d1CC8b6B3B6CC859cF80Fd902972371C1’
The Treasury holds $621,653.09 of DPI and $77,683.31 of MVI at the time of writing.
Abstract
IIP-70 authorized depositing $500K of USDC reserves into the Operations Account. Per the Stablecoin Asset Management Guidelines, the FN recommends these funds be made productive. In order to actively manage these reserves, this IIP will authorize the FN to deposit and withdraw assets into Beta Finance & Rari Capital freely in line with the stated guidelines.
With the emergence of Beta Finance liquidity mining on DPI and MVI, the FN would like to transfer DPI and MVI from the Treasury to the Operations Account and have the authority to invest assets productively. We expect DPI and MVI to become productive assets with various protocols like Aave V2, Rari Capital and Beta Finance all offering incentives on one or both mentioned Index Coop products. Rari Capital is teasing LM in their discord, Beta Finance has a proposal live on our governance forum and Aave V2 liquidity mining rewards are expected to be replenished during November which may, or may not, include DPI.
Having this blanket authority will allow the FN to act nimbly when managing the liquidity of the Operations Account as market conditions or the state of the Index Coop’s operations evolve. The ability to deposit and withdraw assets into Beta Finance enables Index Coop to partially offset the costs associated with proposed INDEX incentives being offered on DPI upon listing DPI, MVI and ETH2x-FLI.
Motivation
The Operations Account presently has the ability to deposit stablecoin held within the Operations Account into Aave, Balancer, Compound, and/or PoolTogether. This proposal seeks to extend this to include DPI and MVI, as well as adding the lending protocols Beta Finance and Rari Capital to the list of protocols the FN can deposit and withdraw from.
The FN seeks to deploy assets held within the Operations Account productively across a number of protocols in order to earn income for the Index Coop. Because the Operations Account is set up and the Beta incentives are only known for the first 12 weeks, we would deposit the DPI and MVI from the Operations Account rather than the Investment Account. Once the Investment Account is up and running, this type of strategy (non-stablecoin) is meant for the Investment Account.
Specification
Overview and Rationale
The FN recommends adding Beta Finance and Rari Capital to the list of protocols that Index Coop can earn yield on assets from within the Operations Account. The rationale is detailed within each section.
Beta Finance
Beta Finance is a recently listed non-custodial permissionless lending protocol with over $120M in TVL. Depositors provide liquidity for passive income while borrowers take out over-collateralized perpetual loans. Participation in certain Beta markets as either a depositor or borrower is incentivized with BETA tokens that provide a beneficial improvement to the net APY. The current APR from incentives exceeds the APY offered by various other lending platforms. The FN may seek to accrue BETA for additional meta-governance power for the INDEX token or sell for current income. Beta Finance represents one of the best APRs on DPI and the best APR on MVI once BETA incentives are provided.
Rari Capital
The Rari Fuse pools are forks of the Compound code base and although they hold around $1B in funds, the contracts at Compound are well battle tested and are also in use by Cream. Rari offers two yield aggregator products, for USDC and DAI, that aggregate yield across the Fuse pools. The current ROI is just beneath 20% and represents the yield of depositing across multiple fuse pools. This becomes increasingly more lucrative if Rari Capital was to offer Liquidity Mining rewards. Index Coop already has an existing relationship with Rari Capital having founded Fuse pool 19 together. The FN may seek to accrue RGT for additional meta-governance power for the INDEX token or sell for current income.
MVI & DPI from Treasury to the Operations Account
Transferring MVI and DPI to the Operations Account enables the assets to be put to productive use. Currently, both MVI and DPI assets are held within the Treasury wallet and are not earning any yield for Index Coop.
An example, if Index Coop was to spend $106K on incentivising Index Coop products on Beta Finance lending platform, depositing MVI and DPI would net Index Coop approximately $25K in BETA tokens based on the proposal linked here. This represents roughly 24% of the total cost being earned back over the initial three month period. This overlooks the risk managed aspect like considering concentration risk and others mentioned in the Stablecoin Asset Management Guidelines, but highlights the ability to reduce the cost of the INDEX incentives being applied across DPI, MVI, BED and ETH2x-FLI on Beta Finance.
Technical Specification
Beta Finance & Rari Capital are accessible from Gnosis Safe via Wallet Connect and no technical work is required.
Voting
FOR:
DO authorize the FN to use Beta Finance & Rari Capital in the Operations Account and DO transfer all MVI & DPI from the Treasury to the Operations Account.
AGAINST:
DO NOT authorize the FN to use Beta Finance & Rari Capital in the Operations Account and DO NOT transfer all MVI & DPI from the Treasury to the Operations Account.
Copyright
Copyright and related rights waived via CC0.