Proposal to purchase $200k ETH from the treasury committee wallet given the recent price rally of INDEX, to begin reducing the volatility of our treasury holdings and allowing for the potential expansion of smart treasury after its’ 3 month trial period.
The community treasury has seen its firepower increase rapidly over the last two weeks, but crypto markets are known to have extended moves both up and down. Now is a good time to swap INDEX into a lower volatility asset like ETH.
90d returns of ETH: +264%, INDEX: +2404%
The INDEX token clearly falls further up the risk curve compared to ETH, having an annualised volatility of 367% compared to only 113% for ETH over a trailing 90 day period.
The smart treasury may also be deployed soon, with an initial seeding of $500k liquidity split 80/20 INDEX/ETH. Banking an amount of ETH now ready to expand the smart treasury beyond $500k after the 3 month trial period will allow us to scale up without worrying about INDEX price in 3-6 months time. $200k ETH will allow for $1m of total liquidity to be added to the smart treasury pool taking the total value to $1.5m.
Undertaking this diversification would be a one-off event prior to having structured treasury management in place, which includes the upcoming launch of the Smart Treasury.
Propose the treasury committee purchases $200k of ETH, given the total market liquidity of circa $2.3m in Sushiswap + Uniswap for the INDEX token, this represents a manageable sale of INDEX if done over a number of days.
The purchase can be carried out by the treasury committee (myself, Dylan and Punia) using (at today’s prices) around 8000 INDEX tokens. The treasury committee wallet currently holds 22k INDEX, with the next request for reward contribution/growth funds taking place in two weeks time, ready for another 3 months of expenses. This leaves sufficient runway for February rewards distribution using the remaining 14k tokens before the committee wallet is replenished for the next quarter.
It is important to also mention that there has been interest in OTC trades for the INDEX token and the treasury committee plans to offer an OTC option in the short term while liquidity remains low. We will manage this on an ad hoc basis as requests come in, handling the negotiation and trades via the committee wallet allocation. Any trades that take place will be disclosed to the community after they have taken place.
For: Allow the treasury committee to diversify $200k INDEX tokens to ETH
Against: Do not diversify our treasury holdings
- For - diversify $200k INDEX to ETH
- Against - do not diversify