Short Term Treasury Diversification


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

0 voters

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^ oops didn’t mean to cast my vote yet. Would be good to have an abstain option in the poll for now. Probably needs a bit more thought on the execution aspect. Don’t agree with a market sell. Have we thought about selling the treasury streaming fees?

*It’s not possible to change the poll after the first 5 mins

As for the execution, we may be able to cater for some of this swap via the OTC requests that have come in, which avoids going to the open market for the whole thing. What’s the concern with a market sell?

I’m anticipating that we use some of the accumulated streaming fees ($100k from the current total of $250k DPI) to seed the smart treasury when it goes live hopefully in the next few weeks.

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:rofl: I love that we live in a world where buying ETH is considered a prudent, conservative decision :joy:


I think if we monitor the market impact as we execute this transaction, we should be fine. Might take a few days or a week depending on trading conditions (for example, a spike in volume due to CGI launch might allow us to sell more into the buying pressure) but $200k with $2.3 million of liquidity sounds alright to me.

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can we repost then? Richard’s questions seem like good ones.

I’m voting “no” given the current options in the poll and the open questions. There seem to be a lot of open questions, and this is a non-trivial decision.

Also, why is ETH preferred over any other asset? If the goal is “reduce volatility” why isn’t a stablecoin being considered? That’d serve that goal better. **

I also think it might be good to have other options besides “$200K or Nothing”


Lemme clean up my post :point_up: ahem

I am voting “no” due to the construction of the poll and open questions that are not answered. These questions include:

  • The stated goal is “reduce volatility” - why is ETH preferred over any other asset, esp. stablecoins which would objectively be the least volatile?
  • Why don’t we have option to vote to use less than $200k?
  • Why is a market set the best way to execute? What other options were considered?
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Thanks for the input Greg. To answer the questions first off:

  1. Mainly because the ETH can be used to expand the smart treasury in the future as that will be an Index/ETH pool, the fact that it has demonstrably lower volatility is a bonus. If INDEX gains against ETH from here that’s great, if it falls, we are hedged. It’s true that stablecoins would offer even lower volatility but if they lose purchasing power against ETH we would need to sell more INDEX in future possibly at less favourable INDEX prices.
  2. $200k represents less than 1% of the dollar value of the treasury at today’s valuations. Deciding between $150k or $250k is the difference between +/- 0.2% of our treasury. It doesn’t seem value add to have further discussion around every detail of the proposal, but I’ll expand more on that below.
  3. A mixture of OTC and market selling is the plan as I mentioned in the response to Richard.

As the treasury committee we have some discretion to take actions that benefit the Coop, as laid out in this post.

If the community feels that we are not being sensible with this proposal then that is the purpose of the poll, to gauge the sentiment and make sure we haven’t misjudged things. When it comes to deciding on the asset and the allocation however it doesn’t seem to be a value add activity to decide the parameters by community vote. We have the treasury committee (and other working groups) to make these decisions and lay out the case. It feels like we should be defaulting these decisions to yes and the community can step in to say no, rather than default no and having to get buy-in for everything. Governance minimisation and empowering those in positions of responsibility, while avoiding decision by committee on detailed aspects will help us to move quickly while still having the sanity check to ensure sensibility.

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100% with you on sensibility, empowering, governance minimisation :raised_hands:

I’m trying to understand what is truly being proposed.

These answers :point_down: just weren’t clear to me in the post & comments. Maybe everyone else got them.

To put in Q/A form (copy/pasting quotes so as to not misconstrue), it seems:

Q:The stated goal is “reduce volatility” - why is ETH preferred over any other asset, esp. stablecoins which would objectively be the least volatile?
A: " ETH can be used to expand the smart treasury"

Q: Why don’t we have option to vote to use less than $200k?
A: “$200k represents less than 1% of the dollar value of the treasury at today’s valuations”

Q:Why is a market set [sic, meant “sell”] the best way to execute? What other options were considered?
A: its not, instead, “a mixture of OTC and market selling”

Have not used them but Matcha has INDEX/WETH limit orders

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@DarkForestCapital voted for. This is an important and forward looking first step to creating a long-term sustainable treasury model. A well diversified treasury will give us maximum optionality through varying market conditions.

Our next step should be to form a relationship with CREAM or AAVE that allows us to use INDEX as collateral so that we can reduce our equity spend.


Let me give this a try @gregdocter

A: ETH does reduce volatility of the Treasury when compared to INDEX. That’s a fact. Preference for ETH over stablecoins is outlined in 1) the Treasury survey and 2) the smart treasury proposal. Basically, there are many benefits of using ETH vs stablecoins, beyond volatility reduction. Diversification into ETH is part of the broader strategy.

A: there’s a reason why $200k was proposed, based on the research and evaluation of the Treasury Committee. Once again, there’s a broader strategy here as it relates to the Smart Treasury design. Imho it doesn’t make sense to have a poll with 5 options, given we usually have ~15 people voting. It could split the vote and slow down the ability of the Committee to do what it is meant to do.

A: It looks like OTC + market sell is the best way to execute and is the approach we are taking. Market sell is also possible given small amount as % of total liquidity and can be executed over a period of time without causing too much price pressure.

Hope this addresses your questions.

yup! they were just not clear/obvious to me in the original post.

Where can i find the research and evaluation of the Treasury Committee? I’d love to learn more.

Seems like the broader strategy might be useful for context too.

Treasury survey, part 1

Treasury survey, part 2

Smart Treasury proposal

@DarkForestCapital can comment on whether they keep notes of their meetings.

Voted for
Average market volume (last 30 days = £1.1M)
Min daily = $227k
Max daily = $2.2M
Current Market Cap = $34.2M
$200k = 0.6%
Is there a way to conduct all the OTC trades first to reduce market sell positions?

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I understand that it’s not easy for everyone to keep up with all the things that are happening, especially with something as sensitive and complex as the treasury and I would like to continue improving that. I can pull together something that unifies all the different conversations into something simple, a bit of a roadmap. The thing is sometimes these things are emergent and it’s not easy to describe the plan until it becomes clearer.

Further to Verto’s post above the $200k figure comes from 10% of the available market liquidity for index tokens, the maximum we can sensibly trade over a period of a few days. There is a precedent for this figure based on Set’s experience with DPI rebalances, and it also allows us to scale the smart treasury to 3x it’s initial size, without having to make a bet on INDEX price at the time.

I voted for & I am stoked to see such a high level of engagement. :slight_smile:

Adding 200K worth of ETH to the treasury to me is a stepping stone to setting up a 80/20 INDEX/ETH pool for the treasury at a later date. For this reason alone, it make sense to purchase the ETH in the lead up to deploying this pool.

INDEX liquidity is definitely something to be considered and i think that is well addressed in the post.

However, reading over the comments. I do think more needs to be done to communicate a roadmap of sorts around this topic. It might need a call or two, to handle all the questions. There will be questions about entirely different strategies and they would fall outside the scope of any roadmap article. Communicating a vision stitching everything together will help concentrate the discussion. It is a broad topic and great to see @DarkForestCapital taking on this mammoth task.

I posted this proposal, here, to see what people think about the idea of token holders and contributors buying INDEX from the Index Coop Treasury.


I think it makes sense to change some INDEX into ETH, there is a risk the INDEX price will moon, but it’s a small fraction of the total treasury (Consider we have over 50% of the total INDEX allocated to future spending), that’s a lot of INDEX.

This :point_up: discussion has been very helpful.

I’m parroting :parrot: back in a way that makes sense in my brain. With no intent to misconstrue:

Problem: The Index Coop Treasury is invested only in INDEX. Today, INDEX is a volatile asset. This threatens long-term Coop sustainability.

Solution: Purchase $200k ETH from the treasury committee wallet using approx. 8000 INDEX tokens


  1. To prepare for implementation of the smart treasury
  2. To reduce the volatility of Index Coop Treasury holdings
  3. $200k is 10% of the available market liquidity for INDEX tokens, the maximum we can sensibly trade over a period of a few days.

How: A mixture of OTC and market selling

Immedite Effect: After purchase, the Treasury Committee Wallet will hold approx. 14,000 INDEX tokens.



While I agree with this, it does seem like liquidity is too thin to do this on the open market and it will hurt holders.