Treasury Questionnaire pt 2

Finance Treasury
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Part 2 of the Treasury Questionnaire seeks to distill learnings on how the community is leaning from the initial questionnaire and to further clarify several key questions.

Question 1:

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The overwhelming consensus seems to be that the community believes payment for contributions should come from $INDEX reserves.

Question 2:

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75% of respondents believe that we should hedge between 10-30% of the treasury’s $INDEX holdings. The weighted average vote is 15.5%

This begs, the question, into what do we diversify?

Diversify $INDEX Holdings Into:
  • ETH
  • Stablecoin
  • DPI

0 voters

and also, how often will we rebalance?

Rebalance Frequency
  • < 3 Months
  • 3 Months
  • 6 Months
  • 12 Months
  • Only Once

0 voters

The last questions from pt 1 of the questionnaire seemed to generate rough consensus.

Question 3:

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89% of respondents want to maintain a target of some % of the treasury to be made up of streaming fee revenues as a buffer for INDEX volatility.

56% of respondents voted for targeting 0-10% of the treasury’s balance from revenue.

Question 4:

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66% of the respondents agreed that moderate saving and moderate spending towards growth is ideal, while 33%, and I respect your ambition, think we should be sparing no expense for growth.

The general consensus seems to be oriented towards growth while being conscientious about spending at the same time.

Question 5:

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There seems to be no strong consensus for targeting any specific amount of the circulating supply of $INDEX

Would love to hear everyone’s thoughts, agreements, disagreements below.

After this survey, I will work with the treasury committee to draft a proposal based on any actions we identify from this exercise.

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Great work thank you.

I wonder if the Diversify question should be multi option?

I would considering diversifying into all three of ETH, DPI and stable coins. (50:30:20? of the diversified funds).

Something I’ve also thought about proposing is that we should be looking putting some of each (75%) into income generating forms :
yETH / ibETH / stETH
crDPI (or even split and stake each)
yDAI etc.

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Thanks @LemonadeAlpha for pulling this together.

I think that diversifying into ETH with 3 month rebalance is perfect. Not sure I have a strong opinion on ETH, DPI & stablecoin diversification. Why do we need stablecoins in the Treasury? We are part of the growing industry, in what most of us believe (I hope) is a secular and not cyclical uptrend. Treasury should reflect that belief.

I agree with the concept @overanalyser, but not with the proposed solution. For Treasury assets, only top tier protocols should be used. Especially without insurance. For me, if we are talking about lending ETH out, that’s Compound and Aave, that’s it. Both have very low rates on ETH, arguably making the whole exercise useless. Either way, I don’t think we should be taking smart contract risk with Treasury assets.

I am a fan of Alpha’s ibETH and stETH is also great. Just not for Treasury assets at this stage.

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I went back and voted, then realised it could screw a bit with this post but I think all is good.

The diversification question keeps getting more interesting. Ultimately, diversification should enhance INDEX Coop abilities without undermining them, right, which is what I understand is being said in earlier comments.

Unproven platforms or complex hybrid positions should be a no go in my opinion - too much risk and tricky to manage, at least to begin with. (Perhaps we should hold platforms to the same standard DPI does for inclusion)

Having said that, ETH and (some) stablecoins have appeal from a safety aspect …but may signal a lack of ambition or faith in INDEX.

What about taking say 30% of the treasury to overtly boost INDEX, splitting 50/50 ETH/INDEX and placing them in a pool/pools - this could increase liquidity, enable easier trading, and generate income from fees.

I may be missing something critical but the only issue is impermanent loss, which lessens with fee income and, if we weren’t holding ETH anyway, is largely academic on the upside while the downside [opinion] is not very likely. For INDEX, pooling would mitigate a downturn or take the edge off a big upturn - but that’s not too bad in a global context if INDEX vs ETH is doing well.

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