AIP #3: Allocate 5% of Deposits to Yield Generating Opportunities

Proposals
#1

AIP #3: Allocate 5% of Deposits to Yield Generating Opportunities

Author(s): @McWaterCap

Summary

Vote to invest 5% of Alkemi deposits into 3rd party platforms, for the purpose of generating additional revenue for Alkemi DAO. Revenue generation would come from community approved investments, including (i) defi activity/yield farming and (ii) 3rd party asset managers.

Abstract [What?]

Proposed revenue generation activities under this proposal are split into two categories (a) stablecoin investments and (b) non-stablecoin investments. Stablecoin investments would include investing USDC, DAI, and similar assets which Alkemi DAO may choose to accept as deposits in the future. Non-stablecoin investments would include investing WETH and WBTC. This would be the first in a series of proposals which will ultimately determine the DAO’s investment and risk framework specific to investment of deposits, in addition to the mechanisms by which deposits are accessed for these activities.

Stablecoin investments would be originated by contributing 5% of stablecoin deposits on the Alkemi Open and Verified platforms, to a community approved 3rd party asset manager(s), with an investment thesis centering on principal protection.

Non-stablecoin investments would be originated by contributing 5% of WETH and WBTC deposits on Alkemi Open and Verified platforms, to community approved 3rd party defi platforms. Should deposits be invested in liquidity pools or AMM activities, impermanent loss must be demonstrably mitigated.

Motivation & Goals [Why?]

Investing a portion of platform deposits makes Alkemi more capital efficient and introduces a new revenue stream to the DAO. These revenues can be used to (i) attract additional deposits by increasing deposit pay rates and (ii) accrue value to the ALK token.

Specification & Implementation [How?]

In order to begin these investments, a series of proposals will be required, in addition to discussion among DAO members. The roadmap for these proposals is outlined as follows:

  1. Approve this proposal.
  2. Determine the mechanism by which the DAO will deploy these deposits, including identification and approval of any expenses necessary to achieve this.
  3. Prioritization of specific asset investments.
  4. Approve stablecoin investments, including an approved asset manager, investment time horizon, use of revenue, risk policy, mechanism by which funds will be remitted, and identify and approve any expenses required to achieve this.
  5. Approve specific stablecoin investment.
  6. Approve generalized WETH investments, including whitelisted platforms and smart contracts, investment time horizon, use of revenue, risk policy (including adequate impermanent loss mitigation, mechanism by which funds will be remitted and identify and approve any expenses required to achieve this (including gas).
  7. Approve specific WETH investment.
  8. Approve WBTC investments, including whitelisted platforms and smart contracts, investment time horizon, use of revenue, risk policy (including adequate impermanent loss mitigation, mechanism by which funds will be remitted, and identify and approve any expenses required to achieve this (including gas).
  9. Approve specific WBTC investment.

Vote

Sentiment check [DEADLINE: 24/02/2022]:
  • :white_check_mark: Yes - Approve the proposal
  • :x: No - Do not approve the proposal

0 voters

1 Like
#2

I’m for this overall but noting two underlying problems.

  1. There’s currently no ability to reallocate deposits given for lending to be used elsewhere. Unless they are borrowed with proper collateral.

If we use DAO treasury instead of user deposits this could work.

  1. But another issue is the verified pool vs open pool. The open pool could easily connect with other open platforms, but even if we get around the first problem, there are slim to none other platforms in DeFi at least that I’m aware of that would allow for a verified users funds to be used in an external platform or investment strategy that would easily satisfy the institutional compliance standards such as kyc and known counter parties.
#3

Both 1 & 2 above are noted and understood. The intent of this proposal is primarily to discuss if this is possible (over time & with development) and is it worth considering for the medium term development of the platform.

Regarding #1 - the thought process is to introduce a mechanism to the platform, which effectively changes the capital ratio and capital reserves of the protocol. This would require changing the rules of the platform. Setting aside open/verified for a moment, the proposed mechanism would require the DAO (by a vote) to direct funds into a particular investment for a set period of time. A seemingly similar functionality has been built by Tokemak, which allows DAO participants to direct the assets deposited on Tokemak to specific defi smart contracts (i.e. liquidity pools on an array of DEXs). First considering this concept for Alkemi Open pools---- could a mechanism be built, which would direct (based on DAO vote) a percentage of deposits to a DEX LP chosen by DAO voters?

#4

This proposal is pending a Snapshot vote or can be closed by the author.

#5