Strategic treasury diversification

Hey everyone,

Recently the idea to do a treasury diversification before the upcoming Gnosis auction was posted by me (Discourse link). It was then made clear an EOI would be most suitable to discuss this more in depth across DAO members.

We, Maven 11 Capital, are highly interested in supporting the Tracer DAO in the coming years. We are also sure that together with other strategic partners, we can strengthen Tracer’s positioning and help the DAO grow.

We would like to purchase TCR tokens to represent our long-term support of Tracer. We propose to the Tracer DAO a strategic treasury diversification of 5%-7.5% of the total token supply to take place prior to the Gnosis Auction. We are open to hearing other proposals in terms of the % of the TCR allocation for that purpose. Obviously other terms, including participating strategic partners valuation and vesting schedules, would be applicable as well which can be outlined in the exact proposal.

A USDC treasury diversification would serve as a way to make the DAO well-funded regardless of the future market conditions. We believe that raising the funds now is beneficial for the community as the future valuations in the crypto space are uncertain and can go down significantly if the general market becomes unfavourable. Furthermore, it would be helpful to onboard a group of strategic partners into Tracer who have a long term belief in the project.

We are curious to hear various thoughts about this proposal and we highly encourage you to take an active part in discussion.

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Sounds interesting. I think that treasury diversification should def take place at some point. We need to have our funding secured for the coming years.

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I’m a bit more interested in what Maven 11 Capital can bring in addition to USDC. I’m wondering if this will help us facilitate partnerships with other projects Maven 11 has a stake in.

Also, I’m wondering if Maven 11 has had inputs in other protocols it invested in, and in what ways.

Edit: PoolTogether recently passed a proposal to diversify their treasury, and Maven 11 was one of the VCs that participated in it. They also committed a portion of it to LP on Uniswap. Link

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“becoming active members of the Tracer DAO through acquiring TCR tokens”

Or

Becoming VC dumpers of the TCR tokens?
Maven 11 is not a top VC. The seed portfolio is not impressive to me and projects like Nash/Radix failed on it pretty hard.

Who are your partners, how can they help Tracer? How is Tracer not becoming the next Nash?

How do we make sure you don’t aquire too much market share early on and can rule the DAO proposals instead of a combination of active governors and the team?

Are you a fighter VC like Paradigm? Can you agree on a very long lockup of the tokens? If not I don’t see a reason why Maven 11 would be the right choice for a strategic round VC.

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Hey Sushi - just providing a bit more context here. The Maven crew have been in touch with us over the last 2 months jumping on calls and trying to understand the mechanisms and support our team in any way they can.

They’re a great young team and have seemed very hungry and willing to grow with Tracer.

I’m sure they would be willing to some sort of a vesting period to negate any risk here.

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Hi Patrick,

Thanks, good to know. I like the transparency here.

I know my words might have sound harsh towards Maven, but the points I was trying to make still stand.

  1. How strong is the VC; what successes can they point out they’ve made in the past, what did did they do to add to that succes
  2. How do we make sure a single VC or group of VCs won’t control the biggest market share, making it fair for everyone, including recent new partners, the auction buyers and those who buy after initial listing.

Can this VC help us with the right:

  • market makers;
  • strategists;
  • partnerships?
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Hey @Beepidibop and @JustASushiChef

Thanks for your responses. First, I mostly wanted to kick off the discussion, we are not leading these funding efforts or aiming to take the biggest share here.

Beepidibop I hope we, or the backing group at large, can add value in a few ways, namely onboard portfolio companies (one example of this from another project we are part of here), market makers, help with product development, marketing and being an active DAO member (e.g. helping with stuff like incentives/tokenomics). I think us stepping out here is an example of the latter two in itself. Apart from that, us becoming members of the PoolTogether DAO can be viewed for additional stuff such as bootstrapping liquidity.

JustASushiChef, no worries about sounding harsh haha. Questions are valid imo. On specific points, anyone acquiring too much can be mitigated through the % allocation towards the entire raise + valuation. Additionally, lock ups, vesting and having the right to vote with locked/vested tokens or not, are important. I think these should be written up in the proposal, happy to hear your suggestions (also depends on what other parties coming onboard want to see, can’t speak for anyone else). Finally, I imagine that the proposal would also contain everyone involved and their blockchain addresses etc. This seems natural in how transparent it should go with a DAO.

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This is great. Indeed a treasury diversification would help tide Tracer through tough days.

However, imo, 5-7.5% of the total token supply is quite a huge portion. I am sure Maven 11 would not be the only VC interested to support Tracer DAO in the coming years. More VCs would step in & do likewise. The proposal of 5 - 7.5% of total token supply might just set a precedent for the rest.

Moreover, Treasury diversification would also mean that we are giving others access to power over the direction Tracer will take. It might yield a consequence of consolidation of power by large holders. Assets will always have a way of gravitating to a few well-resourced hands.

Perhaps a review in the % TCR allocation is needed. Just my thoughts.

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Hi @MordantBlack, in response to the concern regarding percentage distribution, here are some of the other figures from seed/private sale rounds.

DeversiFi: DeFi Platform DeversiFi Raises $5M in Bid to Scale Trading on Ethereum

  • raised $5M @$40M val for a 12.5% distribution.

Bonded Finance: Token Distribution. A comprehensive breakdown of the supply… | by Bonded Finance | Medium

  • Seed round: raised $250k @$5M val for a 5% distribution
  • Private round: raised $1.6M @$8M val for a 20% distribution

With regards to the “access to power”, I believe appropriate vesting schedules will mitigate the risk at concern here. As time progresses, additional service providers will be engaged by Tracer DAO which will also mitigate this concern alongside the vesting schedules of current service providers.

I could envision other top tier VCs/Angels in addition to Maven11 being partnered with the DAO which would provide Tracer with a strong foundation. Benefits (non-capital) would include:

  • R&D/Mechanism design advisory for current and future financial contracts
  • Connections to institutions for strategic partnerships
  • Hiring (solidity engineers etc.)
  • Governance Expertise/Advisory
  • Liquidity Provision
  • etc.
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As a Tracer governor, I support the proposal by Maven11. Certainly treasury diversification is something we can all agree is necessary for long-term sustainability of Defi projects, and IMO the concerns over the size of the diversification into VC control are addressable.

For one, looking at their portfolio Maven11 has a pretty strong track record for being a long-term partner with quality projects. This is also shown by Patrick his comment in relation to Tracer. Based on that I’m sure other parties would be of similar high quality. As long as the 5-7.5% allocation will be split across various parties besides Maven11 (which seems to be the plan according to Adam) and they are given proper vesting terms so as to not control too large a portion of circulating supply, dumping concerns are overblown.

So, I support moving forward with this initial preliminary proposal and addressing the above concerns for the final version.

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Happy to have Maven on board I hear good things about them - I think 5%-7.5% sounds about right. Once the allocations have been settled - I’d be interested in diversifying the USDC I’d be interested to include some more yield effective stable coins also such as alUSD, LUSD and FRAX.

Additionally this earlier diversification can allow us to use most of the public auction proceeds to provide liquidity - there is nothing more damaging to an early community than an public auction followed by dumping with low liquidity. It will also allow us to avoid having to pour huge amounts of the treasury into yield farming incentives.