Tracer Drop Episode #01: Treasury Management

Treasury Management

Agenda

  • Treasury diversification
  • Treasury optimisation
  • Treasury spending
  • Treasury governance

Call Recording Link: here

Call Notes

Spending

  • treasuries providing public goods
  • blockchain having the power to tax
  • crypto platforms are an economy
    • except for imposing externalities on each other
  • shared infrastructure = security
  • Nation states are administrative that can tax its citizens - public goods are forward looking
  • empire metaphor for DAOs - king owns land or YOU
    • has assets that are held in perpetuity
    • can use as they see fit
    • DAOs sit in this area
    • normally illiquid - DAOs are liquid empires
    • all of it without coercion
    • kings system without the monarch/bad things etc.
    • these metaphors are guides to create possible mechanism
  • people empowerment in the blockchain space
    • industrial revolution - bigger the better
    • communication and coordination - military etc.
  • RMIT to start a research project in paleoinstitutionalology - government run by the wealthy

Diversifying

  • should DAOs diversify - and how
  • DAOs should be against diversifying
  • one way to do so without dumping price - some users dump
  • “DAO swap” - between 2 DAOs - we hold your tokens and you hold ours - hedge % against risk
  • DAO Swap not a good idea now - execute when “blue chip” DAOs surface
    • DAO = signaling mechanism
    • providing public goods for blockchain
    • TCR tokens in the land - other tokens in a liquid market
    • need to hold an unbalanced model
    • if you treasuries as stocks - diversify
    • treasuries are signaling strength of blockchain/application
  • as individuals - can diversify - as the DAO - don’t diversify
  • Diversification is good according to modern portfolio theory - Markowitz 1952
  • if you dont let people know whats in the treasury - there’s no point - it has to be a signal of the protocol
    • if there was someone highly regarded - they could diversify and it would be value adding
  • hold Tracer in an account - or put it out into positions etc.

Risk

  • how much should you put the treasury at risk
  • cash management - how to manage cash factors
    • how much cash on hand as a company?
    • liquidity = function of day to day needs
    • financing consideration - returns for people securing system
    • day to day needs
    • speculative demand (investment)
    • precautionary demand
  • need to use a matrix of the 6 factors
  • you can yield farm or staking for treasury
    • risky
      • impermanent loss
      • bugs
      • governance failures
      • subject to slashing risk
    • look into blue chip defi
      • not any at the moment
    • keep in vault until blue chips are around
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