Creating a Smart Treasury that leverages a buyback and make model instead of buyback and burn to provide more lasting ecosystem benefits.
As many have noticed, buyback and burns have proven absolutely ineffective (see Placeholder’s piece on Smart Treasuries here: https://www.placeholder.vc/blog/2020/9/17/stop-burning-tokens-buyback-and-make-instead). They provide no actual value to token holders and the scarcity meme seems to be limited to Bitcoin. For these reasons, I propose to create a Smart Treasury as an alternative.
I propose that we create a new treasury, The Rari Smart Treasury: A treasury built on Balancer that is used for earnings into the Rari ecosystem and autonomously rebalances to optimize for pool allocations.
This accumulates value into a diverse treasury instead of just burning it.
The treasury will be managed by the DAO, or rather, the token holders. They can choose to deploy the capital wherever they see fit, however, the mission of the treasuries will be to:
- Increase the yield delivered by the Rari Protocol
- Increase the TVL within the Rari Protocol
- Increase safety of the Rari Protocol
- Increase the size of the treasuries
The treasury could later invest in various funds (like what YAM is doing). I foresee a future where the treasury allocates to partner protocols in addition to holding assets like DPI. With the Melon ecosystem on our side, there are a series of fund managers that we could support with the capital within.
The treasury will be built as a Balancer Pool with the following details:
Starting pool: 80% - 10% - 10%: rgt - usdc - eth
Eventual transition: 80% - 10% - 10%: rgt - rspt - rept
Pool fees: 10%
MinimumGradualUpdateDurationForSwapFee: 3 days
AddTokenLockTime: 3 days
The Smart Treasury will act as a replacement for the buyback and burn as it delivers similar purposes as I outlined in a previous forum post: https://forums.rari.capital/d/12-switch-from-buyback-and-burn-to-rari-smart-pool
As incoming RGT from emissions into the Smart Treasury would result in price dilution. The creation of the Smart Treasury will enable us to deploy and invest the protocol's holdings in an intelligent way that will be used to indirectly accrue value towards the RGT. With the buyback and burn structure, we are consistently losing assets which could be better utilized in favor of the protocol.