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How to effectively govern collective DAO Treasury?

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Why should THE DAO consider partially diversifying into staboins in the first place?

原文标题：《 DeFi 之道丨 DAO 金库的多元化资产分配指南》

原文来源：加密 VC 1kx 的研究分析师 Justin M

The Way of DeFi

Introduction to the

The largest DAO vault has amassed billions of dollars in assets under management, according to Openorgs.info. These funds are concentrated in the protocol's native governance token, presenting various challenges such as:

· Diversify the vaults while minimizing market impact

· 在持有集中头寸的同时管理协议的特定风险

· 用高度不稳定的资产为工作流提供资金并支付酬劳给贡献者

Many DAOs began to acknowledge these challenges, leading to a shift in thinking about more complex asset management strategies.

This article, the first in a multi-part series, will examine these strategies and provide advice on how to effectively govern the collective DAO vault.

In the first article in this series, we discussed vault decentralization as a means to reduce the concentration of native DAO tokens and provided guidance on building allocation in a positive-sum fashion. Throughout this article, we draw on our experience as a lead investor in two DAO Vault allocations (Index Coop, Forefront) and as a participant in another allocation (Visor).

The benefits of diversity

Before diving into the specifics, let's review why the DAO is considering partial diversification into stablecoins in the first place.

The allocation of stablecoins can be:

· 减轻投资组合的总波动性

· 抵消未来的运营费用

· 增加 DAO 在市场混乱时期的弹性

Because THE DAO vault, which focuses on native tokens, is naturally reflexive, the stakeholder outlook can significantly change the valuation of the vault. If external events or negative future prospects drive price misalignment, daOs will lose access to their purchasing power when they are most needed. Diversifying into non-speculative assets strengthens capital reserves and enables THE DAO to sustain operations during bear markets.

Moreover, as Hasu recently pointed out, the native tokens held in DAO's vault are actually unissued authorized shares of a legacy company. These shares are not considered assets, but represent only the potential total supply available under the agreement or to the company. The DAO could realize some purchasing power by selling these unissued tokens, but it could be substantially lower than the market price. In other words, when analyzing the available purchasing power of a DAO Treasury, we should focus primarily on its diversified allocation.

However, obtaining a staboin allocation ultimately requires the DAO to sell its native tokens, so there are some subtle issues involved. Methods of raising stablecoins may include, but are not limited to:

Over-the-counter (OTC) : This is an allocation strategy in which tokens are exchanged directly for another asset rather than flowing through the secondary market. This can be a direct transaction between institutional investors and/or the community with minimal direct impact on price and can provide additional flexibility in token lock-in and attribution schedules. We will focus on this particular approach in this article.

Market sale: This is the most direct way to raise stablesoin, but it is also the most negative for price. Selling in the market can signal a negative view of the current valuation to stakeholders. In addition, selling in illiquid markets or selling in large quantities in a short time can lead to downward pressure on prices.

Conditional order strategy: This is an alternative to selling in the market, using conditional orders that are stripped over time. This can include calendar-based rebalancing, TWAP/VWAP strategies, limit orders, and more.

Financial derivatives: Derivatives strategies can include taking hedged mortgage debt positions, using new financial elements such as UMA's range tokens, implementing liquidity management programs, rebalancing through protocols such as Visor, or employing other revenue-generating strategies such as Ribbon's vault. These tend to be complex, or as with scope tokens, require a DAO to be fully marketed to sell the issue, and are often a more hands-on way to raise money.

Consensus must be reached within the DAO before any of the above strategies can be initiated, as vault rebalancing will affect all stakeholders. We recommend that a governance proposal be created and put to a vote to ensure that everyone's needs for the stablesoin allocation and the method of obtaining stablesoin are consistent. At this stage, it's also good to review your goals and plans for how to handle revenue.

Perform assigned

Design and determine the scope of fundraising

Before raising funds, you need to determine your specific requirements as a DAO. Ask yourself what is the ideal amount of money to raise and what is the minimum acceptable amount. Think in terms of both stablecoins and native DAO tokens -- be happy with the range of possible allotment amounts, and be sure to accept the maximum allotment amount of native tokens. Finally, determine a target date for completion of funding; Ideally, this should be a quick process so that you can get back to construction.

Once you've done all that, you can begin to gather community consensus on funding. Early community consensus will help prevent issues like SushiSwap's Sushi Phantom Sage-Strategic Raise proposal. This is a proposal to divest about 51mm SUSHI tokens from the community coffers in order to join various institutional investors. For reference, the terms of the deal include a cliff for 6 months, followed by a linear vesting for 18 months, at a 20-30% discount to a 30-day TWAP. Proceeds will be deployed into productive assets such as Yearn, stable pools LPs and Kashi markets.

The proposal was met with resentment from the community. Concerns were raised about the size of the deal relative to overall financial assets, the number of strategic investors brought in, and the huge discount at a time when SUSHI token prices were already depressed.

DAO can prevent such incidents by assessing consensus in advance and ensuring that key stakeholders are involved.

deals

Selling tokens from community coffers is ultimately an optimization problem with multiple constraints. The project must maximize the capital raised and minimize the number of tokens sold, while attracting the highest quality investors who are also optimizing for their economic constraints. All of this must be done quickly so that the DAO can turn its attention back to its actual goals.

If a DAO sells too many tokens with too little capital, it will damage the long-term viability of the project. High-quality investors will understand this and push for the fairest price rather than the lowest. For example, when ForeFront approached us for funding, they initially valued the project at a fully diluted network valuation of $3 million (a 50% discount on spot) and were looking to raise $800,000, which was about 30% of their funding. We realized that $800,000 didn't give the project much room to grow, and they sold a lot of tokens early in the project. With this in mind, we offered the community a $10 million valuation (later raised to $20 million to meet demand) because it was good for us and good for the DAO. If we follow with lower prices, our investment will do more harm than good.

A simple goal of DAO's first vault diversification may be to raise enough staboin to fund enough operating expenses for 1-2 years. This frees up resources to focus on building the DAO without having to worry about the constant pressure on working capital. You can turn this number up or down for the constraint optimization issues mentioned above, but it provides a starting point for internal discussion.

Discounts and attribution

DAO should have appropriate attribution terms in place to ensure long-term alignment with partners. Terms vary in length and should take into account the depth of discounts and investor appetite.

The typical vesting period is 1-2 years. Going beyond this period is feasible and signals greater long-term alignment between the strategic partner and the DAO, but the extension of the ownership period should be balanced with the needs.

When a vesting period is included in a deal, a discount to the current price is usually offered. The discount allows for illiquidity. A simple way to understand this is a simple thought experiment: If you had two tokens on the secondary market, one with a one-year lock-up period and the other with no lock-up period, assuming they were traded in the same volume, which one would you as an investor choose to buy? The rational choice is to go for the more liquid option, as the illiquid option does not yield any net gain.

Now, assume that the less liquid token is 30% cheaper than the more liquid option. You know, no matter what happens to the price of the token in a year, after a year you're going to make 30% more than if you bought it outright. All of a sudden, you're thinking about which is rational to buy. Therefore, if the terms of the deal include a lock-up period, sufficient discounts must be provided to encourage the assumption of illiquid risk.

As the transaction progresses, the discount token price for sale needs to be committed for several months, during which market fluctuations can result in a large discount/premium for spot. However, as the volatility of the market constantly adjusts prices, it is unsettling for all parties involved. Instead, do it in a robust way, making changes only when absolutely necessary.

Entrustment of negotiation

Once you have designed the scope of your fundraising, identified your constraints, and built community consensus around the need to sell, you can identify representatives from the DAO to lead the effort to attract investors.

Due to the complexity and sensitivity of the negotiation process, it makes sense to delegate THE DAO negotiation to a team of contributors, as Index Coop did with their BD working group, or to the core team itself, depending on how far the project goes in the decentralization process. Ideally, this team would be composed of members with prior business development or finance experience, but it is generally accepted that not all DAOs have these types of members. It is important to ensure that negotiations are handled by a minority in order to achieve speed and accountability in the negotiation process.

Composition of investors

Selecting participants is one of the most important components of fundraising. A project's best investors are both its users and community contributors, but strategic investors can also complement your project's strengths and weaknesses.

Strategic investor

Some DAOs pursue investments from strategic partners to help them develop agreements. These strategic investors can include investment DAOs (e.g. MetaCartel, Seed Club), institutional investors (e.g. 1KX), or angel investors, who can bring experience and expertise to help guide projects from idea to execution.

The DAO should carefully consider whether they want to have a lead round and, if so, who will lead the round. The benefits of a lead person include:

Help the DAO fill this round with investors. Additional investors are selected for their specific attributes, experience, or network, and when combined with others in this round can maximize the value of the DAO. The lead can help structure the round in a way that helps achieve the community's goals.

Act as a liaison between the DAO's negotiating team and the investor community. Typically, the lead person will negotiate on behalf of the entire investor community, minimizing negotiation time between all parties involved.

Because lead investors play a critical role, it is best for DAO to choose a leader with a similar spirit or vision. If the DAO wants to scale into a specific vertical, finding a lead person who has done similar things for other DAOs will bring the most value to the project. Consider the DAO's greatest risks and find parties that can help mitigate the risks in these areas.

The usual lead investor (usually a venture fund) has a token network ownership goal due to the economics of their fund and may therefore demand a significant portion of the round. It's up to the community to decide whether the value of the fund will bring a net benefit to the community, rather than looking for a more diverse group of investors. Sometimes, however, having more investors can be counterproductive to the project, as you may need a highly concentrated minority of investors to have a significant presence in the game. We usually recommend giving more shares to a few investors rather than a wider distribution, which usually leads to investor apathy and no investor feels responsible for the project.

But a lead isn't always necessary. Think of the lead as another tool in the toolkit to help the DAO accomplish its tasks. If the DAO wants a more diverse round, or more actual control over the negotiation process, then no lead is perfectly acceptable. Choose the approach that best suits your situation and constraints.

If the DAO intends to seek investment from institutional investors, they should consider reporting requirements. These requirements will vary by investor, their third party service provider (auditor/administrator/accountant), and jurisdiction and structure. Investors will greatly benefit from additional validation and information about investments, which may include:

· 智能合约/投资条款的细节（从智能合约审计师那里获得分配机制的书面确认也是有益的）。

· 关于如何查询智能合约以查看锁定/可要求的代币的说明，或者一个基本的前端用户界面，允许投资者连接他们的钱包并查看他们的头寸。

· 谅解备忘录或条款表，这不是一个具有法律约束力的协议，概述了每个人对机制的理解，并为投资者的审计提供了联系人（由 DAO 和投资者的核心贡献者签署）。

A major concern of institutional investors is around their own audit work. Unfortunately, auditors are not yet sophisticated enough to validate the smart contract mechanism. In the traditional world, if assets are held in escrow, the auditor would contact the contact person to verify that the funds are safely held and that they are owed or controlled by the investor. In smart contracts, this is not possible, so providing as much information as possible will benefit investors.

Community investor

Remember, your best strategic partners are your own community members. A successful Treasury diversification allocation should include an allocation with similar conditions to the community. Forefront and Index Coop both did that in their most recent round of vault sales.

In sales of Forefront, the DAO reserves a maximum allocation of $200,000 FF (20%) out of $1 million FF for the community, giving preference to those Forefront contributors who have made significant contributions to the DAO. Grants are capped at $10,000 with a minimum contribution of $5,000.

Index Coop also provides grants to communities. Eligibility is determined by reviewing which members have received contributor awards in the three months leading up to the sale. These members are allowed to purchase on the same terms as strategic investors, including a six-month linear vesting period and a discount to the market price, with a total cap of $100,000 per contributor.

Create the final proposal

All DAO members should have a say in determining the terms of the final transaction. Community consensus is an ongoing process that should be managed in an open and transparent manner within the DAO's capabilities. For this reason, we recommend drafting a proposal and having the DAO vote before finalizing the allocation. Sometimes the founder creates the proposal (Forefront), sometimes the community (Index Coop), and sometimes the VC who takes the lead. In any case, it is always done for the purpose of reaching agreement among stakeholders.

Through the deliberative process that takes place on the forum, the community will be able to discuss and modify the proposal as appropriate to ensure it is consistent with the DAO's goals. The proposal should emphasize the goal of capital raising, specific terms of the deal (e.g., discount, vesting period), and ways in which the community can participate. In addition, it should provide the community with enough time to deliberate before closing the round.

Vault diversification will open a new chapter for many DAOs, giving them the ability to focus on their specific tasks without being limited by the fear of continuing operations. The diversified allocation of vaults is a means to ensure stable currency allocation of funds without materially affecting prices, and to give new stakeholders an incentive to coordinate their objectives with the DAO.