Attracting DAO Treasuries to SMART Yield

Summary

Seek out protocols with large DAO treasuries and make proposals for them to utilize SMART Yield. Large Treasuries are seeking predictable income which they can use to plot out salaries & expenses. Barnbridge SMART Yield provides an ideal solution for these treasuries. As DAOs already embrace crypto & continue to grow in prevalence, they could become a more reliable customer base than traditional institutions.

Motivation

Barnbridge created an incredible Defi primitive with SMART Yield, but it is overshadowed by its lower rates compared to other protocols. As treasuries grow, consistency gains more weight over straight returns. As Tyler has discussed many times, institutions would jump at the opportunity to lock in a 3% yield due to the high rate and consistency of return. This situation applies equally to DAO treasuries. I’m excited to add a new focus to our marketing strategy as I believe there is an immense mutual benefit to be gained for DAOs, Barnbridge, and retail investors.

OlympusDAO

One of the more complicated Defi protocols, the OlympusDAO is an on-chain central bank which issues a backed (but not $ pegged) stablecoin. This stablecoin ($OHM) is currently backed by a large and growing treasury, the idea being that as the treasury grows, so too will the issuance/value of the OHM stablecoin. To grow their treasury, Olympus has been buying up a variety of assets, most notably DAI. For Olympus, having consistently yielding bonds to grow their treasury should be more attractive than chasing yields.

There is an additional advantage to working with OlympusDAO, the (3,3) mindset. This is the guiding ethos of the Olympus community, and speaks to a game theoretic strategy where both parties receive maximum utility by working together (their medium article explaining the concept). Communities like these who seek to improve the protocols they work with should be the first we seek out.

Both financially and culturally, OlympusDAO is the ideal candidate to attract to SMART Yield.

For further reading on OlympusDAO, here’s a link to their recent protocol/treasury overview: June Review — It’s in the Fundamentals | by OlympusDAO | Jul, 2021 | Medium

Argumentation

For

  • Build a working relationship with other protocols
  • The other protocol receives steady & predictable income
  • Barnbridge gathers protocol fees
  • Apes get juicer junior pools
  • Other protocols could eventually incentivize our junior pools to support their senior position

Against

  • Negative attention if we come off crass
  • We may end up introducing ourselves too early (TVL too low to be considered a bluechip/SMART Alpha not yet released).
  • Most treasuries are currently 95%+ their native token

I’d like to open up this discussion here so that we may work together on our first proposal with OlympusDAO. All feedback is welcomed, especially if you think there’s some major offerings Barnbridge has in the works which will make it a more attractive partner in the future.

Peace, Love, & Bond is Barnbridge

h/t TapedAnkles for the post format

3 Likes

Agreed! We’ve previously spoken with Zeus as well as Sam over at FRAX, and I think that our SMART FIAT product will make it far easier for them to use our SMART Yield app. At the moment both have concerns about junior redemption risk as well as the lack of convertibility a senior bond poses. While FIAT is a couple months out, there are two items worth noting in the interim:

  • SMART Yield on Polygon will make it financially feasible for an entity like OlympusDAO to do rolling senior bonds with 5-day or whatever-long maturities.

  • SMART Alpha will have a huge opportunity for what you’ve laid out here. Essentially every DAO will be in a position to take the senior side of its respective ERC-20, provide cheap leverage to advocates in the form of junior tokens, and get itself downside protection at a scale unavailable anywhere else. I’ve been thinking about building out a SMART Alpha ambassador program to facilitate knowledge transfer on this.

So with that said, I think the inter-project collaboration will become a major priority starting in August (i.e. once audits for SMART Alpha come back and we open up about it).

5 Likes

Well that’s just about the best response this could’ve gotten.