• General

  • RFC - Approval to swap some $sDAI treasury to mint $stTBY

Summary

  • Request for community approval to swap some (up to you, minimum $1M) of $sDAI treasury remainder (after cooler loan allocation) to mint StakeUp’s $stTBY, and receive free volatile token allocation, which could be airdropped to holders.

    Motivation

    Why?
    OlympusDAO is at a stage where the treasury is focused on providing liquidity to holders through cooler loans, but the un-allocated remainder could also be put to use to benefit holders. Rationally, the DAO has been holding sDAI to capitalize on the high interest rate environment. stTBY presents a de-risked, community-driven alternative to sDAI. sDAI currently yields 5% and is dependent on the % of DAI supply staked in the savings rate contract as well as subject to MakerDAO governance (the savings rate has been lowered before), stTBY offers a more robust design with rates that are directly linked to US treasury bills, currently yielding 4.7%. At the same time stTBY also offers token supply ownership at no cost, with exponential potential for growth. In exchange for seeding stTBY liquidity, the DAO will receive 0.25% token supply / $M supplied. At $10M supplied, this would equal 2.5% of total $SUP volatile token supply. The DAO could contribute as little as $2M or as much as $20M to be eligible, at the same terms ($SUP allocation adjusts respectively).

    Aidrop to OHM Holders?

    Instead of retaining the $SUP allocation in the treasury, the tokens could be airdropped to Ohm holders. The DAO would end up achieving the same goal of providing cooler liquidity to holders while now also offering asymmetrical upside.

    Put simply

    $stTBY is designed to reinvent the Circle/Tether model in a fully decentralized way that shares all value with its users. This proposal allows OlympusDAO to own a significant piece of that without taking additional economic risk, simply mint and hold the stablecoin while still earning treasury yield.

    How stTBY works

    stTBY is a rolling yield vault, 1:1 mint/redeemable for USDC, which generates yield from Bloom TBYs. Bloom TBYs (docs.bloom.garden) are economically equivalent to treasury bills, as they produce yield by lending over-collateralized against treasury bill tokens. This means that yield and the stablecoin itself is ultimately secured by the value of the treasury token collateral. Unlike other RWA protocols, due to the loan structure, there are no KYC requirements or transfer restrictions. Therefore, the method of yield production is similar to that of MakerDAO, however, the risk is much more isolated as there is only one collateral asset. Further, the contracts are non-upgradeable and uncensorable, whereas sDAI could be censored in the future or risky collateral added to the system. stTBY presents a clean, safe yield opportunity for treasury management.

    How $SUP Works

    $SUP is the yield-bearing utility token for the StakeUp ecosystem. $stTBY charges three fees: Mint fee (1bps), Redeem Fee (50bps), and Performance Fee (10% yield). Rather than being hoarded by a DAO treasury, 100% of fees go directly to $SUP stakers. Staking $SUP does not require a time lockup. As an early holder of a significant amount of circulating supply, OlympusDAO (or Ohm holders if Airdrop to holders route is preferred) would receive a high share of these fees during the startup phase. Then of course, the price of $SUP should change with the stTBY’s TVL, which will be heavily incentivized.

    Where is the treasury collateral ultimately held?

    The tokenized treasuries are issued by Swiss RWA token issuer Backed. Backed’s DLT program registration guarantees that even in the case of an exploit, value can be recovered through the Swiss courts. This process has been tested and verified by the StakeUp team. Custodian info for ib01 can be found at Backed.fi.

    $SUP Tokenomics

    49% of the supply is allocated to the team, investors, and launch partners including deals like this. 51% of the supply will be distributed to the community programmatically in support of mint volumes and deep curve pool liquidity.

    OlympusDAO Treasury

    OlympusDAO Treasurywill have the option but NOT the obligation to provide stTBY or DAI as liquidity on Curve to earn additional $SUP, $CRV rewards and trading fees.

    Basic Revenue Model

    Revenue Model

Data Sources Supporting the thesis

We are eager to hear your thoughts, please give us your feedback:

  • Should Olympus consider and vote on this proposal?
  • Would you prefer an airdrop or treasury token retention?
  • What amount might make sense?

Seems like relatively comparable risk to MakerDAO on the RWA centralization risk front, as either one could face risks from RWA censorship, so that's good in terms of whether we choose to allocate assets either way.

If there is an airdrop, I believe a portion should go to the treasury, (~10-20%) as it is where funds are being drawn from, and the remaining portion should go to users, as an incentive.

Yield seems relatively fair for the risk profile, especially on the decentralization front.

I say, let's do it.

    First off, thanks for making the proposal!

    Putting my Treasury Hat on for a second, I think it's important to make a few statements of fact for consideration when thinking through this.

    When Cooler Loans were launched, community voted for 95% of the Treasury to be earmarked as the LTV for all gOHM, denoted in DAI. As such, if we recharacterize in the spirit of diversification, it's important that the Cooler covenant is maintained. To be safe, that puts 5% on the table or roughly 9.4m. That amount was earmarked for contingency, etc.

    It's important to note that if this amount is exposed to risk and anything happens resulting in the loss of funds, the LTV's would immediately become 100%.

    So, with that in mind, it sounds like what's being offered here is, at a minimum, 2m sDAI at 5% would be converted to 2m stTBY (Minus Slippage) for 4.7% (Current). On top of this, there is disbursement of $SUP (Either to the Treasury as an Airdrop).

    The questions that come to my mind are:

    • Liquidity assurances and redemptions. This was a blocker when we used to hold LUSD and there was concern around liquidity at scale and ensuring that the asset was as liquid as DAI should it need to become DAI. Probably need validation around this to ensure that, if at any moment, the 2m stTBY could be redeemed for USDC.
    • What percentage of stTBY supply would 2m be today?
    • With SUP distribution via airdrop, what would the counter asset of SUP liquidity be on Curve?

    Thanks!

      HackerLaddy thanks for the comments & Relwyn

      • Thanks for the questions, here is a response to each of your questions.

      Liquidity assurances and redemptions. This was a blocker when we used to hold LUSD and there was concern around liquidity at scale and ensuring that the asset was as liquid as DAI should it need to become DAI. Probably need validation around this to ensure that, if at any moment, the 2m stTBY could be redeemed for USDC.

      • The way redemptions work for stTBY is pretty simple. Every two weeks, an underlying TBY tranche matures. For a day, the USDC available from TBY redemption is made available to stTBY holders to redeem 1:1 for the USDC. You can also queue a redemption in between maturities. You can always see how much liquidity will be available on the StakeUp dashboard page. TBYs are 6-month debt instruments. Because stTBY is composed of TBYs which are ultimately composed of USDC, there is always enough USDC by definition to redeem all stTBY in circulation, assuming you are willing to wait 6 months. The goal of the system is for swapping at the peg to be cheaper than redemption, and because of its low-risk nature, we don’t expect swapping liquidity to be an issue.

      • Concerning swapping at the peg, the largest allocation of $SUP–which accrues real yield and value from protocol fees–will be earmarked for stTBY-3crv liquidity providers to provide strong/deep liquidity. With the combination of high incentives, low stablecoin risk, and USDC redeemability, we expect the pool to be very liquid.

      What percentage of stTBY supply would 2m be today?

      • To be explicit: this is a launch incentive program. There will be public incentives for minting stTBY when the protocol is live, but the reason for this proposal and the unusually high volatile token allocation is such that the protocol can launch with strong liquidity and a DeFi-aligned DAO as partners. With that said, there are $2.2M of various TBY tokens in circulation today. These tokens will be converted to stTBY at launch so there will be liquidity from that. Several other entities may participate as launch partners similar to Olympus, up to the $20M launch goal.

      With SUP distribution via airdrop, what would the counter asset of SUP liquidity be on Curve?

      • $SUP will have two liquidity pools, paired against wETH and wstTBY. $SUP incentives will be directed to this and stTBY-related liquidity pools programmatically / automatically, as its goal is a fair distribution to those who contribute ecosystem liquidity.

      More than happy to provide context to any other questions that come up!

          7 days later

          We've received some feedback that the entire cooler loan allocation has some risk of sitting idle, and some DAO members may also wish to see more liquidity re-allocated from sDAI to stTBY minting or other opportunities.

          To expand on the initial premise from the first paragraph of the RFC

          OlympusDAO is at a stage where the treasury is focused on providing liquidity to holders through cooler loans, but the un-allocated remainder could also be put to use to benefit holders. Rationally, the DAO has been holding sDAI to capitalize on the high interest rate environment. stTBY presents a de-risked, community-driven alternative to sDAI. sDAI currently yields 5% and is dependent on the % of DAI supply staked in the savings rate contract as well as subject to MakerDAO governance (the savings rate has been lowered before), stTBY offers a more robust design with rates that are directly linked to US treasury bills, currently yielding 4.7%. At the same time stTBY also offers token supply ownership at no cost, with exponential potential for growth. In exchange for seeding stTBY liquidity, the DAO will receive 0.25% token supply / $M supplied. At $10M supplied, this would equal 2.5% of total $SUP volatile token supply. The DAO could contribute as little as $2M or as much as $20M to be eligible, at the same terms ($SUP allocation adjusts respectively).

          I believe there are some strong arguments to support this.

          For example:

          1) Interest rate risk 

          2) Centralization risk

          3) Lack of upside to Ohm holders during a bull market 

          4) Unallocated cooler loan liquidity remains unused 

          I'd like to take this opportunity to articulate the guiding principles behind our initiative at StakeUp. Our strategy is inspired by the "Circle-like" model, yet it stands apart with its emphasis on complete decentralization, community ownership, and total value sharing within the community.

          Echoing the ethos of Ohm, which was established with the goal of developing a reserve currency and a community that is truly of the people, by the people, we share a similar vision. Our commitment is rooted in the aspiration to transform the financial landscape into a more equitable and beneficial space for everyone.

          The StakeUp/Bloom team is open to honoring up to the maximum $20M mint allocation to $stTBY in exchange for 5% of the $SUP supply in the launch program. However, some of this may become accounted for by the time the proposal is passed from other participants. $1M is hard committed at this point, and up to $19M additionally could be minted under the program.

          It may also make sense for the DAO to explore allocations to other volatile assets.

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