Summary: We are seeking approval from the community to allocate up to 50% of excess reserves into previously whitelisted protocols and add to the whitelist. Excess reserves are treasury assets which are not used to back OHM currently in circulation.
The OlympusDAO treasury continues to grow and accrue larger amounts of assets that can be utilized to generate passive yield income for all Ohmies. To help increase the rate of RFV growth and backing per OHM, the Treasury team feels it is the right time to allocate a greater amount toward whitelisted protocols.
This expansion of the OIP-20 framework will continue to enable agile treasury asset management while also creating significantly higher yield on idle assets. The proposal laid out below is to give the DAO the mandate to allocate up to 50% of excess reserves into whitelisted protocols approved by the community (currently Compound, Aave, Convex, and Sushiswap) and to approve an additional protocol for the whitelist, Rari Capital.
Motivation: In OIP-20 the community approved the usage of up to 33% of excess reserve assets, the Treasury team wants to expand this effort to 50% with this proposal. At the time of writing the Olympus treasury contains $776,356,715 dollars in market value, and $175,531,939 value in risk free value. Currently, the DAO only utilizes 33% of this or $57m.
This proposal aims to introduce a framework which would allow the DAO to increase the allocation up to 50% of excess treasury reserves in whitelisted protocols. By proposing a % as opposed to a fixed sum, it will allow the DAO to reduce overhead and numerous votes while pursuing an active role in our treasury management. This in essence makes the DAO more efficient.
One last important note is that these treasury assets can only be used in whitelisted protocols which have been voted on by the DAO. This currently only includes Compound, Aave, Convex and Sushiswap but can be extended. The Treasury Team would like to extend that whitelist with Rari Capital.
Description from info.rari.capital: Rari Capital is a suite of decentralized finance protocols on a mission to bridge the gap between technical and non-technical minds, in order to bring the next wave of mass users into this industry.
Rari Fuse is an open and decentralized interest rate protocol that supports isolated interest rate pools, allowing pool creators to create customisable isolated interest rate money markets of any assets and allowing users to lend and borrow digital assets.
Risks: Rari Fuse pools can be customized with dangerous parameters especially if they use a bad oracle, or incorporate unsafe assets into the pool with little liquidity.
For example, if the price of assets crash significantly, and liquidation bots fail to keep up with the liquidation of the uncollateralized position, the pool might become undercollateralized and depositors might not be able to withdraw the full value of their deposits.
Protocol Analysis: Using a risk analysis framework developed by the DAO, the Policy and Partnerships teams have attempted to score various protocols based on some subjective and non-subjective data. Rari Capital scored 18. The subjective values were derived from averaging the votes of multiple DAO members.
The following risk matrix shows the outcome of the vote. The "Risk of losing funds" column refers to the chance that assets are lost before the initial investment doubles. The "Impact of funds lost" column refers to how much treasury value will be lost if an incident occurs. Lastly, one final reminder that this score was partially derived from a DAO-averaged subjective value.
Proposal: Allow the DAO to allocate up to 50% of excess treasury reserves in whitelisted protocols and to whitelist Rari Capital.