AGP discussion: Treasury Stabilization

Discussion thread for:


I think the bottom is past and so we should prepare all the infrastructure for the next bull run, and then the AA could do a sizeable cashout.
Also Dai right now unfortunately wouldn’t take the size of the treasury that we are considering, specially with the 100M artificial cap that they have no plans to raise anytime soon.


This feels a bit recursive as the github sends back here, so not sure if there’s a proposal already worth discussing or it it’s a placeholder.

In any case: the AA board’s did some hedging before I joined the association, and we’ve been using that capital to operate for the past months.

Additionally, we opened a large CDP and used the DAI when ETH was rock bottom at ~100.

We’ve now in the past couple of weeks been purchasing some DAI at ~165-180 because we’re going to need quite a lot of it in the coming quarters to make payments for all the approved (and to be approved grants).

Currently, we’re in full bull mode at the treasury level. The reasoning for this is that we see unlikely a crash sub 100 for Ether in the short term AND that the current treasury size just does not support an endowment-like structure where we could live off the interest.

Realistically, we need the treasury to more than double from current levels in order to be able to cash most of it towards stable assets so that with an aggressive management of it, we could live off the interest (assuming say a 10-15% rate of return, so really best case scenario).

Now, we’re essentially eating in the principal and so it feels like being more aggressive isn’t that much of an additional risk.
That being said, we need and will hedge out of ETH as the main base, with a strong BTC position as well as potentially other real- synthetic- stable- or new type of assets.

Super keen to hear what the community thinks of this.


The content of the proposal can be seen in the PR under the “files changed tab”

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Thanks Luke, and my bad.

I think it doesn’t make too much sense to mandate a specific amount to sell for stable assets without going at it from a needs standpoint and risk/reward evaluation based on such needs.

I feel I have addressed a general idea of it in the previous comment. Regarding transparency: we don’t quite have the bandwidth yet to do a real-time transparency report but this will all obviously be made public as soon as possible, and the txs from the multisig already have descriptions when they are used to exchange into other currencies.


A counterpoint to this is that we should not bet the future of the project on another ETH bull run happening in the next four years (our current runway) when the confluence of factors leading to the last one (low regulation plus ICOs raising ETH and taking a large % of supply off-market until they cashed out) is unlikely to be repeated before then.

Additionally, there are the tailwinds of competition including Cosmos (live), Polkadot (soon), Near, Zilliqua, ThunderCore, etc etc. I’d rather have stability near-term than bet the survival of the project on another bull run (and on the bear market being over for good).

The proposal does take this into account, specifying that the Aragon Association should prefer DAI but that other relatively stable assets like CHF, EUR, and USD are also acceptable.

Of note is that DAI has been at historic lows for the last few weeks (currently at $0.96-97 USD on the most liquid markets) indicating that there is plenty of supply to buy for under the $1 USD we know it’s worth. Buying as much of this discounted DAI as possible would be good for the stability of the treasury and also a nice way to pay down the CDP at a discount if we so choose.

It’s good to hear that you’re buying DAI but it’s not been nearly enough imho. We are still very heavy ETH, and I don’t fully agree with the reasoning:

The goal is to speculate on ETH and trade up to a treasury that supports the project with an “endowment-like structure”? If so, can you please share the bullish factors for ETH that would counter/ outweigh the bearish factors I mentioned above and explain why holding so much ETH is worth risking the precious four years of runway we have left?

(I’m generally not of a scarcity mindset and am optimistic about this industry overall, just trying to be realistic as I’ve seen bear markets last many years, and many coins have their moment in the spotlight never to re-emerge.)

The need is stability. We rode a 12x in 2017 and barely touched the ETH, now ETH is about 2x the price at the time of the crowdsale after dipping below it briefly. Watching the treasury has been a rollercoaster ride and I think we’re ready for a change of pace.

Is now the time to be greedy, waiting for a 3x or 4x that may not come in time? Or do we play it safe, grateful that we got a few free years worth of runway and cashing out what we have left, as would have arguably been the responsible thing to do a long time ago were it possible? I can see the allure of waiting for ETH to go up enough to set up a perpetual endowment fund. I am just skeptical it’s worth a gamble waiting for it.

Eager to hear your thoughts on this!

I fully understand the concern, and the reasoning.

It’s really a fundamental question for the whole project and I see two potential paths:

  1. Aim for sustainability, sell most of the treasury for stable assets, and decide that we’re fine with running out of capital in less than 4 years.

  2. We can continue funding operations in the short term while being exposed to potential upswings in price. This clearly introduces the risk of further reducing the runway (to the stopgap prices we have, either through CDP liquidations or better through stop-loss orders) but also gives us the chance to increase the treasury size and guarantee a future continued sustainability for the project - especially in light of decentralizing the full governance of it.

I tend to swing to option #2 because I’m more of a risk taker as a professional background, but definitely understand the reasoning and rationale for going with strategy #1.

I think an AGP question for the community that framed the discourse in this way, so more related to what the overall strategy goal should be could be very effective in guiding the decision. But I don’t think an AGP proposal with specific targets would be too helpful in these constantly moving market conditions.

Probably worth noting that obviously there is no financial interest, bonus or other conflict of interest for the choice (other than being personally independently exposed to ETH and ANT, but don’t think any decision we take would have an impact on ETH’s price, and wanting like everyone else appreciation of ANT - so aligned there).


Hey @anteater,

This is just my two cents here but there are multiple indicators that maybe, there could be a chance that, eventually, [add other conditional things here], we could go through a new bullish trend in the coming months. Of course such indicators can always be wrong / misleading / etc.

Stiil, I personally believe this would be a mistake to sell the treasury for stable assets right now, when we are possibly close to the worst market point and possibly going through an upside trend …

But again, I’m really not good at TA, so this is just an opinion :slight_smile:

Stability can only be attained by inactive matter.

Marie Curie

I wouldn’t be concerned about treasury stability more than the treasury sustainability.

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Another aspect of Treasury Stability is budgeting, as of now there isn’t an official budget for project wide expenses (through the AGP process specifically). Perhaps, it makes sense to establish a project wide budget, which could then feed into the requirements/goals of effective treasury/runway management.

I think having an established budget would also help some of the conversations about how AGPs allocate funds and prioritize things more clear. @stefanobernardi have you thought about what a budget proposal might look like?

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We have been thinking about this a lot, but have not figured out where that intervention would make the most sense (eg. a limit on the Flock program, on a per-flock proposal basis, on the whole budget etc.).

For clarity: are you suggesting an AGP finance proposal stating an upper limit to ALL outgoing funds from the treasury for a given period? To be ratified by the network?

I was thinking that initially, while the association multi-sig holds funds and makes payments on behalf of the network, that an association track proposal to set a budget policy to limit the amount of funds distributed by AGPs per quarterly AGP vote. If the AGPs passed in a given quarter exceed the budget the association would use its discretion to distribute funding to meet the cap.

I could see a policy like this perhaps also fitting within a Meta Track AGP as an update to the AGP-1 document imposing the budget constraint, but don’t have strong feeling on which track is used, other than doing it at the association level requires less formalization as we already rely on the associations judgement on treasury management concerns.

Got it.

Yeah, it’s an idea. Unfortunately there would be some clear vote conflict in the first ballot when proposed given there would be other AGP proposals that might go over budget, but that’s solvable.

In any case, we will be building a more robust and transparent public budget (potentially updating transparency…org ) that would include all outstanding liabilities, as that is something that is currently not obvious when looking at transparency or the multisig.

I haven’t really made my mind yet if a per AGP budget would be more harmful than helpful, as we already have the AA board reviewal as a stop-gap, and in any case it would be hard to implement. Eg. say there are 3 AGP proposals for $500k each, and the total cap is $500k. Say that two get voted on positively by the community. What happens then? Do they both get knocked down to $250k? It would probably make them not workable anymore.

Generally speaking thought, overspending at the AGP finance level is definitely a big worry and needs some sort of constraint, so very open to this and other ideas


I went ahead and created a new thread for discussing the AGP Budget idea, as it seemed significantly divergent from this threads topic to warrant its own discussion thread.


It would be nice if the voting app supported multiple choice questions, would make it easier to see what the preferences are among multiple options like this.

But reading the feedback here and thinking about it more I agree now that maybe it’s the wrong time or the wrong mechanism for managing the treasury like this. If you have stop losses in place and a reason to believe that option #2 is worth the risk taking then I will defer to your judgement as you are likely in a better position to make that call than I am.

I am going to withdraw this AGP but leave you with a gentle suggestion to consider buying as much DAI as the Association can source at these low prices. It will be convenient to have if the stability rate gets raised so high that we need to begin paying down the CDP to avoid incurring excessive fees. If the price of DAI goes back up and the rate comes down then the Association could make money just by flipping the cheap DAI for a higher price later. And all of the Finance AGPs are denominated in DAI so we should have a lot of DAI on hand anyways.

Thanks everyone for the reviews and feedback.


Thank you so much for the inputs - treasury management is a (obviously) constant thought in our minds, and it’s really good to hear outside feedback and opinions about it!


I-m with you on this… and I agree that some decition shall be made about this, maybe this shall be the first use case to dogfood the Aragon futharchy app that is being planned to deploy --> Draft AGP for Vote #2: Futarchy Signaling Markets

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