AIP-441: Protect Treasury - Lock Up 20% as BTC for 3 years

I think the objective to enhance diversification with a less correlated asset is good idea.

However, there are many ways this can be achieved.

We can also work with partners such as @Avantgarde to deploy part of the Treasury for them to manage. We can create smaller pilots to test how this works. However, substantial enough so it has some impact.

We can also convert to ETH and USDC for investments into web3 funds. This will partly diversify from APE, but remain within the overall sector. It can also create an avenue for builders in the APE ecosystem looking for VC funding which we can look to match with grants.

How is your book coming along? @Sasha

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The point of this proposal is to freeze funds, not diversify their distribution/usage. Everything you said is entirely contrary to this idea, as it involves using more treasury, not less.

The remaining 80% would be for ideas like the ones you wrote.

I looked at something similar last year but instead of converting APE to BTC, we were going to convert it into US Treasury bonds via Archblock.com

The argument made then is that Ape proposals should be for the growth of the EcoSystem and investments do not do this.

Saving the treasury = growth of the ecosystem since you can’t grow ecosystem if treasury is gone :wink:

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Sustainability study should be dropped here tbh which strengthens your argument & concerns imo. The study has many projections of an $ape only treasury and the consequences.

Avantgarde_Research_-_ApeCoin_DAO_Treasury_Sustainability_Study.pdf (2.8 MB)

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Let us add some more color to the conversation. One of the main pillars of finance is diversification, as it enables the reduction of risk. Having the majority of the treasury in a single asset leaves the overall risk profile unnecessarily high. And whilst BTC has been less volatile than APE historically, it does not generate revenue for the DAO.

This discussion is evolving around notion of making DAO more sustainable. Part of our report covers sensitivity analysis, in other words how sustainability of DAO would react to implementation of certain financial instruments. Stablecoins have a rather dramatic effect in reducing volatility compared to BTC and can also serve as an additional revenue stream for the DAO through blue chip DeFi protocols.

For example the table bellow illustrates Required Returns vs Stablecoin Yield Index. Numbers in purple, orange, and green correspond to required returns that are in line with current, 2023 average, and long term average levels of yields on stablecoins respectively. Numbers in red represent required returns that are in excess of current yields. In other words, anything in red could be challenging to achieve based on historical data without moving further out on the risk curve.

In this table, with an allocation of $300m, the DAO would require a yield of 3.65% in order to cover all operating expenses, which is an achievable number compared to conservative estimates of yields currently available in the market.

Please have a look at our full report, where we explain what other measures can be taken to ensure sustainability of the DAO.

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