[1IP-08] Simple diversification mechanism for 1inch DAO Treasury

That High Fee mostly comes thro High Gas costs because of congestions user has to pay to use Eth chain . One we transit to pos & sharding fee will reduce & so will the gas cost too .

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Totally understand the discussion around value of different assets proposed. There is a little reference that wasn’t clearly stated in the proposal. Historically, those (ETH, WETH, WBTC, DAI, USDT) are the top 6 most popular assets in DAO treasuries .

Also, dropping here a Dune Analytics query made by @Belac that showcases pretty much the same distribution.

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Once we transit to pos & sharding

PoS is scheduled to happen in autumn which will cut ETH issuance by heavy margin. Sharding on the other hand is not scheduled and with all those L2s can easily not happen at all. So I wouldn’t expect radical fee cut on Ethereum in the near future.

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Then it Maybe Better to get that 32ETH buyback from treasury which can earn significant yield as a POS validator after Mainnet goes Live …

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I view this proposal as the first step towards more advanced treasury management strategies.

I really like the idea of tapping into the staking yields of ETH as they are a sustainable way to earn yield. Also, there is no need for us to run the validator ourselves – we can use liquid staking solutions by swapping the treasury’s ETH for Lido’s stETH or RocketPool’s rETH. That way we can get most of the yield of staked ETH without any of the work/worry of running a set of validators.

With that said, I’m 100% in favor of this proposal in its current form. It is an easy to implement way to start actually diversifying the treasury’s funds.


FYI – zumzoom is the Lead Blockchain Engineer and Architect in the group of 1inch core contributors. Awesome to see him here in the governance forum :slight_smile:

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This is a really nice and simple proposal, as it presents a simple first step to diversify the treasury. I like it for 3 reasons:

  1. It is automated. Once implemented, no manual action is required to maintain the strategy.
  2. It is scalable. As 1inch volume grows, so will the Treasury’s diversified basket of assets.
  3. It follows the 80/20 Pareto principle. Crypto has always been dominated by a handful of assets followed by a long tail of all the others, and this strategy focuses on the historical top performers.
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This is a great proposal. Strong support. There are small risks involved and the short-term return may not be huge but we believe it is an important step in the right direction.

It definitely matters which assets we want to include in the 1inch treasury. Given the current markets - severe downturn, more downside possible but long-term upside very obvious for top assets - the selected assets are stable &or of highest quality with long-term upside, hence fully agree with assessment:

  • USDC, USDT, DAI: Top 3 stablecoins

  • WBTC: Bitcoin is still the most secure, most decentralized chain and BTC has highest marketcap, solid upside potential and best downside potential if the bear is longer.

  • Eth/Weth: Ethereum is still the most dominant, secure, decentralized, smart contract chain and Ether is the native reserve asset on Ethereum, and mid-to-longer term the only real contenter to Bitcoin on monetary premium

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Agreed .

I Was also thinking if we Should Include Gold reserves in 1inch Treasury too like PAXG ?

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We like the simplicity of the proposal and its implementation (a cost/complexity improvement vs. today)

Additional active treasury management - whether that includes short-term trading, yield farming or long-term gold, even government bonds or stock - is probably more interesting in v3.

Re: Active management strategies: We’d also benchmark to stEth/rEth = ETH + 4%

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I like this proposal and as @tradersnow said it’s a passive/simple way to diversify the treasury.
Based on the surplus sold to USDC it seems a majority of the surplus will still always be in stable coins and could provide earning opportunities in the future with some sort of treasury management and would also make it easier for the DAO to use the more diverse set of tokens.

So far it seems the treasury has sold around 2000 ETH so I think it’s fair to say no buy-back of ETH is required if the treasury keeps the surplus ETH.

I don’t know of any decentralized gold other than on Synethix on Optimism. To redeem PAXG you have to go through paxos and since they have the authority to freeze/pause PAXG at any time it might not be the best thing to hold in a DAO. This is the same with XAUT, centralized by Tether and you must be allowed to trade it by tether.

I like the idea of converting the the wETH/ETH collected into ETH 2.0 staking derivatives. In fact, some has even been collected by the spread surplus in the past:


I’m wondering if it’s worth exploring wrapping a portion of the stables up too. probably this idea is best for another proposal.

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With stETH currently trading at ~3.5% below Net Asset Value (NAV), and rETH trading at ~1.5% below NAV, this seems like a low-risk way for the treasury to obtain low-risk staking yield on any ETH it collects.

We’ll come out ahead as long as the following will occur before we actually need to spend those treasury funds on anything: a) the PoS merge will occur; and b) validator withdrawals are enabled.

I still see value in keeping some as vanilla ETH since ETH is, by definition, a more secure asset than ETH derivatives built on Ethereum. But, stETH trading at a lower price than its underlying value makes it extremely attractive as an investment.


TL;DR – ETH staking liquid yields are approximately 4%. stETH trading at nearly 3.5% below its value means that someone who purchases stETH at this discount, and holds it until validator withdrawals are enabled, will be making an additional 7.5% compared to vanilla un-staked ETH.

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  • ETH
  • WETH
  • WBTC
  • DAI
  • USDT

I don’t know but i’m still a bit hesitant to include USDT

Should be -

  • ETH
  • WETH
  • WBTC
  • DAI
  • 1INCH

And Buying Strategy can be

  • Switch from buying USDC with Swap Surplus revenue to buying 1INCH when the 30D Avg. Price of 1INCH is GREATER than Current Price
  • Switch from buying 1INCH with Swap Surplus revenue to buying USDC when the 30D Avg. price of 1INCH is LOWER than or equal to Current Price

Same can be applied to other assets like ETH & BTC With a buying weightage of 50% 1inch

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FYI – this proposal is live on Snapshot:

[1IP-12] Simple diversification mechanism for 1inch DAO Treasury
(see edit)


It looks like there was a miscommunication and the Phase-3 in-forum temperature check was skipped. I understand that is not idea, but I didn’t see any major gripes with the proposal so Phase-3 might have been redundant. Are there any objections with this counting as the canonical Phase-4 vote?


In the future I’ll be more proactive about progressing proposals to Phase-3 if it is clear that no further edits are needed. Or maybe we should look into making Phase-3 optional like Aave does in their governance? Thoughts?


Edit – The phase-4 vote has been cancelled and won’t resume until the proper phase-3 temperature check vote has run its course.

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If we use this and look at the data I collected we can see

  • ETH/wETH - $2,300,000 or 15% of the current treasury
  • wBTC - $173,000 or 1% of the current treasury
  • USDT - $1,400,000 or 9% of the current treasury
  • DAI - $700,000 or 4.6% of the current treasury
  • 1INCH - $12,000 or 0.08% of the current treasury

I’m not sure if leaving $1INCH as a leftover asset would seem viable. Buying back would expose the treasury to a lot more $1INCH if the other proposal passes though.

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We’ve heard your feedback and have canceled this Snapshot vote so that the proper phase-3 temperature check vote can take place.

I have edited this post to include the temperature check poll and moved it to phase-3.

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So , Treasury = 20% of Volatile Assets + 80% Stable . Seems Fine .

In Favour :white_check_mark:

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Temperature-check vote was a success. 10 votes in favor, 0 votes against.


1IP-08 Phase-4 snapshot vote is now live!

Please hop over there and give this proposal a vote!

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[1IP-08] Simple diversification mechanism for 1inch DAO Treasury has officially passed!

Final results were 12.23M votes in favor of the proposal, and 0 votes against the proposal.


I will update this thread once the new treasury diversification strategy has been implemented.

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1IP-08 has been implemented!

All the backend work is done, so next time one of the whitelisted tokens is collected as Swap Surplus revenue, it will be sent directly to the treasury!

I’ll update this thread as soon as I notice one of these transactions occur.

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The first 1IP-08 transactions went through on Friday. Our treasury is now starting to add ETH, wETH, wBTC, DAI and USDT!

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