Start generating yield for DAO Treasury money through investing in low-risk defi instruments

Dear colleagues,

Currently DAO Treasury funds are allocated in USDC and do not bring any yield. We suggest to reconsider this and start allocating this funds in low risk defi instruments

Our proposal is:

50% stay in cash. 50% to be allocated in the following instruments (pools)

  • Earn
  • Compound
  • AAVE
  • USD+

All pools selected are stable coins, thus they represent low risk. Our estimate shows that this steps can result in 5-15% APY depending on instruments.

Our own experience shows very positive experience with such yield generation.

We see the following steps:

  1. Decide whether it is good idea in general to start yield generation for DAO Treasury
  2. Decide on exact defi instruments/protocols and proportions of money to be invested

We would be happy for your feedback on this.

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I’m currently working on 1IP Draft to use Bancor 0 IL USDC pool to generate income for treasury. Might Be a slight Wait because Bancor v3 will be arriving by end of this Q1 . Infact in V3 you’re guaranteed to have space even for stablecoins like USDC


Also , we can also use stable coin index to generate yield & this

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Hello 1inch Community, I am a member of the Treasury League of Idle DAO. Happy to contribute more information to this thread.

As mentioned in the table by @Genkai.Shogun, Idle offers a low-risk way of yield generation for stablecoins. With our solution called “Best Yield” we automatically allocate assets across different battle-tested DeFi protocols (e.g. Aave & Compound). This leads to substantial risk mitigation (re-balancing in case of a hack). But also attractive APYs above those of Compound and Aave.

In this context, it’s also worth mentioning that we have been on the market for 2 years already and since then successfully audited by leading security companies such as Quantstamp & Consensys.

Further, we have collaborated with Lido to launch a risk-adjusted financial product for ETH staking (stETH Perpetual Yield Tranches). Depositors into the Junior Tranches receive a higher proportion of the yield, but also take on extra smart contracts and financial risks. Vice versa, the Senior Tranches receive a smaller portion of the generated yield but they’re also in line to be repaid first in case of default. Applying the Senior tranche, 1inch ETH staking would therefore shift from the medium-risk to the low-risk category.

The current pool size is 3,200k stETH with Senior APYs of 12.9%.

Further info on Best Yield and Tranches can be found in our docs.

Please let me know if you have any questions. I look forward to the further exchange!

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Can I ask you guys a question about what I have been wondering every time there is a suggestion to get yield by another company’s service?

I understand that if I use another company’s service, I don’t need to build a system and I can start getting a yield right away.
The question I have is this.
1inch has a great development team. If we had some financial professionals, we could build a service to earn yield on our own, but even with the organization of 1inch, is it difficult to build such a system?

If you can build your own service, I’m not sure if it will bring results in terms of safety, yield, and stability, but the same is true for other companies’ services, as there is no 100% guarantee of what the results will be.
If we set up our own service, we can at least control the safety, yield, and stability.
If the idea of using another company’s service is opposed to the idea of starting up your own service, you can compare the good and bad points of each and have a richer discussion…

In the past, when I wrote about my concerns about using other companies’ services when there was a similar proposal to get a yield by using other companies’ services in another topic, Roxan also agreed with me.

I would really like to get a conclusion on whether we can build such a service by ourselves before using another company’s service, what do you think?
Even if we have to vote for using another company’s service, I think it would be easier to get support if we have a conclusion on this point first.

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Yes they have & thus i want to see the Money Market aka Lending on which @k06a is working which will be completely permissionless . It’s gonna be here really soon like in upcoming 2 - 3 months as per @k06a . Maybe undergoing to some audits RN

I’m excited to see it as it can act as another power house for treasury + i think it will be having utility to 1inch treasury and token too .

This is true using other company service you loose control & that is ofcourse risky because you can have delay in rescue if other companies introduce a new change in the stuff they made .

Because of this I’m also waiting on side line to see what & how effective their upcoming innovations will be before suggesting any hard changes implemented on top of treasury

Out of curosity , i wanted to know will idle dao provides any type of special treatment to DAO treasuries in terms of security or backup collateral in case of mishaps

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The above-mentioned protection mechanisms are the same for all deposits. In addition, we collaborate with insurance provider InsureAce. So here, an additional layer of security could be added for currently 2.69% per year.

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