[RFC] Bastion Detailed Proposal For Treasury Management

[NalX]

Thanks for the clarifications. If you wanna resubmit let me know, I can also edit the pending WIP. Up to you!

The 4x was more in case that this proposal goes up first, but don’t underestimate this community (the good or bad haha)

[TheSkyHopper]

I honestly thought for a moment there that the Mod Compensation was a done deal.

[z0li]

@TheSkyHopper

4x: Pending MOD Budget. But hell, if this doesn’t pass, like what? I’m going to work for the stingiest community ever?

So if the mods budget is zero, four times zero is zero…

Guys, if we vote no for the mods budget we will have a treasury manager for 3 months for free!!!

[Teejayb007]

The clarification was well needed and put the proposal in a clearer prospective.

This vote is a 100% YES for me!

[isthatlowfat]

@TheSkyHopper

Background and High Level Details:
As a veteran of trading and managing portfolios in various markets professionally spanning 20 years and in crypto for nearly 5 years, I (with also the help of my team) would be able to manage the treasury. This management may take on many forms whether it is discussing with Dani the overall vision on the treasury, deploying capital for farms or otherwise, and finding other managers or personnel to help the treasury with multiple trading or investing strategies. Furthermore, I have a keen interest in setting the governance groundwork for sustainable treasury management for the long term and working constructively with governance improvement proposals.

Hope you don’t mind - I have a few questions that will help me get to know you, your values and your problem solving skills!

What would you say was your biggest trading win and why?

What would you say was your biggest mistake? What did you learn from it?

How do you plan on splitting your time between TM here and other endeavors you may have?

Can you describe the ideal qualities/personality traits that you feel a TM should have?

What would make you question the competency of another TM?

Besides the experience you’ve shared, what sets you apart from other TMs?

How do you handle criticism (constructive and negative)?

If you and Dani disagree on a critical decision for WL. How will you handle it?

How do you decompress after a hard day’s work?

How quickly can we get in touch with you in an emergency? I.e. if something catastrophic happens on WL and you are needed to intervene immediately, what is expected time it should take us to get in touch with you (when I say us, I don’t mean the community, but core team for example)?

What are your opinions on the liquidation cascades that impacted WL? Could they have been prevented? Why/why not?

What are your opinions on how the buybacks were handled in December/January?

What would make you say “I was a successful TM” for WL?

@TheSkyHopper

4. Treasury Related User Interface (“UI”) and Experience ("UX) improvements: While this is out of my hands, I’d like to see if we continue to improve the DAO Fund page on the app – so to clearly explain the Treasury such as the proportion in Liquid Assets / Less Liquid Assets (think BSGG) / and SAFT exposure descriptions (Cross of Ages). Further, a unit tally of net outstanding TIME (or WMEMO equivalent) to further calculate value per token.

I estimate these activities likely will constitute the first 2 months of treasury management (including integration with the team).

Anything to improve the UX/UI is a great point. These ideas don’t necessarily need to pass through a DAO vote. Enhancements like this are excellent ideas.

@TheSkyHopper

5. VC type investments: such as SAFT agreements (seed pre-ico token deals), have played or playing a large role (BSGG, Cross of Ages) in both the value accretion of the treasury and certain opportunity to leverage the 80,000 hodler community. While Dani has brought deals, I think it makes sense to explore adding a dedicated New Project Analyst team to help screen, structure, and execute VC deals giving valuable headroom back to Dani and the team to keep building.

I love that you want to contribute to sourcing deals. The idea of putting a team together for this makes total sense. Do you have people in mind for this function or are you looking to find people within the community to fill these roles?
Will these be voluntary or compensated positions?

@TheSkyHopper

6. Manager Selection and Allocation Management: It will also make sense to add managers who have skills in different strategies. Immediately, I can think of trend following strategies to be potentially a great add for example. I would like to work on sustainable parameters and allocation rules for the DAO to allow for third party management as well.

Super interested to know what you’re looking for here specifically. Is this related to TM activities or do you see these being beyond typical TM functions?

@TheSkyHopper

7. Governance around Treasury Management: Last but not least here on this list (which isn’t exhaustive btw) is that DAOs in general as a new type of institution needs to continually evolve. It embodies the spirit of democracy, but as we know, in practice this has been far from perfect in crypto as in the “real” world. As a reserve protocol, treasury management is a/the core function that needs to succeed within the DAO in the long run. A sustainable governance model must be always sought. Here, we’d have to look to overhaul voting timing, tightening and solidifying the proposal to WIP processes, and to create an active governance function (such as a board) over the Treasury Manager and the decision-making process. I look to collect as much feedback.

I think in this area we need to optimize the process. The steps need to be clear on how something can evolve from a discussion to an RFC or WIP. There should be basic requirements that need to be respected for that evolution to prevent subjective bias here. Mods should be permitted to contribute at a higher level here.

@TheSkyHopper

Fees

I have previously proposed fees of 2% of the staking revenues of the Wonderland for 5 weeks (1st month of management) - and mainly out of frustration (and cheap) nothing was done seemingly in Treasury. Anyways I honor this, and ask for the following fees:

1st Month: 2% of Staking Returns and paid in WMEMO, this may amount to very little but incentives me to quickly see that assets can be reasonably put to work in farms.

2nd Month: US $100,000 or roughly 0.0004% of liquid assets (this is 4x the MOD budget)

3rd Month: US $100,000 or roughly 0.0004% of liquid assets (this is 4x the MODs budget)

(I expect to re-assess and propose fee structure at every term re-election but If a WIP for re-election is NOT put forward, but for some unknown circumstance I have been still left beyond 3 months as Treasury manager I propose that the payment will increase to $200,000 monthly)

There’s been a lot of losses and I think it is important that we get a strong footing before negotiating higher fees. For this initial period, this comes out to be less than about 0.5% management fees, a quarter of the rate charged by Grayscale to just manage a pile of Bitcoin passively.

Personally, I’m fine with the proposal as-is, but I think some in the community might be a little off-put by the 6 figure monthly price tag before you’ve turned a profit.
Would you consider a lower base rate with the performance bonus tied to profitability metrics? For example – growing treasury by x% by Y date = performance bonus of Z?

I’ve got more questions/comments, but I’ll save them for later.

[Bolli]

@SirDan

I would vote yes on this.

I would vote yes here too.

[KumaSeeds]

I like this proposal and the possibility of having a treasury management focused on results.

We really are a strong community and we have great potential, with the right people in the right places we will certainly genuinely ascend.

Thanks for the proposal.

[linolime]

I think you have valid questions and I hope they respond, soon

[TheSkyHopper]

Lets get these questions answered:

What would you say was your biggest trading win and why?

In general, its just being in crypto at the right time in 2017/18 and 2021 and riding the wave.
Buying Solana in the 15-35 range was great for example directionally.

Over time, its been harder to single out which was the “biggest” win. Its a numbers game, and there’s wins and losses. I’d say the most satisfying ones was from the result of good research that no one else had thought of.

What would you say was your biggest mistake? What did you learn from it?
Taking excessive risk on a few things in the past and losing big either cutting it or just riding it down to being rekt. Sadly, it took more a couple times to learn this.

How do you plan on splitting your time between TM here and other endeavors you may have?
I do have other endeavors, but I also have people to look after them and a team to look at WL Treasury too. This is a large portfolio that a lot can be done, and its exciting. I’m going to spending a lot of time on this Treasury.

Can you describe the ideal qualities/personality traits that you feel a TM should have?
Common Sense and Intelligence are probably two biggest qualities. Personality traits - open mindedness and being humble. Someone quite introspective as well. These lead to long term trading/portfolio management success.

What would make you question the competency of another TM?
Its losses or lack of profits that can’t really be explained. Sometimes great ideas lead to bad results and thats fine. Its where its apparent that not alot of thought is put into trading/new idea research/risk management. It shows.

Besides the experience you’ve shared, what sets you apart from other TMs?
Take this proposal even - No one serious has wanted to touch this: to figure out the situation beyond some doxxing of someone who did nothing wrong. I really try to keep an open mind, and take risks that are good but no-one else seems to want to take.

How do you handle criticism (constructive and negative)?
It comes with the job. Constructive ones, and offer a solution are greatly appreciated. I’m going to expect quite a bit on this one - 200,000 addresses, there’s no way everyone will be happy - so i’m expect that a lot of those that don’t offer much i’ll have to ignore as well.

If you and Dani disagree on a critical decision for WL. How will you handle it?
I’d think we’re reasonable people and we can find a compromise. I think a critical decision anyways, should be up for a DAO vote - and I’ll execute the will of the DAO.

How do you decompress after a hard day’s work?
Its always nice to have a beer at the end of the day - but I think its the same as any normal person. Managing a treasury or portfolio I admit after all these years doesn’t stress me. Sadly, I think though people do, but I’m getting used that too. B

How quickly can we get in touch with you in an emergency? I.e. if something catastrophic happens on WL and you are needed to intervene immediately, what is expected time it should take us to get in touch with you (when I say us, I don’t mean the community, but core team for example)?
I’ll make arrangements that I’m contactable generally all the time. There’s other DAO team members as well, who can intervene - so I’m confident this can be managed.

What are your opinions on the liquidation cascades that impacted WL? Could they have been prevented? Why/why not?
Hindsight is always 20/20 - so in hypothetically, yeah they could have been prevented. But - I don’t think its fair to really opine on this.

What are your opinions on how the buybacks were handled in December/January?
Buybacks are good for holders. Sadly for a lot reasons they were stopped at the end of Jan.

What would make you say “I was a successful TM” for WL?
I’m only a numbers-results kind of person. So:

1. A consistent increase in the treasury backing per WMEMO
2. A price above treasury backing
3. Increase in the inflow of coins to increase the overall treasury.

[linolime]

Thank you! You got my vote.

[adamfx]

A couple of things I would like Wonderland and the proposal to address:

OVERSIGHT: Who is watching the Treasury Manager?
Bastion is an external party and under this proposal given control of a large treasury.

One concern is that Bastion personnel will front-run Wonderland Treasury buys on their own Bastion accounts for profit - enter before Wonderland buys, price goes up, then dump for profit.

Will Wonderland have transparency over Bastion’s Addresses and will someone at Wonderland be delegated with Forensic Examination of their on-chain activity?
Should examination of suspicious activity demonstrate that Bastion is likely behaving untoward, (including likely not disclosed all addresses under their control or influence) it should lead to termination of agreement and loss of any distribution.

INCENTIVE
The Incentive structure with a high water mark makes sense. I would even propose a higher percentage for overachievement above 2nd highwater mark. 5% then going to 8% for extreme positive results. These are both high btw!

But to align interest with Wonderland more closely, I would like to see a Carried Interest function baked into the proposal.
A significant percentage of the External Treasury Managers Performance Fee Earnings should be held back and re-invested along with Wonderlands. This is typical in TradFi private equity management.
These retained earning are reinvested along with Wonderland Funds and distributed at some future time (1 or 2 year rolling, not 5yr like PE) along with gains made those earnings.
Should Bastion do anything untoward, this carried interest will be forfeit.

Any Wonderland and Treasury Manager agreement should incentivise success and build multiple lines of revenue (from stables, farming, VC and others). It should also structure an agreement to account for untoward circumstances also, and mitigate for those risks.

Any proposal should have the protection of Wonderlands interest’s at it center, without any elements of a giveaway, without recourse.