Scope:
Request DAO approval to increase the allocation limit to UWU Lend to 20% of the total treasury for a period not to exceed 120 days unless an additional TMP to do so is submitted and approved by the DAO.
Current Governance Limitations:
By voting yes on this proposal, the DAO would be giving temporary permission to exceed the 10% protocol exposure limit in the Treasury Allocation Proposal (WIP #26) for 120 days or until voted otherwise by the Treasury Council or the DAO, whichever comes first.
Objective:
- Increase the exposure limit to UWU Lend to 20% of the total treasury.
- Allow the Treasury Council to adjust the allocations within UWU in accordance with the 20% limit.
- This limit will include UWU tokens held and tokens in the LP.
Rationale:
It is believed that it would be in Wonderland’s favor to maintain a sizable treasury allocation on UWU Lend farms while the yields are high, since there are currently limited high yielding farms in DeFi.
For clarity, there will be no further acquisition of UWU other than by farming and vesting prepaid tokens. Further acquisition of UWU by other means would require a separate TMP. ‘Farming’ refers to activities that generate a positive yield partially or totally in UWU, e.g UWU-ETH LP, providing credit on uwulend, or future vaults on uwulend.
Snapshot:
https://wl-l.ink/Snapshot/TMP-1-1
Voting options:
- Approve Increased Exposure
- Deny Increased Exposure
UWU Lend Background:
UWU Lend is a liquidity market that offers depositing and borrowing and is forked from AAVE v2. Users earn interest on deposits and pay interest to borrow. The protocol was founded and is actively managed by Sifu. Wonderland is currently supplying DAI, USDT, and Sifu in the UWU Lend farms. We are borrowing DAI and USDT for looping, with a Health Rate of 1.20.
Risks/Considerations:
Price Risk:
UWU price could continue to drop and farmed tokens need to be vested for 4 weeks to not incur a penalty fee. No loss would be incurred unless the price of UWU dropped below our cost basis ($11.02 per UWU on farmed tokens).
Smart Contract Risk:
UWU Lend code was forked from Aave v2, which has undergone numerous audits. The rewards system is forked from geist, which has also undergone numerous audits. UWU Lend has completed its independent audit with Peckshield and results will be published soon.
Liquidity Risk:
The LP for UWU-ETH is incentivized and guarantees short-term stability due to the 8 week lock. However, as the weeks pass, we will have less forecastable liquidity as providers can pull out funds. To mitigate this uncertainty, Wonderland will actively manage its UWU position to capitalize on periods of stronger liquidity and decrease its need for liquidity when uncertainty is greater.