Scope:
Request DAO approval to deposit a mixture of stablecoins on SwapFish (Swapfish.fi)
Current Governance Limitations:
WIP #28:
[…] the Risk Officer will now identify and share with the Treasury Council the risks associated with each strategy prior to the council’s vote […]
A TMP is being used to assist treasury personnel with decision making by having the DAO review the proposal, assess the risks and make the final decision.
Objective:
- Deposit up to $3.5mm into a mixture of stablecoins LPs on Swapfish. Some options include the following LPs: Frax-USDC, DAI-USDC, USDT-USDC, etc.
Rationale:
The Wonderland Treasury still has a lot of unallocated funds and given the current market conditions there are limited opportunities. This is a fairly straightforward stable farm strategy with relatively low risk as only stablecoins will be deployed. In the absence of a Risk Officer, the DAO is being asked to accept the risk by providing its approval.
Plan/Strategy:
The Treasury Operators (TO) recommend depositing up to $3.5mm spread across a mixture of stablecoin LPs on SwapFish.
Example Yield Scenario:
SwapFish is currently paying the following yields on stablecoin LPs: Frax-USDC (17.67%), DAI-USDC (12.28%), and USDT-USDC (10.54%). Between the three LPs, the pools total roughly $17mm. A $3.5mm investment is expected to lower the yields about 20% (e.g. 20% of 14%) due to dilution of the pools.
Using a mixture of pools to minimize dilution, TOs recommend up to a $3.5mm investment with a more conservative projected average yield of roughly 10%. This would translate to a daily yield of $959, and a weekly yield of $6,713.
Realized yield may fluctuate based on a wide variety of factors including changes in the price of FISH, pool sizes, and emission rates. The Treasury Operators will monitor the positions to maximize profitability and manage risk. Emissions tokens will be dumped on a regular basis.
SwapFish Background:
SwapFish Finance is a Decentralized Exchange protocol native to the Arbitrum blockchain. With SwapFish users can trade crypto assets as well as earn trading fees and FISH tokens.
Docs/Resources: https://docs.swapfish.fi/swapfish-protocol/protocol-overview
Snapshot:
https://wl-l.ink/Snapshot/TMP-12
Voting options:
- Approve Deployment
- Deny Deployment
Risks/Concerns
Price Risk
The SwapFish emissions token FISH could decline in price. To mitigate this, TOs will sell/swap the FISH tokens on a regular basis as they are farmed.
Depeg Risk
There is a possibility the stable coins used could suffer from a depeg where the price drops below $1.00. The stablecoins under consideration are deemed to be relatively low risk by the TOs.
Smart Contract Risk
SwapFish Finance has been audited by SolidProof and reviewed by RugDoc.
https://docs.swapfish.fi/security/audit-kyc-and-rugdoc-review
