ShineDAO treasury management vision

Main purpose of the ShineDAO treasury is to provide operational sustainability as well as long term DAO survival in case of prolonged bear market. Moreover, assets in the treasury are going to be used to generate additional yield and to encourage innovation through the network of contributors and projects that they support. Transparency and risk assessment topics described in this document aims to set up a framework which will help us achieve those goals.

Risk Profile
The main purpose of a treasury isn’t to make money per se, it’s to make sure that we can reach our goals as an organization and that we can survive long-term. Therefore we recommend building a rather defensive portfolio, so we can focus on our mission instead.

Focusing on our main mission will also send the right signals to everyone involved in the DAO. We shouldn’t spend time on managing the treasure, but instead build a kick-ass product.

Whenever we purchase or deploy assets into yield making strategies the following are considered:

  • Volatility risk (Stablecoins vs. ETH vs. MATIC vs. other)

  • Systemic risk of asset (Is the asset backed? If yes by what? What can go wrong?)

  • Systemic risk of staking platform (Is this battle tested pool with high liquidity?)

  • Infrastructure risk (Are we using new L2s, side chains or ETH mainnet?)

  • Compounding costs (Is the platform auto compounding? If not how much would it cost?)

  • APY (Is risk adjusted return net positive?) - APY volatility (How predictable is APY?) - Etc.

Governance

Committee level members will help in selection of assets to be held in treasury, selection of protocols where those assets can be deployed as well as deciding upon risk tolerance and asset restructuring of the treasury. Short term trades are excluded and only assets with long term holding period are considered. Discussions are held in a #trasury channel which is only accessible to Committee level members.

After a restructuring is proposed and agreed upon between the committee members a snapshot vote will be casted with the whole DAO with a minimum of 2 days duration period. After that the restructuring will be implemented.

Transparency and financial reporting

Even though there is no shared framework for transparency and financial reporting in the DAO ecosystem, ShineDAO will support those principles and provide information to all present stakeholders which can help them base their financial decisions.

Treasury info will at the starting point be presented over official Debank profile. A bit more elaborate and complex financial reporting is planned to arrive in the future as we gather the best practices from the industry. Those metrics, when expanded will include forecasting expenses, remaining runway and similar.

Early Stage Investments

Treasury is not meant to be used to make early stage investments. Only strategies considered so far are yield farming and holding. In exceptional cases borrowing and investments can be considered, however, those will include a wider discussion within the DAO which will also take a legal perspective into account.

Treasurer
It is also suggested to have a role of the treasurer which guide discussions around treasury management and execute liquidity rebalancing.

Conclusion

The above sections aim to establish a proper framework for ShineDAO treasury which can advance our efforts of benefiting the community members and the supported projects from the web3 ecosystem. Transparency and reporting will instill confidence

into the DAO members that the funds are carefully spent and utilized while taking everyone best interest into consideration. By following the governance process committee members will suggest ideas where to deploy our assets and the rest of the DAO will vote on it. By doing so we are moving towards a more sophisticated future where we are better suited to overcome any sort of challenges that we stumble along the way.

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