[DAO:a04a723] Decentraland DAO Treasury Diversification ( Phase B )

Governance
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by 0xd6c957f9a6411f35d01baae2658758f277408878 (Rizk)

Dollars are currently a crucial missing element in our DAO treasury. In this proposal, I suggest initiating the expansion of our stable coin during this bull market. It’s essential to use this opportunity, as such favourable market conditions occur only once every cycle, approximately every four years. Accumulating dollars during a bear market is not a viable option due to various reasons, primarily the lack of liquidity and the low price of our mana treasury.
This strategy aims to strengthen the DAO’s financial foundation, grow capital for the long term, and ensure sufficient funds for future grants, which will be managed by the upcoming council. By accumulating dollars now, we can mitigate risks of potential market illiquidity or a sharp decline in MANA prices, which could otherwise force us to spend millions of MANA for a minimal amount of dollars.

The DAO treasury currently holds around 80,000,000 MANA, with an additional 1,850,000 MANA that is vested monthly. Considering the daily and weekly trading volume of MANA on centralized and decentralized exchanges (Weekly Volume schedule attached for the passed couple months), I propose using two months’ worth of vested MANA, equivalent to 3,700,000 MANA, for strategic stablecoin accumulation.

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This process would take place incrementally over the next two to three months, following a strategy that allows flexibility for the upcoming council. They may choose to adjust, pause, or continue the plan as deemed appropriate.

This approach ensures minimal impact on the MANA token, as evidenced by the weekly trading volume, and establishes a favorable price range for our accumulation strategy during the bull market. It will not negatively affect our community, investors, or key stakeholders. On the contrary, it will enable us to fund future grants and continue developing the platform effectively, even in the event of a bear market.

  • Yes
  • No
  • Invalid question/options

Vote on this proposal on the Decentraland DAO

View this proposal on Snapshot

1 Like
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It makes sense to have some stablecoins reserved for future operating expenses / grant payouts the DAO [I assume] will encounter in 2025. This is a quite conservative amount as well if we have to make stablecoin payments.

If I recall, there were times during the peak grant program when slippage was higher, liquidity was lower and it was costly to swap MANA to pay DAI grants in the bear. Having had some stablecoins could have prevented this, or the requirement that all grants/payments were paid in MANA.

What those expenses will be… TBD. Good proposal to get it started for the upcoming unknown year of expenditures. (Which the DAO needs to figure out btw!)

1 Like
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Why not consider staking options?

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Decentraland DAO Treasury Diversification ( Phase B )

This proposal is now in status: FINISHED.

Voting Results:

  • Yes 87% 1,794,793 VP (34 votes)
  • No 13% 268,957 VP (4 votes)
  • Invalid question/options 0% 0 VP (0 votes)
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Decentraland DAO Treasury Diversification ( Phase B )

This proposal has been PASSED by a DAO Committee Member (0xfb1afa4dc069ffb47b19dbee196045d508fcd5a2)

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Hello Jason, If you mean staking the ETH that we’ve already collected, I have a plan for that in the future; I just want to accumulate more ETH first. But if you mean staking MANA, so i guess it’s not a good move, because the fixed supply could temporarily boost Mana price by reducing circulating supply and attracting investors. However, it’s not sustainable long-term because no new MANA is created to reward stakers, and the 80 million mana we have will fly away for stakers to vanish in couple years and faster than you think. It’s better to use the MANA we have to incentivize creators, develop the platform, and build more experiences in the world.

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Surely there has to be a better alternative than converting mana to eth for 3% stake reward.

Selling treasury mana for eth doesn’t sound like a well established plan to me & I believe most others will agree.

You lot don’t have any confidence in MANA token which is a shame.

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Iam a mana Holder since we met 2018/2019 i guess when it was 0.03 . Any Treasury proposal I make here is from my humble perspective beneficial for the future of Decentraland on a small scale.

Back about your proposal, the DAO’s 80 million MANA will be vanished in approximately 2 years with a 3% staking incentive rate if 1 billion MANA staked (50% of the total market cap), because if you look at the top holders on Etherscan, you’ll see that 1 billion MANA is controlled by just a few whales and platforms. They would likely claim most of the staking incentives quickly. This means we’d drain the DAO treasury giving them to the whales, leaving zero funds for development. The coin might get a short-term price pump for two years and thats it.

If we want some incentive for the DAO better to create LP with Mana/Eth or Mana/usd , but even with this we could face the impermanent loss if the price fluctuate quickly leading to big losses.

1 Like
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While I applaud the motivations behind the initiative, I have some serious concerns about some of the details that have been advanced.

Primary concerns:

I do believe Decentraland should seek to separate itself as much as possible from the Fiat currencies of sovereign countries.
And Stable-coin projects always have the risk of unforeseen fatal flaws.
Commodities such as Gold or Silver may be a better bet for diversification of the Treasury.
The only real danger for Gold comes from asteroid mining, and that is a long ways off.

“Past performance is no guarantee of future results”.
With the emergence of crypto-bound ETFs, institutional money is now fully able to enter the game, and things are likely to change drastically.

See Decentraland USD (MANA-USD) Stock Historical Prices & Data - Yahoo Finance.
January 2021, overall “liquidity” in MANA trade went above 1 billion per month.
It’s been over 1 billion per month since !
The 80 million MANA in the treasury is a drop in the ocean compared to this, whether things are bull or bear.

Take a moment to think these numbers through.
A treasury of ~80 million MANA is the highest value to date.
Close to 2% of the current MANA capital is being accrued automatically monthly.
This amounts to approximately an increase of 20% annually (for another few years).
Why is anyone talking about the DAO Treasury “running out of money” ?

There are far better options for tapping into liquidity than using swapping.
If the DAO Treasury does not have an operational arm acting with accounts directly on an few exchanges, that most certainly needs to be set-up post-haste !

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Secondary concerns:

Diversification does not “grow capital”.
It is meant to reduce the risk to see the capital have its value shrink.

This is an issue that I’ve seen with Proposals here: implicit assertions that are outside of the context of the initiative that is being advanced, and which sometimes just get voted in without appropriate deliberation.

What is attached is a picture on a 3rd-party site, which has no legend, and thus cannot be considered officially viable.
A link to more complete info such as what is available on Yahoo Finance is preferable.

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Topics warranting further discussion in separate threads:

The best way to mitigate “risks of potential market illiquidity” is to remove VP from MANA.
The VP coming from MANA is simply too easy to acquire as it is, which might lead to involvement from regulatory bodies.
If VP is to correspond to “skin in the game”… only entities such as LAND, NAMES, wearable publications, etc, should be granting this.

How’s this compromise: only incorporated entities should be able to request to be paid in a denomination other than MANA, for a service that will be continued over time.

Professional services are required for the maintenance and the development of the Decentraland experience. Professional teams need stability with respect to future budgeting.

But if grants to fund the creation of content are to continue, those should only be paid in MANA, as those should truly only be sought by individuals who believe in the long-term success of the crypto-project.

+1 ! MANA should not be seen as a pump-and-dump token meant to be used only for speculation.
It is the coin at the heart of the economy of the Country Of Decentraland.
DCL’s main strength is Tourism ! And there are some rich tourists out there.
The DAO collective must now learn to make things as inviting as possible for just about anyone who can find an opportunity to acquire Tourism Income in this unique crypto-project that is Decentraland.
Then a whole landscape of experiences will become available for the whole world to explore and spend money on.

As that is what will make users want to buy MANA :point_up:

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