I would like to propose the idea of adding BTC to our treasury holding.
I would like to divert 20% of the amo profits from veFXS rewards to BTC accumulation when BTC price is below $50,000 as the weekly candle closes.
This would reduce the $ amount rewarded to veFXS holders during a BTC bear market, but would help build up the value of the protocol treasury and in turn increase the value of the FXS token.
Adding more assets to the treasury holdings results in more profit making assets, and more profit now will compound in to much bigger profit later, which is good for long term veFXS holders.
As BTC goes above $50,000 we will go back to paying all 100% of the reward to veFXS.
I like the idea of diversifying our treasury. wBTC is the most liquid BTC on-chain but I understand if there are custody/centralization concerns. Not sure what everyone else thinks.
@sparkes25 - I appreciate you taking the time to propose this and I like the idea of constantly looking at the optimal treasury holdings for the protocol, however I am strongly opposed to accumulating wBTC with protocol profits for a couple of reasons.
Big picture, I’m wary of making small changes that may not make sense when taken together. Accordingly, my preference is to come up with optimal portfolio balances for the protocol and consider them holistically. If we do 20% now for wBTC and then have another proposal or two for other assets, we’ve quickly just cut the veFXS yield significantly, which could have more significant implications for the protocol. I’d be happy to chat with you and others to think through a larger plan.
For wBTC specifically, I do not think we should invest heavily in this asset. As a protocol, I really don’t think we need bitcoin exposure at this time. It’s sort of a second class citizen in DeFi due to the limitations of the various implementations. wBTC is also a centralized BTC token that is custodied by BitGo.
If we want to add a volatile blue chip crypto asset, ETH is the very obvious one. Frax is built on Ethereum, it is the most trustless (I wanted to say this differently) asset on Ethereum. The protocol can use ETH to pair with Frax and FXS to add FRAX/ETH and FXS/ETH liquidity. Even with ETH, I’d prefer that we come up with a big picture plan so that we do not stumble into a problem down the road.
