Swap some of Nouns’ treasury into the RAI stablecoin and use it to harvest rewards offered by Aave, Idle and Barnbridge.
Background
RAI is a non-pegged stablecoin built by Reflexer. It currently getting adopted by DAOs and other DeFi protocols who want decentralized stable assets that also have the benefit of not being directly tied to fiat. At the moment of writing, there’s more than $15M worth of RAI that was market bought by different participants who want to hold it for the long run.
This proposal puts forward the idea of Nouns diversifying its treasury with RAI and lending it on Aave, Idle or BarnBridge. At the moment, Aave is offering stkAAVE rewards for RAI lenders and Idle and BarnBridge offer IDLE and BOND rewards on top of the Aave ones. This would allow Nouns to access a new income stream for the DAO as well as keep decentralized assets in the treasury.
I’d also love to hear about other ideas you have to take advantage of RAI’s integrations!
will add my 2c about why stables for the treasury are not a great idea soon, but just want to highlight that the author of this proposal is a creator of reflexer. the line between what’s good for nouns and shilling reflexer is rather blurry here
The Reflexer community welcomes proposals to collaborate and we don’t view them as shills. So did Fei and DXdao and they now hold 7 to 8 figures in RAI.
It’s ok to not accept RAI in your treasury, I actually talked with one of your team members and understood your view. But calling proposals a “shill” is unproductive to say the least.
In either case, wish you good luck with Nouns and hope you guys 100x in size from now on.
my apologies for using the word shill. it was too strong a term and you’re correct to call it unproductive. we haven’t yet encountered someone proposing using treasury funds to buy their own token, which is why i reacted that way. we do appreciate the proposal.
Thanks for this proposal @stefan and welcome! The proposal is light on details though about why Nouns DAO should choose RAI vs other stables or other yield generating opportunities. Does it offer more yield? Does it offer less risk? What is the case you would make for it and use real world numbers and informed expectations both, if you care to make one.
I would warn, we also don’t have as a DAO positive consensus around whether we SHOULD be diversifying our treasury. I would not support diversifying the treasury at this time and separately I would not support yield generating activities with the treasury at this time. It’s something for us to marinate on over the coming months but any action in this direction opens up a can or cans of worms. And I hate worms.
My pushback on RAI specifically, without having the benefit of a fulsome pitch from you, is that RAI isn’t yet suitable for a project like ours.
From a risk perspective: It’s too small ($15 million), too untested, and suffers the taint of the ghostyard of the many other failed stablecoins that preceded it – this DAO is not in the business of determining which new stablecoin will not fail.
From a return perspective: we can earn 5-10% on our ETH. That’s our baseline for ETH on ETH returns. I doubt that RAI can sustain long run returns high enough above that baseline to justify the risks. Most stables have oscillated from 3-15% for “safe” yield farming opportunities fwiw.
Your attention to risk management is admirable and I understand your position. I’m an Ethereum fan because the ETH community is my home and I prefer to hold ETH vs many other assets out there.
I’ll answer step by step:
People talked about the risks of pegged coins and pointed to why RAI here and here. RAI is also ETH pure which appeals to me and many of my friends who love Ethereum. There are several places such as Aave, Fuse, Idle, BarnBridge etc where you can get yield with RAI but it’s true that similar to pegged coins, yield is between 3-10% in most cases
RAI’s market cap is not $15M, that’s just the amount that was market bought by market participants to hold for the long run
I don’t know any pegged coin or other synth that got listed on Coinbase, gets incentives from multiple protocols and attracts projects and DAOs even at a nascent stage to believe in it and hold it for the long run, regardless of how large or small it is. I understand your hesitation although that doesn’t negate the fact that RAI has a strong foundation that’s absent even in pegged coins with 10-20x the market cap
In short, I get your position and respect it. Hopefully we can collaborate later down the line in case the DAO’s plans change.