Treasurer Proposal & Grant

Proposal to establish a treasurer who has a mandate to diversify the Mango DAO treasury and maximize liquidity on Mango Markets.

The goal of diversification is to make the treasury more resilient so it grows through market cycles while maintaining a portfolio of crypto native assets. The goal of maximizing liquidity is targeted to maximize trading fees to the DAO and optimize the DEX user experience.

To achieve these goals, I propose the DAO initially target a portfolio mix of 50% crypto, 50% cash and cash equivalents (T-bills, sDAI, any stable yielding crypto asset with a high preference for Solana native solutions) for all managed funds. Further to generate real yields on crypto utilize option based strategies - a mix of covered call & cash secured puts. The reason for focusing on this strategy to enter into a diversified position is they can source meaningful liquidity onto Mango V4.

To implement this strategy, propose to elect myself as the first treasurer within a 2 of 3 council strict governance in Mango DAO. The full transaction set will be transparent and on-chain using SPL governance. The council tokens remain burnable by the main governance. Adrian has volunteered to participate and we’re looking for a third council member. This governance can also allow community token voting as a direct fallback & safety.

Quarterly performance reviews will be conducted that deliver a treasury report to the DAO that demonstrate the progress made towards both mandates. For Q3 2023, the aim would be to kickstart this by deploying up to a cap of 10M USDC while minimizing the exposure to the treasury council. To accomplish that the main treasury will set up a streaming stipend of 250k USDC per week and the treasury council will soft cap the net AUM to $2M within the multisig by returning excess capital as the desired diversification is reached. The initial target portfolio would be 30% wBTCpo (or native wBTC once live) and 20% stETHpo. The intended 5M allocation towards yield products will remain in the main DAO treasury until there is a suitable money market product accessible on Solana and an allocation has been approved by the DAO.

To align incentives, consideration is proposed in MNGO call options with a baseline 0.25% quarterly management fee. MNGO option expiry should align with quarterly treasury reports with the first proposed as 20M MNGO 2023/10/15 0.02C. The options will always be designed to be out-of-the-money to only award successful outcomes & outperformance. For clarity this means the DAO either pays nothing or sells MNGO at 0.02. There is no set MNGO token vesting like in other grants. We can defer or vest management fees to the end of the quarter as a bond to ensure the community that the treasurer is acting in the best long term interest of the DAO.

For context, the proposed strategy to diversify by selling options will earn premiums and is the same as what is currently being executed to generate liquidity on RNDR perp which currently does 3x the volume of BTC or ETH.

As this is a major new direction for the DAO to take towards growing the treasury and liquidity with a significant amount of nuance I’d like to propose an AMA on Saturday 7/22 at 14:00 UTC.

This post serves as a continuation and means of implementing the discussion in governance forum Discord

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Thanks to those who attended the AMA. Pan completes the first Mango Treasury Council and we will be moving to the voting phase which will be an initial stipend of 2M USDC. Assets will be returned to the main treasury as the target allocations are reached and before additional stipends.

Due to VSR limitations, the treasury council will be a separate Realms DAO, but assets it holds will still appear in the main treasury. The mint/burn authority for council tokens will be controlled by Mango DAO and the council’s realm will use Mango DAO owned governance program version.

Mango Treasury Council has been created using Mango DAO owned governance program GqTPL6qRf5aUuqscLh8Rg2HTxPUXfhhAXDptTLhp1t2J

Council mint authority has been transferred to Mango DAO and USDC transfers have been tested