Gov. token collateralised bonds for treasury mobilisation

Hey guys,
So after a couple months’ research into DAO treasury management there’s one primary problem that one consistently runs into when looking to diversify and mobilise treasury value, a problem I will here refer to as ‘illiquidity 101.’

It looks something like this:

Sell governance tokens to market, instantly acquiring liquid assets but dumping on holders.

Don’t sell, and leave the treasury undiversified and significantly sub-optimised.

At the time of writing, RookDAO holds ~160k $ROOK in the treasury at a market value of $4m, roughly 9% of the total treasury value.

This post proposes that 25% of the Rook token held in the treasury is deployed and used as 1:1 collateral for bonds, available on the open market, yielding 5% a year.
Assuming a full sellout, this will result in $1m of liquid assets being made available to the DAO, which can be utilised to secure a runaway or deploy to yield bearing strategies.

There are a couple of teams working on providing the infrastructure for this kind of product at the minute and it makes a degree of sense given that bonds have been such a staple primitive for web2 fundraising; a web3 adaptation of the underlying idea seems inevitable and potentially a way to circumvent the illiquidity 101 problem.

Would love to get some feedback on this idea - what is the community sentiment on this? Is 5% a reasonable target yield?

Hey There - thanks for posting your idea here. While it could be something worth exploring, I think we need more information to work with and should likely include other attributes that need to be disclosed before fully discussing the viability of this option. For example, this proposal doesnt state where or how these funds would be deployed.

While this template has not yet been fully ratified through governance, this would likely help you assess the full scope of the information needing to be included: KIP Draft: Treasury Investment Template

While others may want to pursue this option as documented, I personally will not be in favor of this until there are more details.

Hey x50 - thanks for this posting. As @DaddyMatty said, we generally look for more information in a formal proposal, so if you’re interested in moving forward more concretely then take a look at that template and let us know. It requires some more work to get there but we can work with you as editors on that process.

One other thing I’d say is that proposals usually start elsewhere, typically in our public Discord, which allows authors to do a temperature check as they develop and refine their ideas. There’s a “Proposals” channel there specifically for this process. That channel is here: Discord. We also have space in our periodic Treasury and Governance workshops (including one this afternoon at 3) where community members can bring new ideas like this and get feedback.

Hope that helps - thanks again for this posting!

I would be hesitant to pursue an option like this at 5% yield.

My initial thought is that if you look at a treasury like Uniswap where nearly 100% is native tokens it probably makes sense. I don’t know if it makes sense for our treasury given that we’re already quite diversified with a large chunk of our assets in stablecoins.

I am no expert in bonds, nor the options available in web3, though so I would need some more information. Do you have a specific protocol in mind?