kip: 38 title: Replenish Discretionary Investment Limit Funds category: delegation of powers author: @DaddyMatty (firstname.lastname@example.org) status: Sophon review created: 2022-10-17 replaces: none dependencies: KIP-23
 KIP-23: Discretionary Investment Limit
 Transfer of ROOK from seller to DAO Treasury
 Transfer of renBTC from DAO Treasury to seller
 OTC Trade announcement on Discord
 Rook DAO Treasury dashboard
 Discretionary Funds Tracker
Replenish funding available for discretionary investments to applicable limits as outlined in KIP-23  through September of 2023.
In June 2022, the DAO unanimously approved KIP 23, which empowered Rook Labs to make investments up to the lesser of $5M or 5% of the treasury’s notional value every 360 days. The intent of this KIP was to enable the DAO to take advantage of certain opportunities that must be capitalized on quickly or in a non-public fashion.
In September 2022, Rook Labs utilized the discretionary powers KIP-23 enabled for the first time to acquire ROOK from a large token holder. More specifically, Rook Labs repurchased 51,091 ROOK for the Rook DAO Treasury, using 96.6 renBTC from DAO Treasury assets. The trade, which was approved by Rook’s CEO and CTO, was executed OTC at a fixed price of 0.001891 renBTC per ROOK [2,3]. In keeping with the requirements of KIP-23, the trade was approved by Rook’s CEO and CTO and announced to the community the following day . The seller was a retail investor, not a team member or VC. Due to macro market conditions, they were looking to raise cash, and when they made a decision to de-risk, they reached out rather than selling on a secondary market.
Although offers of this kind are typically not entertained, Labs acted on the opportunity one for a variety of reasons.
- The block was significant, approximately 4% of the total supply of ROOK.
- The total outlay for the purchase fell within the limits of KIP-23 , which allowed the purchase to occur swiftly while preserving the seller’s anonymity.
- We believe strongly in the future of the project, and can envision many uses for these tokens in the future, including M&A, strategic partnerships, contributor grants, and other special incentive programs.
The rationale for assigning discretion over a portion of the portfolio to the Treasury team remains as established (and ratified) in KIP-23 . However, the recent renBTC trade has depleted the funds available for this discretion.
At the time of transfer, the renBTC consideration sent to the ROOK seller was valued at approximately $1.95M . During this time, the Treasury maintained approximately $54.16M  in total assets, and therefore, 5% of the Treasury would equate to a $2.71M discretionary limit. This means that there are approximately $759k in remaining funds available for discretionary purposes until September 2023. Ongoing monitoring of the remaining discretionary balance can be found on our tracker . While these funds would allow for action to be taken for relatively small opportunities, it would severely limit the DAO’s ability to take advantage of other larger, strategic opportunities that may arise.
This document therefore proposes to return the discretionary funds to the mandated cap of the lesser of $5M or 5% of the treasury’s notional value for the remainder of the 360-day period since the renBTC investment.
Replenish funding available for discretionary investments to applicable limits as outlined in KIP-23  until September 2023.