Treasury Ethos
Last updated
Last updated
Our Treasury Ethos serves as the philosophical guide to our financial decisions. These are the guiding principles our Treasury Council operates within—intended to help us remain resilient through challengeging market conditions, and build for a successful future.
We have several key strategic investments that are particularly aligned to our interests. These follow our rigorous governance and approval process to ensure they’re strategically aligned with the direction of ParagonsDAO, and that our potential upside significantly outweighs any potential downside.
Examples include our grants/seed investments for Guzzolene and Gradient (protocols that will help unlock yield on our NFT assets), Mover and Utopia, potentially The Priming (Web3 infrastructure tools with significant potential), and our partnership with BLVKHVND/STADIUM (investments that will maximize our revenue streams).
We have high convictions about these strategic investments, but they are high risk (and in some cases, high effort).
Our liquid treasury is primarily focused on building products, infrastructure and experiences to help the Web3 game ecosystem flourish. To balance out the risks of our strategic investments, we keep a healthy portion of our liquid treasury in stablecoins in our multisig wallet (i.e. we do not attempt to yield farm) to minimize any risk to these funds through market conditions, contract and exploit risk.
This is inspired by Nassir Taleb’s Barbell Strategy and other principles of sound treasury management.
As of December 2022, we aim to keep enough of our liquid treasury in stablecoins to fund OpEx through 2024 year-end, ensuring our future revenues are sufficient to sustain operations past then. In addition, we should always have at least 6 months of OpEx on hand, in stablecoins. This allows us to continue building with confidence and employing/retaining the right people through all market conditions.
While we want to retain a healthy portion of our Treasury in stablecoins, we also recognize the opportunities that provides us to capitalize on market conditions. ETH is the native currency of the ecosystem we operate within, allowing us to purchase playable assets, broker deals and more — therefore we should have enough of it to benefit from its eventual resurgence.
We recognize treasury management is a moving target. Each quarter, we aim to define/revise simple and specific purchase and/or sale tranches for ETH based on market conditions, always following the motto that we are builders, not traders.
While PDT is our governance token for our community, our treasury also holds PDT primarily for operational purposes, such as funding our liquidity pool, providing contributor (and deal-based) incentives, and for member/player onboarding.
We don’t intend to sell PDT on the open market, therefore its USD value shouldn’t be seen as “liquid treasury” at hand. Our main use case for PDT is to distribute it to contributors, community and partners—those who get involved and care about ParagonsDAO long term. As a result, we may from time to time buy-back PDT from the market if we need to replenish PDT reserves for future distributions.
Any rewards we receive from the games we’re involved in, like PRIME tokens from Parallel, will be partially (30%) shared with our community members as PDT staking rewards.
While we’ve yet to define exactly how the remainder of game token rewards will be used (much of this relies on each game’s token ecosystem, game sinks, utility etc.), we expect that we will use it to fund operations (including trading on the market), reinvest into game assets, and fund competition prize pools, leaderboard and esports team rewards. For each game token, we’ll define how it fits into our broader strategic investment framework.
We do not intend to hold tokens that are not part of our strategic investment framework or the games we earn revenue from. For example, when we’re eligible to claim airdrops, we will cash them in for stablecoins or ETH as soon as practicable unless there’s a compelling proposal otherwise.
