–Background–
On Aug 26 2023, the Stargate DAO passed the renewed liquidity incentives mandate proposal, aiming to both reconsolidate non ETH, USDT and USDC assets as well as STG LP positions on various DEXs into ETH, USDT and USDC and deposit them in Stargate V2 pools. The Stargate DAO treasury also has an estimated $3.2m in ETH, USDT and USDC sitting idle in wallets across Stargate supported chains that the DAO could deploy into Stargate V2 pools.
–Purpose–
The purpose of this proposal is for the DAO to consolidate existing positions it holds. If this proposal is approved, this consolidated capital could be used in future to deploy onto HydraChains. The benefit here is that on top of earning on the LP positions, the capital creates Protocol Locked Liquidity, which is a two-fold benefit for the DAO.
–Proposal–
This proposal is made of four parts, as is outlined below.
Part 1:
The first aspect of the proposal as mentioned above is for the DAO to consolidate non ETH, USDT and USDC positions. These tokens will either be consolidated into ETH as per the liquidity incentives mandate proposal or redistributed as incentives for chains Stargate supports.
| Chain | Asset | Amount |
|---|---|---|
| Ethereum | CRV | ~$110k |
| Ethereum | FRAX | ~$992k |
| Ethereum | BAL | ~$96k |
| Ethereum | AURA | ~$205k |
| Ethereum | METIS | ~$15k |
| Fantom / Sonic | FTM / S | ~$58k |
| Total value | ~$1.48m |
Figure 1.
The table in figure 1 includes non USDT and USDC assets, which can be swapped for ETH, to be deposited into Stargate pools and increase POL, in turn reducing the amount of STG incentives paid out to LPs.
The FTM/S tokens that were received retroactively should be redistributed as incentives for LPs on Sonic. METIS tokens will be redirected to the Metis pool as additional liquidity.
Part 2:
| Chain | Asset | Amount |
|---|---|---|
| Ethereum | ETH | ~$231k |
| Ethereum | USDT | ~$39k |
| BNB Chain | USDT | ~$24k |
| BNB Chain | USDC | ~$33k |
| Avalanche | USDT | ~$722k |
| Arbitrum | ETH | ~$308k |
| Arbitrum | USDT | ~$21k |
| Optimism | ETH | ~$52k |
| Optimism | USDC | ~$13k |
| Fantom / Sonic | USDC | ~$817k |
| Metis | USDT | ~$194k |
| Base | ETH | ~$570k |
| Base | USDC | ~$140k |
| Total value | ~$3.164m |
Figure 2.
The second aspect of this proposal would be to deposit the estimated $3.2m of USDT, USDC and ETH into Stargate V2 pools to further increase POL in the protocol and reduce the incentives paid out. All future POL generated should be auto-deposited into Stargate’s V2 pools, unless otherwise mandated.
Part 3:
Part 3 of this Stagate treasury consolidation proposal will include withdrawing some of the DAO’s LP positions for STG/USDC, STG/WETH and etc. pairs on various DEXs across Stargate supported chains. Stargate DAO has an estimated $39m in STG pairs on various DEXs across Stargate supported chains.
| Chain | Protocol | Pair | LP amount | Volume (90d) | Liquidity use (LP/Vol) | Yield generated |
|---|---|---|---|---|---|---|
| Ethereum | Aura Finance | STG/USDC | $9.7m | $46.4m | 0.21 | 17.5% |
| Ethereum | Covex (Curve) | STG/FRAXBP | $2.8m | $9m | 0.31 | 8.45% |
| Ethereum | Covex (Curve) | STG/USDC | $3.7m | $18m | 0.21 | 9.17% |
| Ethereum | PancakeSwap V3 | STG/USDC | $4.0m | $80m | 0.05 | 19.87% |
| Ethereum | Curve | STG/USDC | $1.8m | $18m | 0.1 | 1.07% |
| Ethereum | StakeDAO (Curve) | STG/USDC | $1.8m | $18m | 0.1 | 5.94% |
| Ethereum | Yearn V2 (Curve) | STG/USDC | $1.6m | $10m | 0.12 | 0% |
| Ethereum | Pendle V2 | USDT | $103K | - | - | 0.98% |
| BNB | PancakeSwap V3 | STG/USDT | $1.71m | $63.5m | 0.03 | 23.18% |
| Avalanche | LFJ | STG/USDC | $1.79m | $14.2m | 0.13 | 11.95% |
| Polygon | SushiSwap | STG/USDC | $1.56m | $8.34m | 0.18 | 14.14% |
| Arbitrum | Pendle V2 | USDT | $190k | - | - | 0.04% |
| Arbitrum | Balancer | STG/USDC | $1.47m | $14.5m | 0.10 | 7.32% |
| Optimism | Yearn V2 | STG/USDC | $3.26m | $31m | 0.072 | 16.62% |
| Optimism | Velodrome V2 | STG/USDC | 1.61m | $31m | 0.052 | 19.43% |
| Total value of LP | $35.3m |
Figure 3: All staked, farming or LP positions held by the DAO.
The positions that see significant volume and generate good POL for Stargate like PancakeSwap, Velodrome and others are still aligned with previous mandates and could be kept. Other positions that yield less than what the DAO is paying out as incentives should cautiously be removed.
It is important to note that trading volume in the past 90 days has spiked and hence the yield indicated above may be higher than usual. Moreover, STG earned on Stargate’s farms can continue being bridged to chains where liquidity still exists on DEXes.
STG tokens withdrawn should return to the DAO wallet while USDC / USDT should be deposited into Stargate V2 pools.
Part 4:
The 4th part of the proposal involves the moving of POL locked within Stargate pools from V1 to V2 pools. Currently Stargate generates little to no revenue on its V1 pools as majority of bridging is done via V2 pools. Additionally, most partners have now migrated to being built on Stargate V2.
The estimated value of these pools are indicated in the table below.
| Chain | Asset | Amount | Total value |
|---|---|---|---|
| Ethereum | ETH | ~$1.6m | ~$9.38m |
| USDC | ~$6.5m | ||
| USDT | ~$1.0m | ||
| DAI | ~$210k | ||
| METIS | ~$16k | ||
| BNB Chain | USDT | ~$7.0m | ~$7.01m |
| BUSD | ~$41k | ||
| Avalanche | USDC | ~$5.8m | ~$8.89m |
| USDT | ~$3.1m | ||
| Polygon | USDC.e | ~$6.2m | ~$8.93m |
| USDT | ~$2.7m | ||
| Arbitrum | ETH | ~$3.6m | ~$7.91m |
| USDC.e | ~$2.1m | ||
| USDT | ~$2.2m | ||
| Optimism | USDC.e | ~$2.7m | ~$5.68m |
| ETH | ~$2.3m | ||
| DAI+FRAX | ~$13k | ||
| Fantom / Sonic | USDC | ~$1.2m | ~$8.33m |
| USDC(Multichain) | ~$7.2m | ||
| Base | USDbC | ~$1.9m | ~$9.38m |
| ETH | ~$2.1m | ||
| Kava | USDT | ~$45k | ~$45k |
| Linea | ETH | ~$916k | ~$916k |
| Total value | ~$61.2m |
Figure 4.
The $61.3m worth of POL that is in the form of ETH, USDT, USDC and other tokens are held by the DAO treasury in Stargate V1 pools that the protocol no longer incentivises. This portion of the proposal aims to first off, convert non USDT and USDC stablecoin into USDC or USDT to be deposited into V2 pools. This $61.1m in POL would be able to reduce the amount of STG being given out as incentives at the moment.
–Execution–
First aspect:
Tokens listed here were collected or earned as rewards for LPing STG/USDC or other STG pairs and will look to be consolidated into ETH given that ETH currently makes up the smallest percentage of the DAOs treasury in comparison to USDT and USDC.
This swap will be executed in the most optimal way, be it via aggregators or OTC.
The ETH received will then be deposited into Stargate V2 pools to increase POL.
Second aspect:
These assets will simply be deposited into Stargate V2 and increase POL.
Third aspect:
The DAO currently has approximately $39m worth of LP, farming or staking positions which it can reduce to allocate elsewhere that generates higher and more productive yield. These positions will be withdrawn slowly in increments to ensure that in the case of price movements, there is sufficient liquidity to capture volatile moves.
Fourth aspect:
Similar to aspect two, the DAO would firstly swap non USDT, USDC, ETH tokens into one of the three via an aggregator and have them be deposited into Stargate V2 pools for the moment.
–Final Notes–
Any future opportunities will require future proposal/mandates before any execution. Audits will be carried out wherever relevant and security of the DAOs capital should be of the utmost importance.