[PIP-14] Treasury Management Next Steps

Summary / Previous Discussions

This proposal is a followup from RFC-8 and PIP-10 and aims to generate yield on PopcornDAO’s 2,030,443.89 USDC treasury utilizing the Origin Dollar.

Main Objective

As stated in RFC-8, the objective of this proposal is to generate yield for PopcornDAO by using the Origin Dollar (OUSD). PopcornDAO will convert the idle USDC, currently sitting in the Gnosis multisig, into OUSD using the OUSD dApp from within the Gnosis platform.

Origin launched in 2017, and in 2020 released OUSD, an ERC20 stablecoin that generates yield while sitting in your wallet. OUSD is backed 1:1 by USDC, DAI, and USDT at all times. Yield is paid out automatically each day, often multiple times per day, though a positive rebase in the form of additional OUSD, proportional to the amount of OUSD held.

OUSD yield, currently ~7% APY, is generated from a combination of:

  1. Deploying collateral to Aave, Compound, Morpho, Curve, and Convex
  2. Incentive tokens (AAVE, COMP, MORPHO, CRV, and CVX) are automatically claimed and converted to stablecoin
  3. A 25bip exit fee is charged to those who choose to exit OUSD via the dapp (completely avoidable if using DEX or CEX), this fee goes back to OUSD holders as additional yield
  4. OUSD sitting in non-upgradable contracts (about half the OUSD in existence, ~$31m) does not rebase, instead the interest generated from those tokens is given to those that can rebase

These 4 yield generating functions enable OUSD to generate higher yields than lending directly to any one protocol. OUSD has been battle-tested with a TVL of $300m in December of 2021, and yields did not diminish with scale. Each week a governance vote is held to determine the best allocation of OUSD collateral between the whitelisted strategies, voted on by OGV holders. OGV is the governance token for OUSD, and any token holder can participate in these votes. Analytics for the current OUSD allocation and backing assets are always available on-chain via the OUSD Analytics page.

There are no lock-ups, terms, or conditions with OUSD; it is completely non-custodial. PopcornDAO can unwind the OUSD investment at any point, at the speed of the Ethereum blockchain. There’s no need to ever again give up the keys to a 3rd party platform, such as Celsius, Blockfi, or FTX, to earn yield.

Risk Mitigation

There are three risks when using OUSD, and Origin is making sure to reduce each risk as much as possible:

Smart contract risk of the yield strategies - Origin is only using platforms for yield generation that have a proven track record, have been audited, have billions in TVL, maintain a bug bounty program, and provide over-collateralized loans. Over-collateralization in itself, combined with liquidations, provides a reasonable level of security for lenders.

Stablecoin depeg risk - Origin has chosen 3 of the largest stablecoins to ever exist to back OUSD, and they have stood the test of time and maintained their peg quite well through multiple bull and bear cycles. They have also demonstrated significant growth in circulating supply, so the Origin team is confident that the 3 stables will maintain their peg and that OUSD will remain stable.

Smart contract risk of OUSD - Origin is taking every step possible to be proactive and lessen the chance of losing funds. Security reviews are prioritized over new feature development, with regular audits being done, and multiple engineers are required to review each code change with a detailed checklist. There are timelocks before protocol upgrades are launched, and deep dives into the exploits of other protocols are constantly being done to make sure the same exploits don’t exist on Origin contracts. Security is extremely important to the Origin team. 7+ audits have been done since 2020, all of which can be seen on Audits - OUSD, and OpenZeppelin is now on retainer. On-chain insurance protocol InsurAce awarded OUSD the highest possible security rating of AAA, of which only 5 projects on the InsurAce platform have received.

Contracts/Technical Requirements

Very little technical work is necessary to execute this proposal, practically none! The OUSD dApp is already available within the Gnosis app catalog. PopcornDAO will convert the USDC to OUSD using the OUSD dApp within Gnosis, and then will “Opt in” to yield generation by clicking the Opt in button within Gnosis or by calling the rebaseOptIn() function.

A screenshot of the Opt in button on Gnosis can be seen here:

Organizational/Partnership Requirements

There are no KYC, KYB, or partnership requirements to earn yield with OUSD. All that is required is to hold the tokens in a rebase-capable web3 wallet.

Next Steps

  • From within Gnosis, convert the USDC into OUSD using the Origin Dollar dApp
  • “Opt in” to yield generation

Please indicate if you approve or disapprove this proposal below. The Origin team is available 7 days a week via the Origin Discord server to answer any questions related to OUSD or this PIP.

Convert PopcornDAO USDC into OUSD
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1 Like

What is morpho? Can you provide information on that project?

25bip exit fee - completely avoidable if using DEX or CEX

What is the liquidity of those markets like? Can you offer examples?

These 4 yield generating functions enable OUSD to generate higher yields than lending directly to any one protocol.

Are these functions immutable? Can collateral or strategies change? What is mechanism the protocol employs for shifting strategies?

Does the MetaStrategy ((https://analytics.ousd.com/) refer to this Curve pool (https://curve.fi/#/ethereum/pools/factory-v2-9/deposit)?

Sure, Morpho is a newer, audited protocol that also utilizes Compound and Aave markets. What’s uniquie about Morpho is that it has the ability to match lenders and borrowers directly, instead of just lending and borrowing from a liquidity pool. Please see the blurb on Morpho on the OUSD strategy page.

On-chain liquidity is high, with several hundred thousand on Uniswap and tens of millions on Curve. If PopcornDAO needs to exit OUSD and prefers to go through a CEX, our Market Maker can assist with ensuring there is enough liquidty to facilitate the order.

Collateral allocation between the strategies is voted on weekly. Anyone can propose a new strategy or collateral, but they must hold 10,000 OGV, they must pass governance, and then they must align with Origin’s security standards, which are quite high. New strategies or collateral must also be audited by OpenZeppelin and sometimes a second auditing service.

For these questions I will ask director of product @micahalcorn to join the conversation

The MetaStrategy uses both the Curve pool and the Convex pool to generate CRV and CVX, which are both automatically claimed, converted to stablecoin, and then into OUSD to be rebased out.

More info on the MetaStrategy can be seen on the OUSD strategy page.

The protocol is upgradeable by the 5 of 8 multi-sig and there is a 48-hour timelock on any changes. You can read more about that in the admin sections of our docs. Launching a new strategy requires approval from this 5 of 8 multi-sig, but there is a limited strategist role that can shift funds between approved strategies. All new strategies go through a rigorous process involving a smart contract review and economic analysis as well as a community governance vote on Snapshot.

Very soon, the 5 of 8 multi-sig will be handing ownership of the contracts to OGV stakers (veOGV holders) so that governance of new strategies will be completely decentralized. The strategist role will continue to have the ability to reallocate funds as directed by the community and also take emergency actions like withdrawing from strategies or pausing the protocol.

1 Like

@micahalcorn @pete can we set up a TG group? Also, are these all the deployed contracts and were they all audited in the most recent OpenZeppelin audit? Thanks

If you are part of the core PopcornDAO team please ask the founder to add you to our TG group. If you are not, I’ve created this group for faster communication regarding questions on the proposal and on OUSD.

These are the contracts for the strategies. There are other contracts not included on that list, please see the full contract registry on this page in the OUSD docs.

The Compound, Aave, and Convex strategies were audited at some point. Convex was audited the most recently by OZ in October, the others in previous audits. The only strategy not audited externally (yet) was Morpho but it is much simpler and aside from conducting a thorough internal audit ourselves we also had the Morpho engineering team review that strategy. Since we now have OZ on retainer, we will be doing audits every quarter. The Morpho strategy should be included in the next round of audits, among other new contracts that we’ll develop.

This PIP is currently live on Snapshot, voting will remain open until Jan 7, 2023, 4:15 PM EST

1 Like

Hey, sorry for being late to comment.
What is the logic behind putting all POPcorn DAO´s treasury into a single asset vs diversifying?
@Bernard asked this same question here but there was no answer as far as I can see

Hi Mettodo,

This proposal is not to put all of the PopcornDAO treasury into OUSD, rather, only the treasury assets that were previously held in the Aragon vault. While sitting in Aragon, PopcornDAO’s USDC was not generating any yield. But with OUSD, PopcornDAO will receive consistent daily yields indefinitely, while maintaining custody the whole time.

The PopcornDAO treasury assets on Polygon and Optimism are not affected by this proposal, nor are any other ERC20 asset in the treasury other than USDC.

1 Like

Got it.
Is there any dashboard where we can view all POPcornDAO treasury?

The Popcorn mainnet treasury can be found in the Contract Registry. I am not sure if there is a place to view the multi-chain treasury. The OUSD Analytics Page may be helpful once the transition to OUSD has been made.