PDAOPOOL is an option for consolidating the legacy Ehtereum L1 pools in the PowerUniverse, rewarding early supporters who invested in prototype pools, and ensuring diversification of the PowerPool DAO Treasury
Migration Strategy - Legacy Funds
Existing long-only prototype ‘index’ products PIPT, ASSY and YETI are somewhat of a liability from the viewpoint of promoting the composable PowerUniverse family of pools. They duplicate holdings, mix long-only and more defensive tokens in the same pools, contain 'captive', unstake-able CVP, and overlap too much (all within Ethereum DeFi) to be composable, especially if another, broader and more hedge-able pool token like PPSDEFI is introduced. Over time, under the supervision of the DAO and without slighting existing legacy pool token holders, these legacy product pools need to be deprecated.
The roadmap below will not only deprecate PIPT, ASSY & YETI, reward early supporters and ensure prudent diversification of the DAO Treasury, currently too dependent on CVP alone.
- Migrate all existing legacy pools to Balancer V2;
- Merge all the tokens in the 3 legacy pools into a single new pool called simply PDAOPOOL;
- Declare a dividend and airdrop all the CVP in the combined pool to PDAOPOOL token holders, encouraging them to stake as xCVP to take ownership of the DAO;
- As an incentive/reward for converting/investing in PDAOPOOL, include a redeemable Iluminati NFT as a bonus in the airdrop;
- Implement periodic dynamic rebalancing/yield optimisation of the PDAOPOOL pool with variable composition and weights going forward (see portfolio strategy options below);
- Initiate a buy-back program, whereby PDAOPOOL tokens are periodically acquired by the Treasury at market price until essentially all have been bought back
Subject to DAO approval of this roadmap, PowerPool could migrate holdings of existing (legacy) long-only product holdings towards creating a new, more consistent and broadly-marketable family of pools using dynamic DAO re-weighting to systematically re-classify both existing and proposed new future holdings.
Below, I have taken a ‘first cut’ at re-classifying existing legacy pooled holdings into actionable, forward-looking category shortlists. I have ignored the components of YLA and the neutral high-yield vehicles in general, although holdings like PICKLE and ROOK may be better managed from the neutral, yield-oriented management posture.
(Don’t tell the US SEC, but this absolutely IS investment advice...probably worth what you paid for it!)
"Don't tell me what you think...show me your portfolio"
- Nassim Nicholas Taleb - Incerto
Legacy Pool Migration/Distribution
- CVP - Once consolidated into a single PowerPool PWRPOOL, CVP currently held in legacy PIPT, ASSY & YETI pools should be airdropped/dividended to PWRPOOL token holders, broadening the community and encourging them to stake as xCVP. Other Treasury CVP can be used to seed liquidity on new DEXes like Bancor. Once the market learns that CVP/xCVP is the ‘Swiss Franc’ of crypto, underpinned not only by real fee income, but also NAV gains in the DAO Treasury from defensive/bear/shorting gains, the CVP/xCVP token pair should start to trade at a premium whenever the markets get nervous. The priority is to use meta-governance initiatives to get CVP broadly listed on not only lending, but also partner synthetics/derivatives sites, enabling the PowerPool DAO to hedge Treasury CVP via inverse synthetic tokens and derivative positions. This defensive posture will ensure that Treasury CVP is protected, bolstering Treasury NAV and cushioning any future fall of CVP relative to the market.
YFI - HODL-probably a core holding of the flagship PWRPOOL fund....love the tokenomics...
- MakerDAO MKR - HODL governance play, also collateral voting? MakerDAO’s revenue growth continues to soar as DAI supply nears the $4 billion threshold. At current levels, MakerDAO’s run rate is $152.5 million. The Maker Foundation announced that they had transferred their entire dev fund ($464 million) to the DAO which gives MKR token holders total independent control over these funds.
- Pickle PICKLE - arbitrage pools - move to neutral/yield vaults ‘silver’ list?
- KeeperDAO ROOK - governance play and arbitrage pools - defensive token that benefits from liquidations - move to neutral/high yield ‘silver’ vaults list?
- Tornado Cash? - governance play - holds about $750 million in the Treasury….what for?
- Continuously ask DAO for other nominations, especially protocols where winning listings/pool composition cooperation by governance voting capability is possible; DEXs, lending sites, synthetics platforms and derivatives sites especially.
Bullish/Long Accumulate Shortlist
The management style for the target tokens on this list is to increase holdings, primarily to gain ever-increasing voting influence over listing decisions, but also because they hopefully achieve high enough consensus weightings in DAO stake-weighted voting.
- Aave/AAVE - contained in PPDEFI- major lending site - (vote for collateral)
- Synthetix/SNX - contained in PPDEFI - major synthetic site (vote max SNX for collaboration). KWENTA and two other projects will be spun-off with their own tokens airdropped...what to do with the tokens?
- SushiSwap/SUSHI - contained in PPDEFI - (vote for listings-BentoBox/Kashi)
- CREAM/CREAM - contained in BSCDEFI - lending site - (vote for listings)
- Compound/COMP - contained in PPDEFI - major lending site
- Uniswap/UNI - contained in PPDEFI - governance play on fees from Treasury
- Akropolis AKRO - ???- performs as a front-end for Yearn Finance, minus the institutional focus. This hasn’t worked well for Akropolis so far, whose AKRO token is down 60% in the past 90 days while Yearn’s YFI is up 6.30% in the same span
- My first nomination for whitelisting? Bancor…(alpha leak)
- dYdX - perpetual derivatives site - sadly, no token yet...news flash...now token!
- My second nomination for whitelisting? Perpetual/PERP - perpetual derivatives site (on low-cost xDAI, for which PowerPool has a bridge) that permits effective, flexible hedging even cross chain. L2=Arbitrum
- CREAM is lending 33 assets on BSC,19 Assets on Fantom and 50 assets on Ethereum. (How did they choose which assets to list? Governance!)
Defensive/Hedged Counter-cyclical Shortlist - Etherium Defi
Tokens on this list have generally passed through the opportunities red list and benefited from governance actions to broaden listings and increase liquidity before considering implementing defensive hedging or bearish/short strategies. The objective of managing this short-list through the DAO is to position CVP/xCVP as a defensive, counter-cyclical, volatility-reducing position in the crypto market where almost nothing like this exists except for naked shorts of synthetic benchmark tokens like inverse iBTC & inverse iETH.
- CVP - Defensive Hedged - The DAO Treasury will hold significant CVP, buying, selling, charging internal transactions fees, funding market-making (via Wintermute) and potentially LPing CVP on DEXs like Uniswap V3, and eventually Bancor and others. A key policy to be monitored by the DAO, perhaps even weekly, is whether to increase or decrease the downside protection on Treasury CVP (not stake-able as xCVP). It is possible that in order to preserve the defensive positioning of CVP/xCVP, the DAO could decide to go beyond just hedging Treasury CVP, and actively take short positions against CVP in the open market.
- wNXM - Defensive Counter-cyclical Because of the dynamics of the NXM bonding curve, staked NXM cannot be freely traded for ETH without a 30-day lock-up, and then only if the aggregate demand for insurance is less, not more, than the NXM staked in insurance pools. Freely-tradable wNXM is a countercyclical investment that could go up a lot whenever the DeFi market slows down and demand for insurance relative to staked NXM goes down, at which point arbitrage bots quickly drive the price of wNXM up, reducing the wNXM liquidity discount versus the unstaked NXM that can be sold for ETH, but only whenever demand for insurance falls. This is a classic asymmetric defensive holding that belongs in a defensive fund. It should be moved into the Treasury, along with all CVP. It could be LPed on Bancor with no risk of IL. Another interesting option would be to stake it with insurance yield optimiser iTRUST, which will manage optimal pledging across not only Nexus Mutual pools, but eventually other insurance pools as well. In any event, this would be a defensive holding, and also subject to non-market related dips due to claims affecting the yield.
- My personal defensive suggestion - ZRX - Defensive hedged. ZRX is a low volatility governance play with upside potential to increase fees at least 4 times and still be competitive. It is gas efficient, MEV resistant, zero slippage virtual distributed DEX. It is spread across multiple UIs and accommodates both CLOB and AMM market-making. It is listed widely enough across DEfi that it can be closely hedged at scale, and in a sustained downturn gains on the hedges could help cushion DAO NAV, contributing to the defensive positioning of CVP/xCVP.
- Community nominated ‘hit list’ of zombie ghost chain tokens, over-incentivated cut-paste-fork cloned shitcoins, slow-motion Ponzi schemes and any likely rug-pulls we can find a way to borrow or otherwise bet against. New, permissionless lending sites are making this kind of strategy possible. See for example, BentoBox & Kashi in the Sushiswap family.
- Ask the DAO for suggestions for rewarded tips from fellow ‘Illuminati’…...other tokens with flagging fundamentals that are eventually moved through the sequence from red, to white, to this grey-list for hedging and eventually shorting however possible.
Remember: price and liquidity move together and are high in bull markets and low in bear markets. Also remember that gas fees rise very quickly when everyone wants to rush to the exit. Creating options for systematic auto-hedging is important.
Shorting Options using new lending protocols - Kashi/Bentobox
Having the ability to borrow an asset also opens up the possibility for shorting it. This is useful for speculators who believe that the asset will go down in value but also allows for hedging, which can be extremely handy, for instance, when yield farming risky assets.
As an example, let’s say a new token is launched. Any one can create a money market for the new token on Kashi which allows anyone to provide collateral in a chosen coin, let’s say ETH, and borrow the new token. The short seller can now borrow the new token and sell it immediately for ETH. If the price of the new token goes down in relation to ETH the short seller can buy back the new token at a lower price in the future and repay their loan denominated in new tokens.
The main caveat is that in order to create a money market for a new token there has to be a reliable price oracle available. Kashi allows the user to choose a price oracle at the time of creating a new market. At the moment, only price feeds available on Chainlink can be used, limiting the number of possible new markets that can be created. However, the Sushi team is working on adding their own TWAP price oracle that would expand the set of available price feeds.