Hedgey Advisory (part of Hedgey Finance) to provide advisory services regarding new Tokenomics and Treasury Management for Venus DAO for 3 months, with the option to roll the services into a recurring quarterly provision.
The Proposal
Rationale
State of the Venus Ecosystem
The Venus protocol and ecosystem plays a critical role in the Binance Smart Chain defi ecosystem, providing the best and most actively used money markets protocol (lending & borrowing). Because the protocol plays such a significant role, the DAO treasury needs to be run like a well oiled machine for the longevity and maintenance of the protocols and of the DAO and broader community.
State of the Venus DAO Treasury & Tokenomics
As Venus DAO looks to revise its Tokenomics for this newest iteration, and build out a transparent and efficient operating DAO, additional expertise from a new advisory group will be extremely beneficial. With the goals of architecting a new tokenomics framework, and developing a robust treasury management team from scratch, an advisor with the expertise in these areas and dedicated focus will bring invaluable insights to the DAO, working alongside the already existing community to ensure DAO and community alignment.
Why an advisory group
Developing a new tokenomics framework is very complicated, and involves many considerations. As such diversity of opinions are important, and utilizing expertise of an outside advisory group will bring about new viewpoints, sourced from prior experience and knowledge of other tokenomics, to assist in the framework development best suited to align the incentives of the DAO, current and future community and contributors. DAO Treasury management is a new and increasingly important responsibility within the broader DAO management team, especially as it relates to the treasury’s responsibility to ensure the DAO can fund itself and all of its obligations and goals. A group of expert advisors will be critical to provide best practices, modeling, risk management techniques, and policies and procedures built from traditional finance frameworks but incorporating all of the nuances and unique requirements for DAO and specifically the Venus DAO.
About Hedgey:
Hedgey is a group of defi builders and treasury professionals. Hedgey has two segments of business, its DeFi protocols (Hedgey Protocols), and a treasury advisory and services business (Hedgey Advisory). Hedgey Protocols builds decentralized protocols & tooling for DAO treasuries, built for diversification, native token yields, and contributor & DAO aligned payments. Hedgey Advisory utilizes its financial and treasury expertise to provide world class advisory and treasury management services, ranging from general financial advice, tokenomics and token deployment advisory services, and a full range of treasury advisory and management services. The Hedgey Advisory business does not have any mandates to use Hedgey DeFi protocols, its purpose as an advisor is to act as a fiduciary and in the best interest of the DAO, its community, and its treasury. There is a single principal from Hedgey Advisory, with additional members from the team committed to the project on an ongoing basis, depending on the workload.
Hedgey Advisor Principal
Principal: Alex Michelsen, currently the co-founder and CFO at Hedgey. He has been building in DeFi as a solidity developer and product manager for 4 years. He has 10+ years experience in traditional finance, with a CFA, former work as the global treasury manager at WeWork for 6 years, and worked prior in the corporate bank at JP Morgan. As a solidity developer, he also performs due diligence on protocols that are used for treasury portfolio management outside of Hedgey, to help DAOs earn yield on idle balances, and perform lending / borrowing activities.
Mission and Values
Hedgey Advisory’s mission is to bring world class tokenomics, portfolio and treasury management services to the world of DAOs. In its capacity as an advisor or service provider, Hedgey acts with a fiduciary mindset, putting the interests and needs of the DAO and community before all else, prioritizing the following to establish and maintain trust with the DAO and its community and contributors:
- Safety and security: It is critical to perform responsible due diligence and risk assessments for any tools, crypto holdings, counterparties, and protocols to ensure the utmost safety and security for the assets held by the DAO treasury portfolio.
- Longevity: To ensure the longevity of the DAO for the benefit of the contributors and employees, community, protocol, and broader ecosystem of Venus DAO.
- Transparency and open communication: Provide advice and management services in an open and transparent manner, ensuring portfolio management and performance are transparent, with open communication to the DAO and members to evaluate successes and failures of the services provided.
- DAO Interests First: To prioritize the interests and benefits of the DAO above all else when undertaking advisory activities, to avoid any conflicts of interest and publicly and transparently communicate if any arise, and to make recommendations based on best expertise and most appropriate solutions to the DAO for its benefit, without contemplation to any other business relationships.
The Roles & Responsibilities
The role of the advisor will be to advise, provide due diligence, and best practices and expertise as it relates to the various subtasks laid out below.
Advisor Tasks
| Task | Description |
|---|---|
| Tokenomics Advisory | Provide advice regarding new XVS tokenomics. Perform collaborative due diligence with the community to understand where the most value to the DAO and community can be derived and aligned. Advise on communication with the community and DAO contributors regarding the impacts to new tokenomics, as well as provide technical expertise (as needed) for the design and mechanics of the XVS distribution systems. |
| Financial Reporting Standup | Every DAO should provide at least quarterly reporting on its finances, in particular the balance sheet and operating profits and losses as it relates to the DAO operating treasury. Venus Protocol may require additional financial reporting on the portfolio of deposits and loans within its protocol, revenues, and risks surrounding those activities. The advisor will provide best practices, as well as actively engage in building out financial reporting standards, models, and tools to be used by the current DAO finance members, as well as future DAO members. Building tools that new contributors can seamlessly take over is an important final stage in this role, ensuring seamless transitions to future DAO contributors when necessary. Budgeting for quarterly and annual projects is necessary to establish within the financial reporting standup. |
| Cash Flow Forecasting | Advise on best practices and modeling techniques to build forward looking cash flow forecasts. The term Cash Flow, in this context includes all crypto currency movements as related to the DAO treasury portfolio. The goal of the cash flow forecast is to assess the runway, and ongoing cash needs of the DAO treasury to ensure that it can support all of the goals and projects the DAO plans to undertake, within an allotted and approved budget. |
| Treasury Portfolio Risk Assessment | Advise on building and maintaining risk models as related to the treasury portfolio, revenue and operating expenses. The portfolio needs to weigh risks vs benefits of its investments, in addition to aligning short and long term assets and liabilities. Advise on VaR (value at risk) reporting. Advise on allocating and deploying treasury funds to various protocols for diversification, yield strategies, and other portfolio allocations. |
| Treasury Policies & Procedures | Advise on creation of well documented policies and procedures that are approved by the DAO. |
| Treasury Diversification | Advise on various diversification strategies, if and when needed, and proposing various protocols to use. Providing some due diligence on protocols risks and benefits, both on a technical level and from the perspective of the community and broader ecosystem. |
| Treasury Portfolio & Asset Management | Perform and provide research and financial analysis of investment opportunities, yield strategies, the associated financial and protocol risk, and assist with proposals for new investments by the DAO. Provide advice on creating and maintaining an investment mandate and policy, developing tracking and reporting on the performance and risks of the portfolio investments. |
Compensation Model
We propose compensation for each 3 months service term to be paid 50% in BUSD (or equivalent stable coin), and 50% in native XVS tokens. The 50% paid in XVS tokens will be paid using the Hedgey time-locked tokens NFT protocol; with a 6 month cliff time-lock vesting period. This aligns the advisory group with compensation available from the treasury in stable coins now, as well as longer term commitments with the 6 month token-time-lock.
We propose payment for the services in two payments, one at the approval of this proposal and onboarding of the advisor, and the other half at the end of the 3 month term, with the amount of both BUSD and XVS tokens determined as below, based on the trading value on the day of the agreement being entered into, equally [$9,000] equivalent per 90 day term;BUSD: XVS.
Engagement expectations
The advisor is expected to provide work services for on average [5] hours per week with Venus DAO, plus regularly attend community meetings in addition to focused tokenomics and treasury management meetings. The advisor is expected to provide written materials and research documents, and provide and/or present those to the community regularly and when appropriate.
Evaluation Metrics
Evaluation will be broken down into two categories:
- Tokenomics Evaluation:
The DAO team and community should evaluate the impact of the advisory services as it relates to tokenomics based on the level of participation and engagement, and in particular bringing new and useful information and ideas to the table of discussion. It may include an exceptional result of the advisors’ frameworks being integrated as a core piece of the new tokenomics architecture.
- Treasury Management Evaluation:
The DAO team and community should evaluate the impact of the advisor as it relates to treasury management having assisted the DAO with completing the following tasks, and having been transparently delivered to the community:
- Regular financial reporting to the DAO community
- Cash flow forecasting reporting & burn rate analysis
- A policy document outlining processes for reporting, cash flow forecasting, and an investment mandate for the treasury portfolio
