Concentrator Is For for DAOs
DAO treasury management is painful. Managing members’ money well is both a serious challenge and a tremendous responsibility. This is doubly true for DAOs with an important purpose, where the stakes are high and treasury mismanagement is an existential threat.
The challenge is multi-dimensional. DAOs rely on their treasuries to achieve their goals independent of market conditions, so the treasury must be resilient. And yet, if the DAO’s treasury is to grow in good market conditions, managers must take risks. On top of all this, the logistics of coordinating multiple signers, perhaps across multiple wallets, makes active or timed strategies excruciating.
Concentrator is an entirely new type of DeFi compounding system built upon the Curve/Convex ecosystem that is ideally suited to support intelligent treasury management for DAOs. Concentrator enhances yields on core assets that DAOs should be holding, and it automates management transactions that would be overly burdensome to execute via multisig. Concentrator helps depositors maximize earning in tokens that have high long term upside and yield potential, and which also provide excellent optionality and utility for actions that a DAO may find themselves needing to perform.
How does it work?
Concentrator is an autocompounder that automatically harvests rewards from Convex vaults, swaps them into cvxCRV, and stakes those on Convex (auto-compounding). Since compounding cvxCRV on Convex currently returns around 50% APY, the overall result is base Convex yields increase by that much, and they do so by holding the cvxCRV token and retaining price exposure to the Convex and Curve ecosystem.
DAO treasuries should be resilient
First and most importantly, we assume that DAO treasuries should be as resilient as possible, so they are actually available to support the function and purpose of the DAO in all market conditions; surviving downturns but also capturing upside during good times. The best and simplest way to create this type of hardiness is to hold some mixture of core assets like ETH and stablecoins. Such assets form a foundation upon which a DAO can rely. Concentrator, being built on Convex, has several vault options in core assets, allowing for a sane allocation of principal while at the same time earning good rates denominated in quality tokens.
DAO treasuries should be mostly passive
Generally to increase yields a farmer employs compounding or other active management, involving regular claiming or swapping transactions. In the case of compounding, more frequent transactions translate into higher yields. For individuals this is a nuisance, but for DAOs constant management activities can be a serious barrier. Where a DAO treasury is managed by a multisig (which should always be true), each transaction requires signatures from several people, often spread geographically and across time zones.
Complicating matters further, these multisig holders may not be work-a-day DAO people, but could be community leaders, or third-party ‘auditor’ types who may simply not have time to devote to such day-to-day management transactions. In practice constant management transactions using a DAO multisig is likely just not sustainable, and so passive solutions are needed. Holding spot or passively providing liquidity are good options, but the automated yield enhancement of Concentrator is ideal.
DAO treasuries should farm tokens with both upside and utility
The final key to smart DAO asset management is in the selection of higher-risk tokens for farming. While it’s possible to swap rewards for more core assets (as a typical autocompounder would), DAOs and other large treasuries can instead choose to seek more upside in their yields by farming more volatile tokens. In this case, making a wise selection of which tokens to farm is crucial.
AladdinDAO, the team behind Concentrator, is built around an elected council of top DeFi experts called the Boule council. The enthusiasm of the Boule for the excellent Curve/Convex ecosystem is what prompted the creation of Concentrator in the first place. Compounding to cvxCRV, as Concentrator does, represents an unparalleled mix of high yield, growth potential and optionality for DAOs. The high yields are of course attractive on their own, but if Curve continues to grow and control AMM market share, earned cvxCRV tokens will be much more valuable in future. For DAOs wishing only to maximize their return without otherwise participating in the Curve wars, these tokens are an excellent choice for accumulation.
On the other hand, for DAOs that wish to participate in the Curve wars, the optionality provided by cvxCRV could be just as important. Due to the symbiotic relationship between Curve and Convex their token prices are highly correlated, so holding cvxCRV is not substantially different from holding CRV or CVX from a price exposure perspective. This rough price parity allows a DAO to keep funds in the Concentrator vault as cvxCRV as long as possible, earning high yields as long as possible, and then to make withdrawal decisions based only on when\if the withdrawn tokens are needed rather than when the price is favourable.
One risk worth mentioning is that cvxCRV could depeg from CRV, in which case depositors would suffer some loss swapping from cvxCRV to CRV. Interestingly, Concentrator itself helps to mitigate this risk. Each time a harvest is run, Concentrator is buying and staking significant cvxCRV, reinforcing the peg continuously.
Depending on a DAO’s particular needs and circumstances, when the time comes they may choose to withdraw to CRV (for vote-locking) or CVX, each of which provides a path to voting on Curve gauge weights and sharing Curve revenue. For DAOs that rely on liquidity in Curve, being able to vote for their own gauges directly is a powerful tool. Truly savvy DAOs that own a portion of their own token liquidity on Curve can even profit from this as they will receive some part of those CRV gauge rewards.
A nice side benefit of CRV and CVX is that after withdrawal, even if not being used to directly benefit the DAO they still offer the ability to earn yield in the form of bribes for Curve gauge weight voting. Bribe harvesting is very management intensive and so it is a less desirable long-term strategy for a DAO, but the utility and the yield potential these tokens continue to possess even after withdrawal from the compounding vault is remarkable.
End Your Suffering
With the endorsement of Aladdin’s Boule Council, amazing optionality, high yields, and future growth potential, cvxCRV tokens are an obvious choice for any DAO to farm, and there is no more efficient and effective way to do that than with Concentrator. Concentrator is a powerful new tool in the toolbox of DAOs with treasuries to manage, enabling maximum earning from sane principal allocations. The complexity of managing positions is almost entirely eliminated, and gas savings provide a nice bonus. For a DAO to survive and thrive it must be able to utilize its treasury wisely, and that has never been easier than now with Concentrator.
Article by crouguer, mistakes are my own. Big thanks to Sharlyn Wu, btt, Martin Krung, Cody White, and a friendly helper from the Curve/Convex community (you know who you are!) for feedback and input to shape this article.
