A Case For A DAO Treasury

Preliminary discussion on the V3 Vortex BNT supply, a case for a DAO Treasury


  1. By not burning the BNT in the Vortex, we benefit from the functionality of a burn, while keeping the optionality of a potential future use.

  2. A treasury can be a self-sustaining resource to outsource development time away from the core “brain trust” of Bancor, alleviating developmental burdens.

  3. In turn this results in several benefits; reduces burnout risk, increased creativity, higher efficiencies that can scale.

  4. This is all assuming the legal green light, but given all of the market value of BNT would be reinvested in the development of the protocol, I see this as an opportunity to scale Bancor.

  5. Potentially could be a non-dilutive measure by counterbalancing sell pressure via Carbon’s potential BNT burning mechanisms.

With all the necessary focus on Carbon, I wanted to get the mental gears moving on how to treat the V3 Vortex BNT supply that has been building up. We’re back up to roughly 1.27 million BNT (as of Jan. 21) and if the markets continue with the volatility, I suspect we’ll reach two million soon enough.

I’ve been thinking further down the road for Bancor in that I think there’s utility in exploring using this cache as a DAO treasury. Since the Vortex functionally acts as a burn mechanism, in which the supply is functionally taken off the market, I think it can serve a dual purpose as we explore the potential future use. Meaning, instead of burning the supply to zero, we get the functionality of that action in the interim, while keeping the optionality of its value in the future.

I’m a huge fan of optionality, especially in that it could provide ongoing financial support for the growth and maintenance of Bancor. Understandably, I’m venturing out in legal waters that I’m not fully privy to within the non-profit DAO structure, so take it all as a mental exercise. I’m thinking a treasury like that, which in a more normal operating environment (post deficit), could be the self-sustaining mechanism to expand the contributor base of developers as Bancor grows.

The upside is you free mindshare of the core contributor base by allocating development time to outsourced coders, paid via potential grants from the DAO, such that giving the primary contributors some much needed R&R. This, in my opinion, has significant benefits to the future development and growth of the ecosystem; freeing up the creatives for new products and directions, while outsourcing the development to specialized personnel. How much more efficient could the core contributor base be if their primary focus is on what they do best, while not also having to do the development side as well?

I firmly believe it would result in substantially more efficiencies and ultimately market value into the Bancor ecosystem than any marginal sales pressure on the BNT token from the treasury.

I think this would be the primary (and non-legal) argument against a DAO treasury, in that it would result in sell pressure of the BNT token to pay for services, salaries etc. I’m of the mind that its well worth the potential marginal pressure to alleviate the development strain on the current core contributors. Moreover, I believe it would be vastly outweighed by the increased efficiencies of the core creatives to have a more normal schedule and narrower focus.

The burnout risk seems high to me, as I’m sure everyone who’s been coding for the past several months would likely agree (I check Github regularly, and its been non-stop). I’m also confident that the mental stress of the past several months adds to that risk.

The way I’ve been thinking it through is that say we have an after-tax value in the DAO treasury at any given time of $x.xx, and for example we’re able to hire two additional developers to liberate two of the members of the “brain trust” arm of Bancor. What new opportunities reveal themselves because those members can rest and think more clearly? Further, as the protocol becomes more robust with Carbon and additional products, it can build upon itself to grow the core personnel base, leading to increased creativity and lower burdens on everyone involved. It’s a flywheel that scales.

Bottom line for me is that we have a de-facto unassigned “treasury” in the V3 Vortex. In my opinion, this could be used to alleviate several pressure points on the current contributor group while also opening the potential for this to scale as Bancor grows. There’s significant optionality here, so let’s fully explore that before burning any more supply. Lastly, this could also be counterbalanced by burning BNT in other areas, like portions of Carbon’s revenue as mentioned. So all in all, could be a non-dilutive measure while we benefit from significant efficiencies and growth.

Thanks for your consideration.


First of all, thank you for posting this - really love seeing fresh ideas here!

I agree with the ethos behind the idea - just not the specifics. My main point of contention is using the BNT from the vortex. I don’t think we should give up the deflationary pressure provided by the vortex right now - or likely any time soon.

IMO the time to push an initiative like this would be upon (hopefully) overcoming the deficit, and potentially using something other than BNT as the treasury token.


Thanks Lesigh, I was hoping to get your take and as always its on point. I generally agree with you, seems like I’m mentally too far down the road while you’re correctly focusing on the primary problems at hand.

I do like the idea of using a different token for the treasury, so maybe we get the best of both worlds of a deflationary BNT (rather than my idea of a potential non-dilutive route) with a mechanism to fill the coffers of the DAO. Thats really interesting. Great feedback!


I always appreciate your posts @PaperStreetCapital! I see what both you and @lesigh are saying. I love the ethos behind the idea, and I love the idea of us having a Treasury. I think about it quite often actually. Fees on Carbon can be collected in any TKN, and the thought of us having a diverse Treasury, comprised of all different TKN is appealing to me. I do however, think it’s slightly premature to start allocating BNT to it. The deficit is definitely my main focus, and buying back and burning BNT is the most effective way to do that. Once we’re beyond the deficit, I would love to see the DAO use x% of fees to continue buying and burning BNT, and the other x% to build our treasury.


DAO treasury is absolutely a positive and valid direction.

however, i would suggest burning the collected BNT and allocate the non-BNT into the treasury.
the reasons for this suggestion are:

  1. treasury is a cash flow for payments. if BNT is that token, when used to encourage 3rd party developers etc, the recipient side will immediately try to sell it for another token (typically USD pegged one).
  2. by indicating a specific split between BNT and non-BNT tokens, there is an “easy” way to identify what goes where.

Hi Paper,

Thanks for the post!

I 100% support a treasury - but I would not want BNT to be in it (for now) for the reasons @teamAsaf mentioned.

One additional option would be to burn the BNT in the V3 vortex when Carbon goes live to drive some additional awareness.

Lastly, I did want to mention that a DAO treasury is something I am currently looking into and evaluating the various options and structures. However, things like this do take time - but efforts are underway.


Excellent points, a best of both worlds in No. 2 for sure. From all the feedback sounds like I’m underestimating the negative effects of using BNT, to your first point.


Love that new option too, a large burn in conjunction with a release sounds like a great idea.

Glad to hear options are already being explored, and totally understand how it can take some time. I think I wanted to write out my ideas to just plant a seed for when the topic may come up in the future, but sounds like y’all are already way ahead of me!


A diverse DAO “portfolio” does sound really interesting! Tons of optionality there.


I support this idea of burning the BNT when Carbon goes live.Probably we will have over $1M worth of BNT to be burned at that time.Right now there are 1.2M tokens in the burn wallet.


Not against a DAO treasury as a concept, but think that
a) any such treasury should be used first to compensate all the LPs who’ve suffered from the ILP debacle (contributors have been well-compensated throughout, according to the foundation themselves). LPs have surrendered 90-100% of their fees to the protocol for over 6 months now, and will likely have done so for a year by the time Carbon has a discernible effect on deficit. As Jen said, fees can be collected in a variety of TKN, so using a treasury as a form of retroactive compensation for LPs would be far more palatable than hiring more devs.
b) as others have said, accruing BNT would be counterproductive to the only goal that matters at the moment; fixing the deficit mess that was foisted upon LPs. The less BNT is burned, the harder this becomes and the longer the process gets drawn out.

1 Like

In general support of the idea to create a DAO treasury and I think it’s something that should be done in the future as the deficit starts to recover and close in v2.1/v3 across remaining positions.

Having a DAO treasury that is used for eco system grants comes with administrative operations such as putting a grant system in place but also figuring out how to award grants. As an example, Curve uses a grants committee with members voted by the DAO that review all grants submitted and approve/disapprove applications. Members that are selected for the grants committee get some stipend that also comes from the treasury for their time invested. Anyway, these are all things that will need to be figured out if this comes online in the future.

The BNT collected is now up to ~1.5m or so in the v3 wallet. There have been some opinions expressed around burning the BNT when carbon launches. The last time this experiment was performed, it was done for the following reasons:

This proposal represents the community sentiment that the protocol should burn BNT as a trial to see if it will have a positive impact on BNT. DAO members have cited the fact that “burns” have a psychological effect on market participants and the same can happen if such an experiment is allowed to be carried out. For this reason, this proposal is seeking a one time burn of 1m BNT when this amount has accumulated in the Bancor v3 vault. If the community determines that this has a positive impact on the BNT token then future proposals can be expected specifying new BNT burn amounts

Unless anyone has some tangible proof that there was a positive impact for performing another burn I would advice against it. We know that buying vBNT at a discount and burning vBNT is mathematically the best way to make BNT inaccessible in the protocol (since 1 vBNT corresponds to 1 or more BNT staked in the protocol).

To that extend, I have been thinking that creating a Carbon strategy with the current BNT that has been acquired to let the market sell vBNT to the DAO at some range gives us a better bang for the buck (as opposed to outright burning it). For example, we can fund a BNT/vBNT strategy with the collected BNT that acquires vBNT between a range of 0.2-0.9 BNT/vBNT. Everyone single vBNT that gets sold to the strategy has been acquire at a discount (below 1) and can be burned to give us a better result (as each vBNT is equivalent to1 or more BNT).