Redirect Treasury USDM to Earn Yield in Liqwid Finance

Temperature Check
1

Hello Sundae DAO Community!

As a new member of the SundaeSwap team, I support governance and administrative processes, with a focus on Catalyst and proposal facilitation. My role includes helping structure and refine governance discussions to ensure smooth decision-making within the DAO.

This proposal seeks to redirect the monthly USDM purchases to be deposited into Liqwid Finance so that they can earn yield while sitting in the treasury, rather than remaining idle.

Context

Currently, 15% of SundaeSwap protocol revenue is allocated toward purchasing USDM each month. Over time, this has accumulated a treasury balance of 42,543 USDM, which is currently unutilized.

Meanwhile, Liqwid Finance offers a lending market where USDM is earning approximately 20% APY. The primary risk associated with providing liquidity to lending markets is that funds may become temporarily inaccessible during periods of high utilization. However, since these funds are intended to remain in the treasury for long-term protocol use, this presents a strong opportunity for the DAO to generate passive yield with minimal downside risk.

By depositing the USDM accumulated from protocol revenue into Liqwid Finance, the DAO can maximize its capital efficiency while preserving accessibility to these funds when needed.

Additionally, we propose directing Sundae Labs to initiate a separate governance vote through Clarity to deposit the existing 42,543 USDM into Liqwid Finance so it can also begin earning yield.

The “qTokens” acting as a receipt for these deposits will be deposited into the Sundae Clarity DAO treasury in place of the USDM.

We also propose treating the interest earned from these deposits as treasury holdings, rather than protocol revenue. This will simplify the administrative overhead, as we won’t need to do monthly disbursals on that revenue, which would be minimal at this time. In the future, if this becomes significant, the DAO could vote to begin paying out this interest, or pay it out retroactively.

Proposal Details

With the above in mind, we propose the following:

  1. Redirect all future USDM purchases (15% of protocol revenue) to be deposited into Liqwid Finance, and the qTokens deposited into the Sundae Clarity DAO treasury, rather than remaining idle in the treasury.
  2. Treat any interest earned on these deposits as treasury holdings, rather than protocol revenue.
  3. Direct Sundae Labs to initiate a separate governance vote through Clarity to deposit the existing 42,543 USDM balance into Liqwid Finance.

Voting Process

The governance vote will have the following two options:

  • Vote YES to adopt the scheme above
  • Vote NO to not adopt the scheme above and maintain the status quo

Are you interested in voting in an on-chain governance vote to this effect?

Poll:

  • Interested
0 voters
2

Hi Jeni and welcome :slight_smile: Just curious, why to separate the proposal into two votes? Could you explain a bit the role of Clarity in this? Since Sundae Labs has its own govervance tool, why to move things to Clarity?

3

Thank you for the warm welcome!

Since this vote: https://governance.sundaeswap.finance/#/proposal#eecaa000118277aa98c36482ccafa47dbe7d52d79c264bad343d7d83ff56adb7

The Sundae DAO has had an on-chain managed treasury through Clarity DAO, accessible here

While the sundae governance platform allows confidence in and auditability of votes, it doesn’t deal with enforcement; the clarity DAO treasury, on the other hand, is managed by on chain smart contracts at the will of the SUNDAE token holders.

Each month, 15% of the protocol revenue has gone to purchasing USDM and deposited in the clarity DAO treasury, which now amounts to 43,535 USDM; Sundae Labs can’t do anything with that, such as depositing it into Liqwid; so, while this governance vote deals with future deposits, we would need a separate vote through the Clarity platform to actually spend the previously accumulated USDM.

1 Like
4

Understood now, thank you :ok_hand: I tried to log in to SS Clarity DAO but got the message not enough tokens (I use them for Community Delegation). Is there a way to count locked tokens too?

5

Unfortunately, at this time, locked tokens do not count toward voting eligibility in the Clarity DAO. If this changes in the future, it would need to be proposed and approved through governance. Thanks for your interest!

1 Like