Hi all, posting on behalf of Avantgarde Finance. We support this proposal directionally. The jobs that Llama lays out, if executed well, will bring great value to Aave. Normally, we would be interested in taking on the treasury management work, and have been preparing a proposal to that end. We’re happy to shelve that for the time being if the community is supportive of Llama taking over this function. We would also offer our support in helping to implement a technical solution that we believe would simplify the process.
An Enzyme vault owned by the DAO and managed by a third party (e.g. Llama) would enable an aggregated view of the treasury’s assets and their allocations, as well as a full and transparent accounting of every transaction undertaken by the manager. We recently announced a partnership with Nexus Mutual where we are managing a vault on the DAO’s behalf using this exact setup.
This implementation is a solution for the three main concerns that we’ve voiced about Llama’s treasury management proposals in the past.
First, we believe that any treasury management strategy should be flexible and be able to adapt to changing market conditions. For example, the allocations Llama suggested in their January post made sense at the time but were outdated within weeks. Gathering DAO-level consensus around specific allocations is not the way forward - instead there should be investment guidelines to which a manager must adhere.
Second, the operational complexity of managing the DAO’s funds using Gnosis Safes and governance votes and the unknowable risks that complexity brings cannot be overstated. Trading from the RF contracts and maintaining a holistic view of the DAO’s balance sheet would be exhausting, requiring governance votes to execute transactions and custom tooling to aggregate and monitor their results.
Third, this complexity would serve to decrease public visibility into and scrutiny of the DAO’s finances. The fewer people who understand how a system works, the more entrenched those individuals are and the harder it is to hold them accountable.
Deploying the Reserve Factor into an Enzyme vault that is owned by the DAO and managed - with contract level compliance and risk-management controls - by Llama allows for flexibility in asset management strategy execution without compromising on security or decentralization. The DAO always maintains custody of its funds, the Enzyme protocol and its supporting infrastructure provide a holistic overview of the Vault’s historical performance via app or API, and the manager has flexibility in adjusting allocations. We have implemented this setup for several DAOs and are happy to help implement it for Aave.