PCV can potentially become one of the largest investment vehicles in the world, portfolio management should be approached accordingly

Dunno why everybody, while discussing PCV diversification, is starting with some random crypto asset allocations or particular investment ideas and not with investment policy, risk management etc., some general principles. Stress test scenarios should be modeled and simulations should be run. PCV optimisation model under certain risk measure should be built. Guys, PCV is the size of a hedge fund and is essentially akin to Foreign exchange reserves of a Central Bank. If Fei is meant to be the Central Bank for DeFi, let’s treat this matter more rigorously.

At the moment PCV = $990M. Nothing has even started yet, and if Fei project succeeds, within several years Tribe PCV will become one of the largest investment vehicles in the world. DeFI TVL went from $1B to $52B in less than a year. During the same year market cap of Tether went from $6B to $44B, USDC’s MC — from $700M to $10B and total crypto MC — from $190B to $2T.

Just to put things into perspective: a16z has $16.6B assets under management, including $865M in crypto funds [1], the largest hedge fund in the world Bridgewater Associates — $140B [2], and world’s biggest sovereign wealth fund of Norway — $1.3T [3]

Clearly, Tribe PCV is no joke and a policy to invest only in ETH, or some random number of coins is in fact a surrogate in the absence of policy. This portfolio should be structured and managed seriously in the interest of long-term sustainability of the DAO.

I think one of the first grants should go for devising an investment mandate for the PCV and implementing it in a set of smart contracts. It should stipulate permitted crypto asset classes (BTC, L1 tokens, stable coins etc), designate certain rules and limits for investment decision making, as well as respective asset allocations: the portfolio should combine asset classes in such a way as to provide the highest expected return for a given level of risk, subject to fundamental diversification and liquidity constraints. Also, I believe that a group of investment stewards from the community should be designated with a mandate to research crypto market and suggest investment decisions for Tribe’s consideration.

Some experimental steps can also be taken, such as creating Tribe’s VC arm (or a set of small VC crypto funds). Mind you that Polychain’s original fund had $10M at the begining. [4]

Tribe PCV could become a huge driving force for the whole endeavour. Apart from guaranteeing Fei’s stability, proceeds can fund Fei Lab’s R&D and grants, as well as can be used for the benefit of Tribe holders in the form of dividends or buybacks, which will drive market’s interest to the token.

@joey

9 Likes

I agree with you. This is a staggering amount of money that can be used. I think this also highlights the power that TRIBE has.

The ability to farm as well, even with a small portion of this fund, could completely fund other projects, such as an entire art sector. If Fei P. decides to start sponsoring artists, those artists may never have to pay gas fees again, which is a big hurdle for those just starting out.

I’m very bullish on the future of this project.

5 Likes

I totally agree with the idea of approving an investment policy and also a risk management strategy.

That is an interesting idea, we need to have like a model to be used when writing investment proposals. Also liked the idea for a VC fund, but this one I think is more complex, more for the future maybe.

1 Like

You’re talking about using people’s money as an investment fund. This is not what the whitepaper represented.

It represented that the PCV was going to be used to defend a stablecoin which is was represented to people who bought FEI, which is absolutely not what is happening.

2 Likes

failed stablecoins project turn into yield optimizer vault :smile:
now we have to think why yield optimizer vault require 2 tokens

back FEI with some stablecoins, remaining ETH turned into yield optimizer vault. and users need to use FEI to invest into those vaults. and TRIBE stays as governance token for the vaults and its ecosystem.

with so much money trapped, we have to resort to something that is proven working in the market, no time to go back to drawing board.

TOTALLY agree! I’m a Deputy Chief Investment Officer for a larger endowment ($1.6 billion), and would love to help in anyway I could. Being all in ETH is SCARY! I love ETH but it represents a systemic risk to Tribe and Fei, it needs to be part of the portfolio but not 100%.

2 Likes

It is an interesting discussion.

Diversifying PCV into: decentralized stablecoins (eg.: DAI), ETH Put Options, DeFi (Compound, Aave, Balancer, Curve, Uniswap, Sushi, etc), BTC.

The article also brings to discussion what would be the role of a treasury management committee.

" Protocols should set up a 5-7 member treasury management committee, which will work on the following:

  • Propose treasury budget to discuss and vote on
  • Define liquidity requirements based on budget
  • Decide asset allocation policy and review this policy allocation every month
  • Define policy for liquidity mining, token buybacks, salaries and vesting schedule of core contributors
  • Publish monthly / quarterly financial statements
  • Publish monthly / quarterly reports on how treasury is spent

The treasury committee can be voted on and removed by token holders."

1 Like

This is super interesting, Bruno. I’m now leaning towards thinking that it should be more algorithmic than community-driven. Fun to think about possible architecture.

1 Like