Use USDC Treasury Balance to Buy and Stake SOL

PsyFi Community -

As dedicated members of the PsyFi DAO, we continually seek opportunities to optimize the financial efficacy of our organization and the utility of our assets. In light of this objective, I would like to present a proposal for your consideration.

The proposal recommends utilizing $100,000 from our USDC reserve, currently standing at approximately $650,000, to purchase SOL. Subsequently, this SOL would be staked using a liquid staking platform to generate yield. Below, I have outlined the potential benefits that support this proposal.

1. Staking Yield: By staking SOL, we can turn an otherwise idle asset into a productive one, generating a consistent stream of yield. Staking rewards are a proven way to earn passive income and, depending on network conditions, can provide significant ROI. Given our current capital allocation, this move could improve our yield earnings considerably.

2. Price Speculation: Currently, the crypto market is experiencing a deep bear phase, with SOL down by over 90% from its all-time high. As developers within the SOL ecosystem, aligning our treasury’s success to potentially benefit from any price appreciation of SOL is a strategic move. With the continued growth of applications on Solana, SOL’s demand and value are likely to rise. Owning and staking SOL enables us to capitalize on this prospective growth, independent of PsyFi’s expansion.

3. Community Engagement: Staking SOL via a liquid staking protocol like Marinade or Jito provides an avenue to deepen our engagement with the Solana community, potentially catalyzing new collaborations. A decision on which specific LSD platform to utilize will be determined if proposal is adopted.

4. Diversification: While our USDC holdings provide stability, diversification remains crucial to hedge against potential market volatility. The acquisition and staking of SOL would contribute another layer of diversification to our asset portfolio.

This proposal serves as an opportunity to actively manage our portfolio, bolstering our potential for yield generation and capital appreciation. However, it’s important to recognize the new risk factors introduced by this move, primarily exposure to SOL’s price volatility. Given that this proposed investment is only a fraction of our treasury’s total holdings (even less when including fiat held in banks), I believe these risks are adequately mitigated.

I encourage all members to share their views so we can collectively make an informed decision. Your thoughts are invaluable as we navigate our path forward.

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Hi Corest - thanks for the proposal! I support your idea of utilizing a portion of our USDC reserve to purchase and stake SOL. Here are my reasons:

Yield Generation: The opportunity to turn our idle assets into a productive source of passive income through staking SOL is an attractive proposition. It aligns with the goal of optimizing financial efficacy and allows us to generate a consistent stream of yield.

Strategic Move in Bear Market: SOL experiencing a significant decline from its all-time high presents an advantageous entry point for us. By purchasing and staking SOL, we position ourselves to potentially benefit from future price appreciation as the ecosystem continues to grow.

I also agree that fostering new relationships and exploring collaborations can contribute to the growth and development of the network, and subsequently, PsyFi.

Moving forward, I will share this with the community so that we can come to a consensus that could potentially benefit the DAO, as well as the ecosystem.

I’m in agreement with the proposal and your well-articulated points. Beyond the short-term objective of leveraging the SOL staking mechanism for yield generation, this proposal also acknowledges the potential of Solana’s ecosystem for the long-term benefit of our organization.

A few additional points in favor of your proposal:

  1. Innovation and Scalability: Solana’s network not only provides a low-cost, high-speed environment for transaction execution but also boasts of cutting-edge technology, notably the Proof of History (PoH) consensus, that brings unprecedented scalability. With 3-4k transactions per second (TPS), Solana stands out amongst most Layer 1 chains. As more developers and projects recognize this and build on Solana, the demand for SOL may rise, which could increase its value.
  2. Growing Ecosystem: Solana’s ecosystem is rapidly expanding, with innovative projects like compressible NFTs, Firedancer, and Solana Mobile leading the charge. The growing use of Solana’s blockchain increases the potential of SOL appreciation.
  3. Resilience and Security: With more than 1.8k validators, Solana demonstrates a high degree of decentralization, enhancing the network’s security and resilience. By investing in SOL, we are investing in a network that values and upholds the fundamental principles of blockchain technology.

The current bear market presents a unique opportunity for us to acquire SOL at a significantly reduced price and benefit from potential market rebounds. Our position as developers within the Solana ecosystem further amplifies the potential advantages of this proposal.

I’m once again bringing this up. We should diversify our on chain treasury and have some directional upside to our ecosystem.

I know that SOL has been on quite a run since I wrote this last, so I suggest we monitor the situation over the 1 or 2 weeks and if support of price is found we go ahead with treasury diversification.