written on November 21, 2023

To ensure the long-term sustainability and resilience of a DAO's financial resources, it is essential to strategically allocate funds from auctions to multiple treasury accounts for future use. Additionally, with this strategy, the DAO can mitigate the risk malicious arbitrage and securing capital for future proliferating endeavors. I propose a simple mechanism that splits auction proceeds into three treasury accounts, each designated for specific years ahead. At the end of each year, unspent funds would be either burned or redistributed, depending on a social contract established between DAO members. The mechanism of splitting auction proceeds and the burn/redistribution mechanism should be implemented in the contracts and backed by a social agreement among members that would promote transparency and accountability. Embracing the idea of Three Treasuries would enable the DAO to navigate challenges with confidence and uphold its commitment to long-term success.

What if the money from the auction were split as 50%, 30%, and 20%, and then allocated to three treasury accounts named Treasury-A, B, and C?

Subsequently, Treasury-A would be used in the current year, Treasury-B in 2024, and Treasury-C in 2025.

At the end of each year, any unspent money from Treasury-A is burned, the funds from Treasury-B are transferred to Treasury-A for proliferation in the new year, and the funds from Treasury-C are transferred to Treasury-B.

In this case, each year, 50% of the spending will be based on the performance of the auction in the past two years, and the remaining 50% based on the auctions in the current year.

In the case of the fork, the forkers will have a right for a ~50% refund from Treasuries-B and C but not Treasury. Treasury-A is for proliferation in the current year or will be burned on December 31st.

If DAO splits the treasury now, we will have 4748, 2848, and 1899 ETH, respectively for Treasuries A,B,C. The adjusted total supply is 385, and the BV will be 12.33 ETH.

In this case, all tokens are equal (with no aging, etc.). The DAO doesn’t need to spend or burn money too quickly or unpredictably to counter the arbitrageurs. More importantly, the DAO will have capital secured for the next two seasons.

Lastly, this concept can be presented as a social contract hard-coded into the treasury contracts.

I think it is also fair to assume that all honest minority already left and DAO can be more vigilante with the arbitragers.