Treasury Utilisation

Impvestment Process

The Impvestment process can be split into two parts: Strategy selection and Investment selection.

Strategy selection defines the process where a specific % of the DAO treasury is allocated towards a new strategy. After the initial launch volatility has settled and the initial treasury allocation has been achieved, pursuing a new strategy or changing the allocation of existing strategies will require a DAO vote.

Investment selection defines the process of the investment of DAO treasury funds into a specific opportunity. To avoid frontrunning the DAO, this decision will be made by the Impvestment Committee and will be communicated to the broader community only after the DAO treasury has fully scaled into the position to avoid adverse price impacts against our treasury funds.

The initial Impvestment Committee will consist of BossImp and J0M4N, which will also represent the majority owners of the protocol initially. ImpDAO however, has always been built on the idea of decentralisation and community power. Therefore, the Impvestment Committee is aiming to achieve two goals in the medium term:

1. Introduce additional vetted community members to the Impvestment Council

2. Launch decentralised strategy pods into the ecosystem of ImpDAO

The selection of both additional members and decentralised strategy pods heavily impacts the success of our protocol. Therefore, the selection of both is handled by the Impvestment Committee to avoid electing bad actors to manage treasury funds and ensure proper due diligence and vetting process before each.

Portfolio Allocation

Initially, ImpDAO will aim to deploy treasury funds into blue-chip protocols on the Fantom network. The first target portfolio is a diversified and pre-vetted DeFi portfolio, which will serve as a yielding foundation to capitalise on upcoming investment opportunities.

Post-launch, we forecast the ImpDAO treasury to quickly grow to a size where ImpDAO is unable to efficiently scale into new positions in smaller protocols without heavily impacting the price and thus our DAO returns. ImpDAO is therefore aiming to quickly transition from a centrally managed portfolio into a pod-style strategy. With that, each pod is pursuing a dedicated investment strategy in the market (delta-neutral, covered calls, blue-chip yield farms, etc.) and has dedicated funds as well as a dedicated PnL. Initially, ImpDAO will own these pod-protocols (sub-DAO) 100%. However, over time, ImpDAO ownership will likely decrease as ImpDAO will be rebalancing its portfolio or changing its overall portfolio allocation. As the topic of strategy pods will only be enacted in the medium term, more information on this will follow soon.

Risk Management & Governance

As the ImpDAO protocol will hold money from all stakeholders, risk management is paramount. Risk has many different forms: Market, operational, security, reputational, etc. and it's important to remember, that not all risk is necessarily bad. However, taking on risks, which could be avoided is.

As ImpDAO is engaging in activities in crypto markets, the protocol is exposed to external regulatory risk as well as a fair share of general market volatility already.

Nevertheless, ImpDAO and its Impvestment Committee will deploy capital into opportunities where the IC is expecting positive risk-adjusted returns. By matching the potential upside of an opportunity with the downside / max-loss event, you are able to benchmark different opportunities while also accounting for their risk profiles.

In order to properly account for risk, identification of such is vital. The Impvestment Committee will thoroughly vet every potential investment opportunity. This includes, but is not limited to: tokenomics, valuation, technical architecture, team experience & size, roadmap, historical volatility and price correlation to other protocols as well as a red flag analysis of all partners and previous communications. With these points, ImpDAO aims to cover a significant portion of potential risks.

Passing this step, an opportunity moves onto the next stage: Evaluation of the current (market) situation and the definition of entry and exit requirements for ImpDAO. Specifically, focusing on the questions, which immediate and intermediary price catalysts we see, which would warrant an investment today (or lack thereof). Furthermore, an exit strategy and price target will also be set to avoid unnecessary diamond hands or other forms of return dilution. In the end, risk management doesn't end with clicking "buy" and it is important to set thresholds and triggers before taking a position to avoid any bias.

To summarize, the core of ImpDAO's risk management revolves around doing our homework, answering the "why now" and "wen sell" questions, defining risk limits as well as external sell-triggers and monitoring these throughout the holding period.