Defi Collective Times

“AS ANTS, WE BUILD THE COLONY”

Treasury Report
OCTOBER 2023
1 2
WHERE IS
THE REVENUE ACCOUNTING
COMING LOGIC
FROM?

3 4

TREASURY EXPENSES
REPORT REPORT

5 6

REVENUES IMPACT
REPORT REPORT
THE DEFI COLLECTIVE TREASURY REPORT  3
OCTOBER 2023 INTRODUCTION /12

The DeFi Collective, a non-profit association harnessing all

relevant onchain & offchain means to support the most resi-
lient DeFi protocols, was officially introduced on October 16.
Core to our mission is the management of a proprietary on-
chain treasury, including liquidity-driving positions currently
on six different chains, allowing the Collective to direct liqui-
dity to pairs involving tokens from supported projects and
harness them directly when relevant. On top of supporting
projects relevant to the Collective, this activity is sustainably
profitable.

We sometimes describe the Collective as a militant organiza-

tion here to promote a specific vision of DeFi, maximizing re-
silience, autonomy, and trustlessness. However, it’s only half
of the story, as the Collective also walks the talk by deploying
its own assets where its mouth is. The Collective itself is also
living proof that supporting the highest quality of DeFi proto-
cols can also prove to be a profitable behavior.

Indeed, the Collective has been self-sufficient from day one,

generating more weekly revenues than its expenses. The sur-
plus secured every month enables us to scale up our activity
over time: an unstoppable snowball of public good support.

In this first Treasury Report, we will disclose data about the

Collective revenues, expenses, and impact achieved so far.
We will publish these reports every month — although this
first one is unique and bulky, as we wanted to include the full
context to help our readers understand the Collective activi-
ties and how they are synergetic to its mission.
TH E D E F I C O L L E C T I V E TREASURY REPORT  4
OC T O B E R 2 0 2 3 1. WHERE IS THE REVENUE COMING FROM? /11

Let’s start with the most pressing question: where are the
ants generating revenue from? From their treasury! But where
does the treasury come from? Simple: teams and projects
that resonate with the Collective’s vision can help it by sup-
porting it with brainpower and resources. So far, the Liquity,
Maverick, Cat-in-a-Box, DYAD, Diva, Retro, and Zero teams
have supported the Collective in their own way, helping it
build a proprietary treasury large enough to be sustainable
from day one.
That treasury includes ETH, stablecoins, other volatile tokens, and sizeable liquidity-driving positions such as veVELO or
veRAM. Such positions are essential to our activity, so let’s explain how they work.

● Introduction to Liquidity-driving tokens ● Liquidity-driving tokens (veNFTs) x The Collective

(For the sake of the example, we will use veVELO from the
Velodrome Finance exchange on Optimism, but the logic is
similar for other liquidity-driving positions).
Initially created by Curve with veCRV, the veToken model
has been further refined by projects like Velodrome and
Retro. It aims to create a virtuous circle of alignment
between the different participants of the decentralized
exchange: liquidity providers, token holders, and
swappers.
A given amount of VELO tokens is emitted and allocated
each week to incentivize liquidity providers. This amount
decreases slightly every week.
The ants are true liquidity-driving token addicts! Indeed,
it’s critical to our mission, as it allows us to direct liquidity
to pairs of our choosing, the one involving tokens out-
putted by resilient, autonomous, and trustless projects
such as Liquity’s LUSD or CatInaBox’s boxETH.
While we do so, we also gain exposure to the trading fees
collected on such pairs, which is a sizeable income source
for the Collective.
● Revenue Breakdown
Through its onchain activities, the Collective generates
three primary sources of revenue:

Holders of the VELO token can lock them for up to four ▷ T he trading fees collected thanks to our voting activity
years to obtain veVELO. The longer they lock, the more with the veNFT we control.
veVELO they obtain; 1 VELO locked = 1 veVELO if locked for ▷ The bribes collected thanks to our voting activity with
four years. the veNFT we control.
▷ And finally, the collective is also supplying liquidity and
Holders of veVELO direct the VELO emission every week in staking various tokens, helping it to secure a third yield
a linear fashion: a wallet controlling 1% of the veVELO can source.
direct 1% of all the VELO produced in a given week.
Most of our revenues are currently earned in stablecoins,
veVELO lockers also benefit from several revenue sources: ETH, and relevant DEX tokens such as Ramses’s RAM or
Velodrome’s VELO.
▷ They get a weekly rebase, a given amount of veVELO to
claim, and added to their existing position, helping them
to compensate for the weekly inflation.
▷ They get the trading fees collected on the pool they
voted on; here, too, it’s linear – if a given veNFT repre-
sents 20% of the total votes on a pool, it gets 20% of the
fees collected on the given pair.
▷ They also potentially get vote incentives: incentives
posted by projects looking to attract more votes to their
pools to grow their liquidity.
TH E D E F I C O L L E C T I V E TREASURY REPORT  5
OC T O B E R 2 0 2 3 2. ACCOUNTING LOGIC /11

Before we dive into the metrics, allow us to clarify our ac-

counting logic by explaining the main principles we enforce.
● Risk-adjusted accounting ● Tools & Solutions Used

Our accounting logic is “pessimistic,” meaning that if there
is a spread with the effective data, it’s to the downside
(revenues are under-estimated). The revenue, thus is
price-adjusted for the risk carried by the denominating
token, most of which is embodied in the liquidity-related
risks (slippage and volatility). Why would we need such a
principle in the first place? Simply because there are situa-
tions where accurate pricing of a given asset is impossible.
 Examples:
The Collective controls a veRETRO position,
allowing it to direct RETRO emissions to pools
of its choice. Doing so earns trading fees
generated on the pool and bribes. Some bribes
earned include bveZERO, a token redeemable
for veZERO once the Zero Exchange launches on
Polygon zkEVM (fork of RETRO). Since those
tokens are currently illiquid, they are not
accounted for in our books (value = 0).
Several positions managed by the Collective
generate yield in low-liquidity tokens, such as
liqLIT. We thus need to account for the slippage
we would face if we sell the tokens.
● Four weeks delta
Today’s report covers the first four weeks of activity of the
Collective treasuries while we just performed our 8th
harvest. We report our contextualized accounting data
with a four-week delta to protect our most profitable
strategies. Realized = Claimed
Some yields are accrued continuously (such as emis-
sion-based LP yield), while some are delivered at a specific
time (weekly rewards for a veNFT). Our monthly public
reporting only considers realized yield; unrealized (=unclai-
med) yields are not included in our revenue figure.
Furthermore, we do not report revenue generated through
capital gains in the reporting period.
The accounting process is currently basic, with the data in
beefy Google Sheets documents and imputed weekly at
each harvest. While our current accounting process allows
us a deep level of accuracy and a breakdown of revenues
between three distinct sources (Fees Collected, Bribes
Collected & LP yields) across six different chains, we are
aware that the time dedicated to the task will scale up with
the number of chains the Collective is present on, and pro-
tocols used. Thus, we are exploring solutions that could
automate the process.
Parallel to our current sheets-based accounting, we
started harnessing Den bookkeeping features, enabling us
to tag, potentially according to rules, all our tokens
inbound. As the rule-building process takes time, and we
just started with Den, we are currently using the two solu-
tions in parallel. This solution is particularly relevant to us,
as we already use the Den UI to interact with our safe, ena-
bling the annotation of transactions and the tagging of
contracts we interact with.
To ease the accounting of gas expenses, we consolidate
the execution of the transactions on one signing wallet as
much as possible. We can quickly get the total gas expen-
diture per month and period using Disiaque’s WhoSigned
gas tracking tool.
Finally, we used Smoldapp’s Multisafe tool to deploy our
safe, enabling us to have the same address for our safes on
all the chains we are active on (mainnet, Arbitrum,
Optimism, Base, Polygon-Pos, Polygon-zkEVM). It drama-
tically facilitates tracking the gas balance, accounting, and
bridging operations.

● L1 vs L2 accounting Logic

Our base accounting logic and principles are the same

across all layers, either mainnet or L2 — however, the tem-
porality of the accounting changes to reflect the different
gas costs of each layer. On L2, we harvest and thus record
our yields weekly (Thursdays). However, it happens at best
only once a month on mainnet — if the gas costs amount to
less than 2% of the yield claimed. When the gas costs are
too high compared to this figure, we simply delay the har-
vesting by as many months as necessary until the $ value
of yield claimed represents <2% of the $ value of the ETH
expanded for gas.
TH E D E F I C O L L E C T I V E TREASURY REPORT  6
OC T O B E R 2 0 2 3 3 . TREASURY REPORT /11

The initial treasury of the Collective has been established

thanks to a combination of donations and loans received from
projects supportive of its vision, including the Liquity,
Maverick, CatInAbox, DYAD, Diva, Retro, and Zero teams.
Upon reception in early October, the total worth of these as-
sets was $1,055M. Thanks to the productive deployment of
these assets and the overall markets appreciating, by the end
of October, the Collective was controlling north of $1.3M of
its own assets.

The primary exposure comprises liquidity-driving tokens, in-

cluding veAERO, veRAM, veRETRO, vlLIQ & vlAURA, making
up about 40% of the total asset value. The rest of the expo-
sure comprises tokens mobilized in liquidity-providing posi-
tions, most of which are stablecoins (>25% of the total asset
value) and ETH, as well as ARB, MATIC, OP & LQTY.

The Collective is active on six chains, but most assets are de-
ployed on mainnet, Optimism, and Arbitrum. Its presence on
Polygon-PoS, Polygon-zkEVM, and Base is currently mode-
rate but poised to grow rapidly as more assets are deployed
and positions compounded.
TH E D E F I C O L L E C T I V E TREASURY REPORT  7
OC T O B E R 2 0 2 3 4 . EXPENSES REPORT /11

The Collective started its activities on October 6th, and ex-

penses such as contributors’ compensations are paid with a
one-month delay; thus, the expenses for the October period
are minimal.
Over the October period, most expenses are gas costs. In October, the Collective spent $237.94 in gas-related expenses,
most of which occurred on mainnet:

Month Chain ETH Value (dollar)

October Ethereum 0.1247449001 224.5408202

Arbitrum 0.0061867693 11.13618474

Optimism 0.000511754484 0.9211580719

Base 0.000172599071 0.3106783278

Polygon POS 1.037507457

Polygon ZkEVM 0 0

All chains 0.131616023 237.9463488

Recurring expenses include $4k for two contributors, with another currently onboarded, adding another $1.5K/month (for
a $5.5k/month total). The Collective also has non-recurring expenses, such as the legal costs of setting up the structure.
The activities of the Collective’s board of directors are uncompensated and, hence, do not incur any expenses.
TH E D E F I C O L L E C T I V E TREASURY REPORT  8
OC T O B E R 2 0 2 3 5 . REVENUES REPORT /11

Over October, the Collective started its activities, the posi-

tions have been progressively deployed through the month,
and the revenue generated on the mainnet was marginal.
Nevertheless, thanks to productive ve-based positions,
especially veRAM, veRETRO & veVELO, a decent revenue
was generated on L2, leading us to the following consoli-
dated total, with a net revenue of $18,410.58.
On L2, positions were increasingly deployed over the
monthly period, ultimately reaching $312,360 allocated in
liquid positions on L2 (such as liquidity providing on DEXes
or Aave supply) by the last week of the month. This revenue
is achieved thanks to several locked positions (veVELO,
veRAM, veCHR, veRETRO, veAERO), totaling a face value
of $342,501 by Oct 30.

Revenues Sources Weekly LP Yield

Bribes Collected
Fees Collected

$ 6000

$ 4000

$ 2000

$ 0 Week 1 Week 2 Week 3 Week 4

Oct 6 ▶ Oct 12 Oct 13 ▶ Oct 19 Oct 20 ▶ Oct 26 Oct 27 ▶ Nov 02
TH E D E F I C O L L E C T I V E TREASURY REPORT  9
OC T O B E R 2 0 2 3 5 . REVENUES REPORT /11

On mainnet, a total of $354,470 was deployed throughout the

month.

Chain Locked Pos. Val. Liquid Pos. Val. Expenses Revenues

Layer 1 $ 0 $ 354,470 $ / $ 1,392

Layer 2 $ 342,501 $ 312,360 $ / $ 17,256.53

All expenses $ 237.95

All Revenues $18,648.53

Net Revenues — $ 237.95 $18,410.58

● Why do revenues matter?

As a nonprofit, why does the Collective care about reve-
nues? The first answer is simple: it allows it to cover its
expenses and be self-sustaining. The revenues exceeded
our expenses, allowing the collective to generate a
monthly surplus.
Other usages of the surplus include supporting initiatives
that benefit the whole space (we hope to disclose our first
one shortly), as well as donations to projects of public inte-
rest, such as the $500 donated in November to BlueChip,
the stablecoin rating agency.

This surplus is further reallocated into tokens & projects

that are in the Collective’s scope, such as LUSD or
boxETH. It is also used to increase the Collective liqui-
dity-driving positions further, giving it more means to
support the vision-aligned projects under its umbrella.
TH E D E F I C O L L E C T I V E TREASURY REPORT  10
OC T O B E R 2 0 2 3 6. IMPACT REPORT /11

The Collective undertook many actions to benefit supported

projects in October.
On mainnet, the focus was put this month on bLUSD with a
new gauge deployed on Bunni . Thanks to its vlLIQ posi-
tion, the Collective could support the bLUSD/LUSD, LQTY/
ETH & boxETH/ETH Bunni gauges with its gauge voting
power. We’ve also been spearheading the effort to repeg
Aave’s GHO and the rest of the GHO Liquidity Committee
— we published a separate report last week focusing on
this topic .
● Parting Words
We’re delighted to present this report to you today. We
would like to address once more our deepest thanks to the
team of chads that made this whole adventure possible in
the first place, the original donators and support of the
DeFi Collective: the Liquity, Maverick, CatInAbox, DYAD,
Diva, Retro, and Zero teams.

On Arbitrum, the Collective’s sizeable veRAM position
further enabled it to grow the liquidity for the LQTY/ETH,
LUSD/USDT, and LUSD/GRAI pairs. LUSD’s presence on
Arbitrum has grown sizeably over the period, thanks to a
dynamic ecosystem. We’d like to address a special thank
you to the Camelot Exchange team, who decided to allo-
cate GRAIL incentives to its LQTY/ETH and LUSD/USDC
pair : it was a sizeable driver of the positive dynamic obser-
ved for both tokens on the network. While the Collective
currently has minimal xGRAIL exposure, it’s actively
growing its position.
On Optimism, the Collective’s veVELO exposure enabled it
to keep supporting LUSD-related pools on the network,
including LUSD/ETH, LUSD/USDC, LUSD/USDT, LUSD/
GRAI, LUSD/ERN, & LUSD/sUSD. On top of voting on
these pools, the Collective used its OP to support LUSD/
ETH pool with vote incentives. With Pool Together’s POOL
token now launched on the network, we’re also looking to
expand the support to its related pool in the coming
weeks/months.
Regarding treasury management, on top of my reporting to
you today (TokenBrice), I’d like to explicitly mention the
involvement of 0xAbmis and Luude and thank them for it.
Both are/are being onboarded as recurring Collective
contributors and compensated for their involvement, as
they proved essential to the Collective’s operations.
October was the first month of onchain activity for the
Collective, and we were already able to demonstrate that
our vision of a self-sustaining support structure for DeFi’s
public good is practical and can be delivered upon. Now,
the real test will be in November, when the Collective will
face increased expenses, with the first round of contribu-
tors’ salaries paid out, as well as other expenses related to
the set-up of the structure. Thanks to its fast-growing
revenue, we’re confident that the Collective will be able to
cover these expenses and still generate a surplus: see you
next month for the contextualized answer!

On Polygon-PoS, the Collective’s veRETRO position sup-

ported blue-chip asset pairs since no other tokens fit our
demanding framework. These include wMATIC/USDC,
wBTC/wETH, wMATIC/wETH, wETH/USDC & some
RETRO-related pairs. The revenues produced were used
to compound the veRETRO position further to grow the
Collective’s liquidity-driving capability on the network.

Since LUSD was not yet launched on Base/Aerodrome in

October, the voting power was used to produce revenues:
our currently limited veAERO gauge voting power was dis-
tributed on pairs such as wETH/AERO or wstETH/wETH.

Finally, on Polygon-zkEVM, the Collective was idle in

October, waiting for the Zero Exchange to launch (expec-
ted in January).
TH E D E F I C O L L E C T I V E TREASURY REPORT  11
OC T O B E R 2 0 2 3 2 024 FULL EXPENSES /11

Month Chain ETH Value (dollar)

October Ethereum 0.1247449001 224.5408202

Arbitrum 0.0061867693 11.13618474

Optimism 0.000511754484 0.9211580719

Base 0.000172599071 0.3106783278

Polygon POS 1.037507457

Polygon ZkEVM 0 0

All chains 0.131616023 237.9463488

November Ethereum X X

Arbitrum X X

Optimism X X

Base X X

Polygon POS X X

Polygon ZkEVM X X

All chains X X

December Ethereum X X

Arbitrum X X

Optimism X X

Base X X

Polygon POS X X

Polygon ZkEVM X X

All chains X X

Total Expenses X X