As you might know, MicroStrategy invests almost all of their USD in their treasury to BTC, believing Fed will continue to print money and devalue USD in 2021 https://ir.microstrategy.com/news-releases/news-release-details/microstrategy-adopts-bitcoin-primary-treasury-reserve-asset
That got me into thinking: Instead of holding purely stablecoins (or yCRV), should YFI treasury allocate a small portion of its reserve (let’s say 5%) to WBTC or ETH?
In the grand scheme of things (let’s say 2 years), the value of either asset will likely appreciate much more than just holding USD-pegged assets.
What do you guys think?
– Edit for more clarifications:
1). No degen farming
2). No coins other than BTC or ETH, whichever the community believes is a good long-term store of value
3). No trading. Purpose is only to buy & hold for 2-5 years. Never sell, unless somehow yearn needs extra cash in emergency
Prefer the stablecoin route. Risk in the system is minimized via uncorrelated assets and stablecoins are one of the least correlated (0 correlation) of all potential asset pairs. We could try for a negatively correlated asset, but the consistency of the negative correlation over time would likely be in question. I prefer zero correlation over a negative correlation between 0 and -1.
Back to the basics aof Bitcoin if you’re asking me. Without it, we’d be nowhere we are today.
Maybe 80% Stablecoins, 10% ETH, 10% BTC
I, personally, juggle with the choice of participating in the USD vaults because I have to hold USD. I don’t even live in a USD country and for me I would much rather hold BTC. or ETH.
I don’t have much experience here, and even in the crypto world in a whole. but this is my sentiment at this time.
USD inflation is something that I just can’t ignore. The only USD SCs I hold are ones in Blockfi that are paying me interest in BTC.
I think a careful consideration of BTC is always worth it.
We get invoices in USD not BTC. I see no reason to speculate on BTC price, that’s why the treasury is normalized to yUSD, which is also nice since we are dogfooding.
There was a discussion of opening up a degen farming treasury, which could pay for a lot of devs, but I think it’s a distraction which will suck out too much energy I’d rather have put into the product.
Yup I get it. That’s why I started the idea with only 5% BTC or ETH.
No degen farming, no speculation - just pure hodl the two best reserve assets for couple of years.
Only consider selling if yearn somehow runs out of cash.
The beauty of Defi and FYI in particular, is the ability to simplify generating yield. While it is tempting to invest in BTC/ETH (the tech we all believe in)…becoming a hedge fund via investment is a slippery slope. As the traditional financial system naturally transitions to crypto, YFI offers the elegantly simple solution/alternative to suppression/manipulation of interest rates in traditional finance. Once FYI gains traditional finance adoption/velocity, we will be much better positioned with a simple/easy value proposition. That being said … being all would be fun, and create an interesting level of “buy in”.
Well, I guess people who holds YFI at this point are most likely already long ETH / BTC on their personal portfolios. So from a personal investors’ perspective, YFI offers a good barbell / balancing act since it’s essentially long DeFi + USD dividends
@banteg 's explanation that Yearn gets invoices in USD makes sense - you need USD to pay USD bills.
I just recently heard Pomp podcast with the cofounder of MSTR. The reason MicroStrategy invested heavily in BTC is that a) they are somehow generating way more cash and they don’t know what to do with it, and b) their investors said ‘we cannot value cash’. So they looked at various assets to invest in, and eventually decided BTC is the way.
In essence, MSTR’s strategy looks unique to their circumstances (too much incoming cashflow than needed). My guess is Yearn is still a very young organization, and it’s better to keep cash buffer to stabilize things in next 1 year. DeFi changes very rapidly every month, and yield opportunities might come and disappear fast.
It’s also worth noting that yUSD is much better than cash…it’s a yield-aware stablecoin basket that increases in value at a rate of 30-80% per year
13.2% right now (and hopefully will boost soon), but definitely a higher yield than cash.