The Factor DAO's treasury will be overseen by a dedicated Treasury Council, comprising of members with relevant experience who are elected by the community. This council will be responsible for managing the treasury's assets and ensuring that the treasury adheres to the principles of operational resilience, diversification of risk assets, and research-driven decision-making.
To avoid any conflict of interest, the DAO's main treasury will abstain from trading $FCTR tokens. Instead, the Treasury Council will focus on managing $FCTR profit-sharing pools, which are designed to accumulate and utilize LP fees and revenue generated from protocol fees to acquire additional $FCTR liquidity.
By adopting this approach, Factor bypasses the need for external liquidity providers, as the protocol itself provides liquidity to its own trading pairs on DEXs and collects the associated fees. This system ensures a sustainable and self-sufficient liquidity model for the Factor ecosystem.
The Treasury Council will manage the treasury according to Factor's three key principles:
- 1.Operational Resilience: The treasury must maintain an appropriate amount of stablecoins to ensure a sufficient runway in adverse market conditions. This strategy safeguards the project's financial stability and long-term sustainability.
- 2.Diversification of Risk Assets: To mitigate protocol-specific risks, the treasury will set strict parameters for asset allocations and their corresponding weights. This diversification strategy helps to reduce potential losses and maintain a balanced portfolio.
- 3.Research-Driven: All decisions related to asset management will be informed by thorough due diligence and ongoing risk monitoring. Assets must be whitelisted before being traded by the treasury, ensuring that only well-vetted and reliable assets are included in the treasury's portfolio.
By adhering to these principles, the Treasury Council will ensure that FactorDAO's treasury remains financially stable, diversified, and well-prepared for any market fluctuations or challenges that may arise.