Borrowing Against DAO Treasury Assets for Expenses: Threshold’s Move to thUSD

Rolling out thUSD for Expenses

Starting with the next batch of contributor payments, all Threshold Guild Committee members and contractors will receive their payments in thUSD.

This change stems from TIP-79 — a proposal to use the thUSD protocol for expenses. The proposal has been thoroughly discussed and approved by T token holders via governance, marking a significant step in our journey to forge our own playbook for DAO treasury best-practices. In the next phase of the TIP-79 rollout, slated to be completed before the end of this month, the Treasury Guild will migrate the majority of payments to service providers, such as tBTC Beta Stakers, Guardians, Minters, and Bootstrap Providers, to thUSD.

Why thUSD?

Blue Chip Stability: thUSD is a stablecoin backed by both bitcoin and ether, ensuring that your payments are not only stable but also backed by the most liquid and widely adopted cryptocurrencies.

Decentralization at its Finest: thUSD embodies the spirit of decentralization by leveraging the security and resilience of Bitcoin and Ethereum, aligning perfectly with Threshold's mission to replace intermediaries with censorship-resistant decentralized networks. By trusting our own code, we can raise awareness, grow adoption and TVL, and further battle-test the protocol.

What This Means for Contributors

Stable Value: As a soft-pegged stablecoin, thUSD provides consistent value of $1 USD, ensuring that contributor payments maintain their intended value regardless of market fluctuations or multi-sig execution delays.

Flexible Usage: Contributors can easily swap thUSD on decentralized exchange platforms like Curve Finance for any token they choose, such as T for staking or tBTC for participating in BitcoinFi and earning yield.

Support for the Threshold Ecosystem: By using thUSD, you are directly contributing to the growth and adoption of the Threshold ecosystem.

We believe this new payment method will not only benefit our contributors but also enhance the overall resilience and growth of the Threshold Treasury.

Important Note: To see your thUSD balance, please import the thUSD token contract address into your preferred Web3 wallet.

Background and Benefits of TIP-79

The Threshold Treasury Guild’s ongoing efforts to diversify the Threshold DAO treasury have been highly successful, making our financial base more resilient and capable of generating additional income while supporting our suite of services.

The Threshold DAO treasury is classified into four main categories:

T token holdings: 492 million T, worth ~$17 million*
Protocol-owned liquidity: Deployed in various pools on Ethereum mainnet, worth ~$3.8 million*
Reserve Assets: Bitcoin, ETH, and stablecoins totaling $3.9 million*
Governance tokens: Includes assets like CRV, CVX, AURA, and BAL for strategic voting power

*All stated asset values are quoted from TIP-79

As the Threshold Network grows, so do our operational needs. Previously, most expenses were paid in T from the treasury, but this practice depleted our treasury by ~$300k each month.

The thUSD Protocol as a Solution

Threshold USD is a decentralized borrowing protocol that allows anyone to draw loans using tBTC and ETH as collateral. Key benefits of thUSD include:

Low cost: 0% interest rate and as low as a 0.5% issuance fee.
Efficient Collateral Usage: Minimum collateral ratio of 110%. Learn more about liquidation risks here.
Upgradeable Via Governance: Most operations are algorithmic and fully automated. New collateral can be added through Threshold governance.

TIP-79 Proposal TL;DR

Conversion and Borrowing: Each month, $400k T will be converted into tBTC and ETH and added as collateral to mint $160k thUSD.
Diversification and DCA: This strategy allows for dollar-cost averaging into BTC and ETH, further diversifying and strengthening the Threshold treasury.
Expense Payments: Using minted thUSD to pay the DAO’s monthly expenses showcases the utility of our own protocol and gets thUSD into more users’ wallets.

The full proposal can be found on the Threshold governance forum.

Managing the Process

The Treasury Guild Committee will oversee the implementation and management of this program, ensuring that collateral ratios are maintained and debts are managed efficiently.

Forging A Treasury Management Playbook for DAOs

thUSD is designed for the future of finance, offering a blend of stability, security, and innovation. With Threshold USD anyone in the world is able to permissionlessly borrow against tBTC and ETH and start spending the future value of their collateral today. Visit thresholdusd.org to get started.

If you’re part of another DAO and interested in transitioning to contributor payments in thUSD, leveraging your ETH and BTC as collateral, we’d love to help! Reach out to Threshold contributors on Discord to learn more about this low-cost, permissionless, decentralized payment solution.

List of Links and Resources for thUSD

The following links and resources will help you get started with thUSD, understand its benefits, and stay updated with the latest developments in the Threshold Network ecosystem.