What will we invest in? Will it be risky? What are the Benefits?
What is The Treasury?
The Treasury is one of the most important aspects of The Tavern protocol.
This is because it essentially uses some of the capital the project raises to invest elsewhere and grow to an even larger amount. This growth can then be beneficial for The Tavern protocol as a whole.
How does this benefit The Tavern?
The immediate benefit of The Treasury value increasing is that the project then has more capital to invest in itself. This investment can happen in a variety of ways:
- Increasing the Liquidity: This then reduces the volatility of the price meaning sells have far less of an impact, therefore increasing the sustainability.
- Buyback: Having this additional investment occur as a buy means that the price will INCREASE.
- Development: Running a project can be expensive and having additional funds to invest can result in more ambitious ideas coming to life!
- Can be reinvested further: With more capital to invest, you can simply make more returns and grow The Treasury pool even faster.
- Security blanket: The capital built up in the treasury can be used to fall back on in harder times to sustain the project through this.
Where will The Treasury be Invested?
We will have three levels of investment; Low-risk, Medium-risk and High-risk.
These risk levels will have differing amounts of funds allocated to them. The largest amount will be allocated to low-risk investments and the smallest amount to the high-risk investments.
A low-risk investment is where you are unlikely to lose your initial investment. However, these low-risk investments normally have the smallest potential to return crazy amounts!
Currently we have $ staked in The Anchor protocol. This uses Terra’s stablecoin UST to allow staking to earn more UST as a reward. The best thing about Anchor is that the pay out is nearly 20% which is amazing returns just for staking a low-risk, well backed stablecoin.
Medium Risk Investments
A medium-risk investment for example would be large-cap cryptocurrencies such as Ethereum or AVAX, or mid-cap projects with solid fundamentals.
These would be considered medium risk as while their potential gain may feasibly be larger than 20% in a year’s time, they also carry downside risk too.
A high-risk investment are those that could crash and burn to near nothing or go 5x, 10x or even 100x!!!
Examples of these would be other node projects. These types of projects are riskier as they do not have the support of the big cryptos and these small start up cryptos are known for ‘rugging’. But because they all start off so small.
The potential for the crypto to go huge and continue to allow you to earn crazy passive income daily (like The Tavern) is there and if done wisely can rapidly increase the value of the investment.