Aavegotchi Diversifies Treasury with $3M Investment in Ether

In a surprise move amidst a seemingly bullish market, the Aavegotchi DAO has approved a proposal to add $3 million worth of Ether (ETH) to its treasury. This strategic purchase, outlined in AGIP 103, marks a significant step towards diversifying the DAO’s holdings and hedging against potential risks.

The vote, conducted through the Snapshot governance platform, saw a decisive 90% approval rate, showcasing the community’s strong backing for the proposal. More than 1,450 participants voted on the proposal.

Surprisingly, the move comes at a time when the general crypto market is experiencing some upside movement. The price of Ethereum has moved from around $1,500 in October 2023 to $2,200 as of press time. However, the market’s “Fear and Greed Index” is over 70, indicating greed and a likely market correction.

The Ether purchase will be facilitated through Ethereum-based DEX Cowswap in six weekly tranches of 500,000 DAI each. Following the purchase, Aavegotchi’s treasury will comprise its native GHST token (56%), DAI stablecoin (21%), USDC stablecoin (13%), and ETH (10%).

The proposal argues that the purchase decision would enhance portfolio diversification, hedge against inflation, and lower the DAO’s DAI exposure. Other benefits include a possible capital appreciation, as well as access to DeFi opportunities. On the flip side, there is the possibility that things do not go as planned due to market volatility.

ETH is subject to high price volatility, which could significantly impact the value of the DAO’s treasury […] Allocating a portion of funds in ETH may complicate treasury access, as proposals would need to clearly specify fund origination requiring additional transactions by the Directors.