I see a few types of ventures for potential treasury staking, but I’ll preface it by saying all of them are against the interest of the stake holders and ultimately the project.
- Provide liquidity as loan providers like Aave
- Dramatically reduces cost of centralization
- Potential for double-counting votes
- If double-counting is solved, governance stakers can’t vote with all the YFI they staked, since a portion would have been loaned out
- Provide liquidity to AMMs like Uniswap:
- Divergence loss means governance stakers will lose ratio of voting power as the price of YFI goes up
- This creates a conflict of interest between the governance stakers and the project. If the project succeeds, they lose power.
- Mint synthetic assets such as Dai or sUSD
- Attaches YFI to external projects the governance has no control over
- Generally, the more utilized an entity’s assets are, the less resilient it becomes. Since it can’t use those assets to respond to unexpected events fast enough. Such as an emergency vote. (Can’t vote since it takes time to approve burning synthetics to get YFI back for governance)
Lastly, just because the project is risky doesn’t mean extra risks are moot. That’s like saying skydiving’s already risky, so I’ll take my chances with this poorly made parachute.