ZIP-110: Conservation DAO Treasury Yield

Abstract

This ZIP defines an automated treasury management protocol for Zoo conservation DAOs. The protocol deploys idle treasury capital across Zoo DeFi primitives -- yield vaults (ZIP-102), conservation bonds (ZIP-101), AMM liquidity (ZIP-106), and lending pools (ZIP-107) -- subject to risk constraints and a mandatory conservation allocation floor. A rules engine enforced on-chain ensures that at least a configurable percentage of treasury yield is directed to active conservation programs, while the remainder compounds to grow the treasury's capital base.

Motivation

Zoo conservation DAOs (ZIP-104) hold treasuries denominated in ZOO, ZUSD, and other ecosystem tokens. These assets sit idle between grant disbursements, losing purchasing power to inflation:

Capital preservation: Yield strategies protect treasury purchasing power, ensuring conservation funding is not eroded over time.
Sustainable funding: Compounding treasury yield creates a self-sustaining endowment model where principal generates perpetual conservation funding.
Risk management: Automated diversification across multiple yield sources reduces concentration risk compared to manual treasury management.
Accountability: On-chain strategy execution with mandatory conservation floors provides transparent, auditable treasury governance.

Specification

1. Treasury Vault Architecture

Treasury DAO
  |
  v
TreasuryManager (this contract)
  |
  ├── ConservationBondAllocator  (ZIP-101)
  ├── YieldVaultAllocator        (ZIP-102)
  ├── AMMliquidityAllocator      (ZIP-106)
  └── LendingPoolAllocator       (ZIP-107)

2. Core Contract

// SPDX-License-Identifier: CC0-1.0
pragma solidity ^0.8.20;

import {IERC4626} from "@openzeppelin/contracts/interfaces/IERC4626.sol";

contract TreasuryManager {
    struct Strategy {
        address target;           // Vault, bond, AMM, or lending pool
        uint16 allocationBps;     // Target allocation (bps of total)
        uint16 maxAllocationBps;  // Hard cap
        StrategyType strategyType;
        bool active;
    }

    enum StrategyType { YieldVault, ConservationBond, AMMLiquidity, LendingPool }

    struct TreasuryConfig {
        uint16 conservationFloorBps;  // Min % of yield to conservation (e.g., 3000 = 30%)
        uint16 rebalanceThresholdBps; // Rebalance when allocation drifts by this much
        uint256 rebalanceCooldown;    // Min seconds between rebalances
        address conservationDAO;      // Where conservation yield is sent
    }

    TreasuryConfig public config;
    Strategy[] public strategies;
    uint256 public lastRebalance;
    uint256 public totalConservationYield;

    event Rebalanced(uint256 timestamp, uint256[] allocations);
    event YieldHarvested(uint256 totalYield, uint256 conservationShare, uint256 compounded);
    event ConservationFloorEnforced(uint256 required, uint256 actual);

    function rebalance() external {
        require(
            block.timestamp >= lastRebalance + config.rebalanceCooldown,
            "COOLDOWN"
        );

        uint256 totalAssets = _totalManagedAssets();

        for (uint256 i = 0; i < strategies.length; i++) {
            if (!strategies[i].active) continue;

            uint256 targetAllocation = (totalAssets * strategies[i].allocationBps) / 10000;
            uint256 currentAllocation = _strategyBalance(i);

            if (currentAllocation < targetAllocation) {
                _deposit(i, targetAllocation - currentAllocation);
            } else if (currentAllocation > targetAllocation) {
                _withdraw(i, currentAllocation - targetAllocation);
            }
        }

        lastRebalance = block.timestamp;
    }

    function harvestYield() external {
        uint256 totalYield = _calculateAccruedYield();
        require(totalYield > 0, "NO_YIELD");

        uint256 conservationShare = (totalYield * config.conservationFloorBps) / 10000;
        uint256 compoundShare = totalYield - conservationShare;

        // Route conservation share
        _transferToConservation(conservationShare);
        totalConservationYield += conservationShare;

        // Compound remainder back into strategies
        _compoundYield(compoundShare);

        emit YieldHarvested(totalYield, conservationShare, compoundShare);
    }

    function _transferToConservation(uint256 amount) internal {
        // Transfer ZUSD to conservation DAO
        IERC20(zusd).transfer(config.conservationDAO, amount);
    }

    function _totalManagedAssets() internal view returns (uint256) { return 0; }
    function _strategyBalance(uint256 i) internal view returns (uint256) { return 0; }
    function _calculateAccruedYield() internal view returns (uint256) { return 0; }
    function _deposit(uint256 i, uint256 amount) internal {}
    function _withdraw(uint256 i, uint256 amount) internal {}
    function _compoundYield(uint256 amount) internal {}
}

3. Strategy Allocation Constraints

Constraint	Value	Governance
Conservation yield floor	20-50% of yield	ZooGovernor
Max single strategy allocation	40% of treasury	ZooGovernor
Min diversification (active strategies)	3	ZooGovernor
Rebalance cooldown	24 hours	ZooGovernor
Drift threshold for rebalance	500 bps	ZooGovernor

4. Risk Framework

Each strategy is scored on three dimensions:

Smart contract risk (1-5): Audit status, time in production, TVL.
Market risk (1-5): Volatility of underlying assets, impermanent loss exposure.
Liquidity risk (1-5): Time to withdraw without slippage.

The aggregate portfolio risk score must remain below a governance-set ceiling. Adding a high-risk strategy requires reducing allocation to other high-risk positions.

5. Reporting

The TreasuryManager emits comprehensive events for off-chain dashboards:

Daily NAV snapshots.
Per-strategy performance attribution.
Conservation funding flow tracking.
Risk score evolution.

Rationale

Why automated over manual? DAO governance is slow. Automated rebalancing with pre-approved parameters executes in real-time while maintaining DAO oversight over the parameter space.

Why a conservation yield floor? Without an enforced floor, governance pressure to maximize returns could erode conservation funding. The floor makes conservation a protocol-level guarantee, not a discretionary decision.

Why minimum 3 strategies? Diversification is non-negotiable for treasury management. A single strategy failure should not threaten the treasury's conservation mandate.

Security Considerations

Strategy Exploit

If a downstream vault or pool is exploited, the treasury could lose the allocated capital. Maximum per-strategy allocation caps (40%) limit blast radius. Emergency withdrawal via ZooGovernor multisig can pull funds from a compromised strategy.

Governance Capture

An attacker who captures ZooGovernor could lower the conservation floor to 0. A time-locked minimum (e.g., 15% floor that requires a 30-day timelock to change) provides a safety net.

Rebalance Front-Running

Large rebalance transactions could be front-run on the AMM. Using private mempools or commit-reveal rebalancing mitigates this risk.

Yield Calculation Manipulation

The harvestYield function depends on accurate yield accounting. Each strategy adapter must implement accruedYield() using the underlying protocol's native accounting (e.g., vault.convertToAssets for ERC-4626 vaults) rather than external price feeds.

References

ZIP-0: Zoo Ecosystem Architecture
ZIP-101: Conservation Bond Protocol
ZIP-102: Impact Yield Vaults
ZIP-104: Research Funding DAO Treasury
ZIP-106: AMM for Conservation
ZIP-107: Impact Lending Protocol
Yearn Finance, "Vault Strategies V3," 2023
ERC-4626: Tokenized Vault Standard

Conservation DAO Treasury Yield