Authored by FlapJackson and Milamber on 1 Sep-25 with review from the Treasury Council
Proposal: Discretionary Treasury Bonding Program
Summary
This proposal authorizes the Treasury Council to deploy discretionary bonding events that enable the treasury to acquire PDT tokens from the market using liquid treasury assets through decentralized bonding contracts. The program facilitates strategic treasury operations while concentrating governance power among actively engaged community members and improving market efficiency through programmatic treasury management.
Abstract
This proposal establishes the Treasury Council’s authority to deploy bonding mechanisms to acquire PDT when strategic objectives or market conditions warrant such action.
Through platforms like Bond Protocol, bonding mechanisms enable open-market acquisition of PDT tokens funded by the treasury. These discretionary bonding events serve multiple strategic objectives: concentrating governance among committed participants, improving market efficiency through programmatic buying, and optimizing treasury composition. All operations are conducted through decentralized smart contracts with no ongoing commitments or guaranteed availability.
Motivation
The primary motivation stems from strategic treasury management opportunities and governance optimization objectives:
Market Efficiency Enhancement
Programmatic treasury buying through bonding mechanisms can help address pricing inefficiencies while enabling the treasury to acquire PDT (removing from circulating supply) at favorable valuations through decentralized mechanisms.
Treasury Optimization
Strategic acquisition of PDT tokens allows the treasury to optimize its asset composition while enabling voluntary market participation. This improves capital efficiency and aligns treasury holdings with long-term strategic objectives.
Governance Concentration
By providing slippage-free exit opportunities through treasury-funded bonding programs, the mechanism enables less-engaged holders seeking token reallocation to exit gracefully without market impact, naturally concentrating governance power among actively engaged community members committed to long-term participation and value creation.
Strategic treasury objectives include:
Discretionary Capital Deployment
The Treasury Council gains flexible tools to deploy liquid assets for strategic PDT acquisition when strategic objectives or favorable conditions warrant such action, enhancing overall treasury value and governance token concentration.
Operational Sustainability
All bonding events are conducted using liquid treasury assets beyond current operational requirements, ensuring continued operations while enabling strategic market participation.
Governance Quality Enhancement
Concentrating governance power among actively engaged participants improves decision-making quality and community alignment around shared strategic objectives.
This program recognizes that effective treasury management requires flexible, market-responsive tools that can adapt to changing conditions while maintaining operational sustainability and regulatory compliance.
Specification
Authorization Framework
Treasury Council Authority: The Treasury Council is authorized to deploy bonding contracts at its discretion, with full authority over timing, pricing, asset selection, and capacity parameters.
Bonding Platform: Primary implementation through Bond Protocol or similar decentralized bonding platforms, with authority to utilize alternative platforms as deemed appropriate.
Asset Flexibility: Bonding events may utilize ETH, USDC, or other liquid treasury assets as determined by the Treasury Council based on treasury composition and strategic objectives.
Operational Parameters
Discretionary Timing: Bonding events are deployed at the Treasury Council’s sole discretion with no predetermined schedule or ongoing commitment to market participants.
Capacity Determination: The Treasury Council determines bonding capacity based on strategic objectives, available liquid treasury assets, and operational requirements.
Pricing Authority: All bonding prices are set by the Treasury Council based on strategic considerations, market conditions, and treasury goals without disclosure of calculation methodology.
Pricing Mechanisms: The Treasury Council has full discretion to deploy fixed-price bonds or dutch auction-style bonds depending on strategic objectives, market conditions, and desired acquisition patterns.
Duration Control: Event duration is determined by the Treasury Council, with authority to conclude events early or extend as market conditions warrant (and as technically feasible by smart contracts).
Technical Implementation
Smart Contract Deployment: Bonding contracts deployed on Base network or other networks as determined by the Treasury Council.
Decentralized Operation: All bonding interactions occur through permissionless smart contracts with no KYC requirements or participant restrictions.
Treasury Funding: The Treasury Council provides approval for liquid assets to be used by bonding contracts as needed, with unused funds’ approval to be revoked at each bond’s conclusion.
PDT Acquisition: All PDT tokens acquired through bonding events are held in treasury reserves for strategic purposes as determined by the Treasury Council.
Operational Safeguards
Operational Reserve Protection: All bonding events utilize only a defined fraction of liquid treasury assets beyond operational requirements, maintaining operational reserves.
Regulatory Compliance: All operations are structured to avoid regulated activities, with no ongoing commitments, customer relationships, or guaranteed availability.
Market Impact Management: Bonding parameters may be structured to support strategic objectives (which may include price efficiency) while ensuring sustainable market participation throughout event duration.
Implementation Guidelines
Bonding Event Process
- Treasury Assessment: Treasury Council evaluates liquid asset availability and strategic objectives
- Parameter Setting: Determination of bonding capacity, pricing, duration, and asset selection
- Contract Deployment: Smart contract deployment with specified parameters
- Market Engagement: Open-market participation through decentralized bonding mechanism
- Event Conclusion: Automatic conclusion upon capacity fulfillment or manual conclusion at Treasury Council discretion
Communication Framework
Discretionary Disclosure: ParagonsDAO will announce bonding events when they are live, but the Treasury Council maintains full discretion over timing and disclosure of strategic parameters for given bonding events.
No Ongoing Commitments: All communications will emphasize the discretionary nature of bonding events with no promises of future availability.
Strategic Considerations
Market Conditions: Bonding events may be timed to coincide with favorable market conditions for strategic PDT acquisition.
Treasury Composition: Events may be structured to optimize treasury asset composition while maintaining operational liquidity.
Governance Objectives: Bonding parameters may be set to achieve specific governance concentration targets while respecting market dynamics.
Benefits and Outcomes
PDT Holder Benefits
- No market impact from large transactions - bonding contract transactions don’t affect DEX price
- Slippage-free exit opportunities for holders through bonding mechanisms
- Potential premium pricing opportunities relative to DEX rates
- Transparent, on-chain settlement through decentralized smart contracts
Treasury Benefits
- Strategic PDT acquisition at favorable valuations
- Remaining tokens/holders have enhanced governance power, including stewardship over DAO strategy and treasury
- Improved treasury asset composition and capital efficiency
- Flexible market-responsive treasury management tools
Governance Benefits
- Concentrated governance among actively engaged participants
- Improved decision-making quality through committed participant base
- Enhanced alignment around strategic objectives
Market Benefits
- Voluntary market participation without ongoing commitments
- Improved market efficiency through programmatic buying
- Address pricing disconnects that have historically disadvantaged long-term governance participants
- Enhanced price discovery through decentralized market operations
Risk Considerations
Operational Risks
- Treasury yield reduction from decreased principal available for yield generation, potentially impacting contributor funding and operational runway
- Market volatility affecting bonding event outcomes
- Technical risks associated with using third-party smart contracts
- Regulatory environment changes affecting permissible activities
Mitigation Strategies
- Strategic alignment of bonding event funding with broader DAO objectives and careful consideration of operational runway and team sustainability
- Bond Protocol has been rigorously tested and audited. Any alternative solution would require similar
- Conservative capacity setting to protect operational reserves
- Obtain legal guidance on approach; continuous monitoring of regulatory developments
- Flexible program structure enabling rapid adaptation
Conclusion
The Discretionary Treasury Bonding Program provides the Treasury Council with powerful, flexible tools for strategic market engagement while maintaining regulatory compliance and operational sustainability. By enabling discretionary bonding events, the program supports treasury optimization, governance concentration, and market efficiency without creating ongoing commitments or regulatory exposure.
This program positions ParagonsDAO for enhanced treasury management capabilities while respecting the voluntary nature of market participation and the discretionary authority of the elected Treasury Council.
Copyright Waiver
Copyright and related rights waived via CC0.