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Financial Cycle Model

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Cosmos DAO Treasury Operating Mechanism

The Cosmos DAO Treasury operates as a decentralized financial hub, designed to manage protocol assets efficiently while ensuring stability, transparency, and community-driven governance. Below is a refined and streamlined overview of its core operational mechanisms, focusing on governance, asset management, and price stability.

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1. Governance and Decision-Making

The Treasury leverages a robust governance framework, empowering $COS token holders to shape its strategic direction through a transparent, on-chain voting process.

  • Voting Process: $COS token holders propose and vote on key Treasury decisions, such as fund allocation (e.g., for development or incentives) and new partnership approvals. To ensure fairness and prevent disproportionate influence, a quadratic voting system is employed, balancing participation across stakeholders.

  • Proposal Types:

    • Allocation of Treasury funds for development or community incentives.

    • Approval of initiatives to expand the Cosmos ecosystem.

    • Adjustments to monetary policies, including rebasing parameters.

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2. Asset Management

The Treasury maintains a diversified portfolio to optimize returns, mitigate risks, and support the protocol’s objectives.

  • Portfolio Composition: Includes $COS tokens, stablecoins (e.g., DAI), ETH, and liquidity provider (LP) tokens, ensuring a balanced and resilient asset base.

  • Rebalancing: Periodic portfolio rebalancing is conducted based on market conditions and DAO-approved strategies to minimize risk and enhance stability.

  • DeFi Integration: Assets are strategically deployed in DeFi protocols, including liquidity pools, staking platforms, and lending systems, to generate sustainable revenue while supporting ecosystem growth.

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3. Price Stability (Rebasing Mechanism)

The Treasury employs a sophisticated rebasing mechanism to maintain the $COS token’s value within a stable range, using the 30-day moving average as a reference, ensuring stability and predictability. Target Price Range: $COS is calibrated to maintain a stable value within ±20% of the 30-day moving average.

Adjustment Logic:

  • Price >20% above the 30-day moving average: The system increases the total supply of $COS tokens to bring the price down toward the target range.

  • Price <20% below the 30-day moving average: The system decreases the total supply of $COS tokens through buybacks and burning to push the price up toward the target range.

  • Price within ±20% of the 30-day moving average: No adjustment is made to the supply, maintaining equilibrium.

Backing: Each $COS token is supported by a minimum value of 1 DAI, backed by Treasury reserves, ensuring robust price stability.

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