Summary
As Threshold DAO continues its strategic focus on tBTC growth (TIP-100), with recommendations outlined following forum discussions the DAO will also take necessary steps to transition thUSD into Autonomous Maintenance Mode. This means removing direct DAO funding, ending active development and ceasing thUSD’s role in DAO financial planning, while ensuring the protocol remains fully operational for users.
Under this new model, thUSD will remain functional, allowing users to open and close troves, while maintaining limited liquidity support in the 3CRV pool. The system will also transition to a single-collateral model, supporting only tBTC, which strengthens protocol security and aligns thUSD with Threshold’s core mission.
This transition ensures that thUSD remains a decentralized, censorship-resistant stablecoin, while the DAO removes financial and operational overhead. Any future governance decisions related to thUSD will continue to follow the standard forum discussion, Snapshot vote and on-chain governance process but due to the lack of direct DAO resources or active focus, changes may take longer to execute.
Why This Transition Benefits the DAO and the Community
thUSD has been a unique, decentralized stablecoin, offering:
- 0% Interest Borrowing – Unlike USDT, USDC, or DAI, thUSD provides fee-free borrowing, making it a capital-efficient option for users.
- Censorship Resistance – Centralized stablecoins face increasing regulatory scrutiny, while thUSD remains non-custodial and resistant to blacklisting or freezing.
- tBTC-Backed Stability – With tBTC as the sole collateral, thUSD will be fully aligned with Threshold’s mission of integrating decentralized Bitcoin into DeFi.
- Minimal DAO Financial Burden – This transition removes ongoing costs, ensuring sustainability while keeping thUSD accessible.
- Sustainable Market Presence – The DAO will leave some liquidity in the 3CRV pool, allowing for organic growth and potential future use cases.
Key Aspects of Autonomous Maintenance Mode
1. thUSD Remains Operational Without Direct DAO Involvement
- Users can continue borrowing, redeeming, and closing troves.
- Liquidity incentives will cease and no new DAO funding will be allocated to thUSD.
- No structured DeFi integrations will be pursued.
2. Transition to a Single-Collateral Model (tBTC Only)
- ETH will no longer be accepted as collateral, reducing risk and simplifying protocol mechanics.
- The system will focus solely on tBTC, ensuring better security and stronger alignment with Threshold’s vision.
- A formal governance on-chain execution will be required to enact this transition.
3. DAO-Owned Liquidity in the 3CRV Pool
- The DAO will leave ~$200K of POL in the 3CRV pool to support market depth.
- The tBTC/thUSD pool will no longer be maintained, eliminating low-utilization liquidity.
4. Future Governance Flexibility
- Any further modifications to thUSD will follow the current governance process, requiring:
- A forum proposal to outline any suggested changes.
- A Snapshot vote to gauge DAO consensus.
- An on-chain governance vote for final implementation.
- However, due to this proposal’s implementation and the lack of dedicated DAO resources, governance actions related to thUSD may take longer to execute.
- thUSD Bug bounty - Cantina Bounty Coverage
Continue Cantina’s Bug Bounty coverage for the thUSD protocol to proactively identify and address any new or evolving threats with minimal overhead.
- Proactive Protection: Swiftly detect and resolve vulnerabilities to safeguard TVL and maintain trust.
- Cost-Efficient: Pay only for validated findings, reducing unnecessary expenses and time commitments.
Restructured Plan – DAO Holdings & Liquidity Allocations
Under the Autonomous Maintenance Mode, the DAO currently plans to retain the following allocations, subject to change based on Treasury Committee’s expense management planning:
The Protocol-Owned Liquidity (POL) in the 3CRV pool will be maintained to some extent to support liquidity. Within the DAO Vault, a certain quantity of tBTC will be retained as collateral, while a designated amount of ETH currently held in the vault is planned to be retrieved.
This ensures that some liquidity remains, while the DAO retains assets in the treasury to be redeployed as needed in the future.
Final Considerations & Next Steps
This decision represents a sustainable and cost-effective approach to ensuring thUSD remains operational while eliminating unnecessary financial burdens on the DAO.
- thUSD will remain available for borrowing and redemption.
- tBTC will become the sole collateral, strengthening alignment with Threshold’s mission.
- Use Cantina bounty coverage to maintain robust security coverage.
- DAO financial support will be removed, but some liquidity will remain to sustain market depth.
- Future changes to thUSD will require formal governance proposals through the existing on-chain process, which may take longer due to the lack of active DAO resources focused on thUSD.
This transition balances sustainability, decentralization and financial efficiency, ensuring that thUSD continues to exist while no longer being a direct financial responsibility for the DAO.