The rise of Auxo


This post is the continuation to: Time to say good Pie where we outlined the reasons why we believe it’s time to refocus operations and upgrade the product line.

The Governance Mining initiative, the program that introduced farming with treasury assets and revenue distribution to active voters, has yielded good result in boosting governance participation to an average of +50% of token holders. I would argue that it also did a better job in fulfilling the original vision than pies did and ultimately provided consistent value to veDOUGH holders. PieDAO was the first organization to put distribution of treasury farming to stakers in the map, the initiative has been often recognized as the main selling point of the DAO over the last year, as well as being of inspiration to other organizations which started similar operations.

After 12 months, several rough edges have been identified with this current version which prevents the system to scale.

Probably the most important is that, as for now, the treasury principal increases exclusively through the compounding of 25% of the distributed rewards, we need mechanics to supports treasury principal expansion and scalability in a way which is non-dilutive vs Treasury Net Asset Value. We need a way to align incentives for stakers to advocate and promote to new stakers without diluting their own rewards. We need to provide optionality for those who value being liquid while creating greater value for stakers under locks.

The reality of farming has evolved significantly in the last year, it is now more complicated than ever to extract good yield with balanced risk and it requires effort and expertise to asset opportunities, understand the technical design of new protocols and the economic assumptions it relies on.

The Treasury Committee spent the last months doing significant research on developing a new set strategies which allow to generate value consistently outside of rewards emission, exploring cross-chain arbitraging, hedged-univ3-range farming, on-chain option arbitraging and other fully and partial delta neutral strategy. While those efforts where initially framed as a product development initiative, it became quickly clear that the vast majority of those strategies are extremely dynamic and nearly impossible to be build as a fully decentralized set-and-forget vaults because they all require a good degree of active management to ensure an healthy way of operating at sufficiently good APY.

Therefore, improvements are required to make operations of treasury management sufficiently trustless, empowering token holders to be in control while allowing a degree of flexibility for operators to act without having to go through the governance process for every single action.

The changes proposed below are inspired by the idea to embrace what works and make it scale, making liquidity provision the main activity of the DAO and protocol development centered around that very need.

The rebranding to AUXO is here described as the celebration of this choice and to signal a net cut from previous operations.

About Auxo

AuxoDAO is a network of dedicated community members running STAT for farming operations.

AuxoDAO will issue an ERC20 token: AUXO. The AUXO token represents share of the fund and has an intrinsic floor value grounded in its wholly owned treasury capital, which is carefully preserved & grown.

AuxoDAO uses its protocol-owned treasury assets to farm multi-chain with the goal to provide liquidity and expand its principal while generating yield on behalf of its token holders. The Treasury returns the value it generates to holders, who actively participate in governance, through its core passive-income product: veAUXO.

The AUXO token has a strictly controlled policy of expansion based on the Net Asset Value of the treasury. The DAO optimizes for protocol-owned-liquidity where AUXO denominated pairs are directly owned and managed by the DAO instead of relying on rented liquidity and incentives.

There will be no liquidity incentives in AUXO, therefore eliminating sell pressure for the token.
The protocol implements policies to automatically buyback tokens from the market in conditions when they trade below NAV value.


AuxoDAO will introduce $KARMA, a token rewarding holders and stakers’ loyalty which utility will be connected to the governace of the KARMA owned treasury with additional features of engagement, promotion and rewards within the ecosystem.
More info provided in future stages.

 📝 AuxoDAO is fundamentally different from PieDAO because veAUXO holders administer DAO-owned funds with the mandate of generating yield, compared to creating and managing tokenised funds which use yield strategies for others.

STAT Framework

STAT is a framework to deploy Sufficiently Trustless Active Treasuries, it allows communities to allocate capital and generate yield on multiple chains on behalf of its token holders without relying on a small set of signers to not collude.

The STAT is composed of several modules implementing mechanics that allow to to expand, manage and redeem a productive-treasury, handle reward distribution and capital-efficient access to capital via fixed-rate loans.

An high-level list of modules:

  • Staking & Liquid Staking
  • Rewards distribution
  • Treasury
  • Bonding
  • Lending

Below you can find a breakdown of how they are applied to AuxoDAO.

Staking & Liquid Staking

Staking in AuxoDAO inherits the core mechanics of the Timelock used for veDOUGH, therefore the staking periods of minimum 6 months and maximum 36 months remain the same with the same curve. It introduces a set of changes to:

  • Enable on-chain governance and delegation
  • Protocol native Liquid staking
  • Aggregation of all locks into a single position
Property Before After
Min Lock 6 months 6 months
Max lock 36 months 36 months
Locks Multiple locks One lock per address
Governance Off-chain On-chain + Off-chain
Liquid staking None Native
Delegation None Yes
ℹ️ The new Timelock is significantly cheaper to use.

Auxo token holders are offered with two options for staking, veAUXO which allows for full ownership and enjoys better rewards or xAUXO a liquid version of veAUXO which accrues less rewards and delegates voting power to a representative.

Rewards Maximum possible Taxed rewards
Governance Direct on-chain Delegated to elected representative
Transfer Non transferable Trasferable
Lock User preference Forever
Redemption Right to burn at lock expiry and redeem from the redemption pool. None
Bonding Guaranteed at NAV Premium
Mint Fee NO YES
Exit Can migrate to xAUXO with a penalty None

xAUXO main benefit is retaining the ability to stay liquid by holding a derivative on veAUXO and delegating their participation to a representative, therefore allowing for a much more hand-off approach. xAUXO holders pay a price for those benefits which accrues to veAUXO Holders that are instead long-term aligned and committed to vote by themselves.

veAUXO holder benefit from xAUXO because:

  • Rewards increase for veAUXO stakers by the virtue of the tax applied to xAUXO rewards.
  • Treasury NAV increase by the premium on bonding.
  • Rewards increase due to the penalty of veAUXO holders exiting to xAUXO from veAUXO.

Rewards distribution & Slashing

The new rewards system provides stakers with the options to receive rewards in:

  • Farmed assets
  • wETH
  • Stables
  • More veAUXO
More on rewards

The rewards contract distributes farmed assets, it implements a system of delegation allowing an external address to claim rewards on behalf of another address. The functionality allows for easy composability and new products to be built on top. For instance, it allows stakers to delegate to a vault which will automatically sell the rewards to accrue the desired chosen asset. It is only possible to delegate to one vault at the time.

As Farmed Assets ETH Vault Stable Vault Compounding Vault
Claim your share of farmed assets from the pool as they were distributed Automatically claims and sells the rewards for ETH Automatically claims and sells the rewards for USDC Automatically claims and sells the rewards, and bonds to veAUXO
Diversifies your portfolio Increase your ETH exposure Increase your stable exposure Increase your veAUXO position and the treasury principal
👀 Those familiar with the Oven will recognise an heritage.

Slashing in the new system is largely simplified by removing the concept of 3 month freezing period which has been the cause of great confusion and increased complexity for the users during notarization votes. Stakers are slashed every single month should they not participate into voting of the previous month.

Bonding - Increase principal

AUXO introduces a way for veAUXO holders to create recurring liquidity events, also know as bonding, in order to increase treasury principal by minting tokens.

A liquidity event takes place when governance identifies new opportunities to pursue and is seeking for capital to deploy.

The pricing function is defined based on the net asset value of the treasury, factoring in liquid and illiquid assets, and the number of existing AUXO tokens.

Token minted during the bonding system are automatically staked into veAUXO or its liquid derivative xAUXO.

Bonding to veAUXO always happens at exact NAV price, while bonding to xAUXO is subject to premium — in consequence bonding to xAUXO increases the NAV price.

Unsold tokens during a liquidity event are simply not minted and do not impact the total AUXO supply.


Auxo Lend is a treasury-backed credit market that provides the most capital-efficient borrowing option for the DAO with fixed-income lending.

Auxo Lend allows the DAO to access extremely efficient on-chain financing leveraging his treasury and reputation to borrow capital without risking liquidations. Therefore increasing the amount of deployable capital by borrowing at fixed rate without having to lock the collateral away from yield strategies resulting in greater yield for the stakers.

Users can earn a sustainable yield through diversified exposure to the Auxo Treasury without having to stake, and enjoy a set-and-forget solution as loans are backed by treasury assets.

Trustless Treasury Operations

AuxoDAO improves the process of treasury management by integrating with specialized contracts enforcing that Treasury Operators can only interact with contracts and tokens chosen by the token holders.

It’s veAUXO holder’s job to whitelist contract addresses and contract signatures into the whitelist.

Once a contract is whitelisted, it can be autonomously used in the Treasury operation until removed. Such system allows that only authorized transactions are executed by Treasury operators.

The Whitelist contract allows veAUXO holders to add or remove authorization for specific function signatures on a specific contract address by doing an on-chain vote.

The role of Governance

In AuxoDAO governance is designed around resiliance of operation and keeps the system trustless and decentralized.
veAUXO holders serve different roles including but not limited to:

  • Notarization & Transparency

    • The community voting is used as subjective oracle to insure full transparency about how strategies are performing, together with information about how they’re set up, operated and composed.
  • Authorization and Access Control

    • veAUXO holders control the authorization layer of the Treasury by whitelisting contract addresses and contract signatures. This system allows that only authorized transactions are executed by Treasury operators.
  • Election of Treasury Operators

    • veAUXO holders can add and remove Treasury Operators at any time, decreasing operational risks and expanding governance capabilities.
  • Election of xAUXO Representative

    • veAUXO Holders can elect the representative which is going to vote on behalf of xAUXO holders.
  • Issuing Liquidity Events

    • veAUXO holders have veto power to authorize or block new liquidity events.

The Farming Operation

The argument requires a full post and further information will be released later.

The farming operation will be focused on expanding liquidity provisioning to multiple chains in order to capitalize on the best opportunities evaluated through a detailed and coherent risk framework. This framework advocates to provide guidance for a proper assessment of such opportunities and to deliver transparency for AUXO holders.


Auxo is designed in continuity with the operations which had best served veDOUGH holders in the last year and build on that by creating ways to grow the available principal and expanding operation on different chains. Auxo takes all the expertise accumulated in building tokenised funds with underlying productivity to deliver a protocol which is tailored around the DAO needs for trustless treasury farming. The introduction of the lending component increases significantly the ability of the treasury to operate and provides a venue for users looking to earn yield in a set-and-forget way which is equivalent, if not better, than a vault offering.

We believe this is the right direction to take. Minding the PieDAO’s lessons learned we can build a reliable and self-sustainable model that has the potential to maximise our holders return. This should be our priority, and we believe the changes above will take us there.

In future posts we will get more in the details of how the migration would take place, the roadmap and much more! In the meantime I will really appreciate everybody taking the time to provide their feedback and vote below on a quick sentiment-check.

How do you feel about Auxo?

  • I think this is the right direction.
  • I don’t feel good about this.

0 voters


Thanks @alexintosh for putting this together.

As a team we have spent a significant amount of time to build something that can bring value to the DAO, and at this stage I’m as happy with the result as excited to get this moving!

I hope our members support the initiative. Looking forward to see everyone’s comments!


Hey Alex,

I’m supportive of a lot of these initiatives and can tell you guys have been hard at work. There are a few things that are not clear to me:

Are you going to give more info on this lending component? I’m confused who is lending and who is borrowing. Is this a way to borrow assets to use in the multi-chain farming using treasury assets as collateral?

This implies that there is only one representative voting for all xAUXO holders? Is that accurate? If so, why choose that model instead of allowing delegation to any veAUXO holder? I find the idea that veAUXO holders are by default delegates and xAUXO holders are by default delegators compelling and a good way to pay delegates for their work. But if all xAUXO holders delegate to a single entity then this entity will have a lot of power and I would expect most participants will be xAUXO holders.

Finally, there is no discussion of compensation of those involved in operating the treasury management solutions and building the infrastructure around the new system. Is there more information on how that will work and what kind of entities you expect to perform these dutes, as well as their relationship to veAUXO holders. Do they submit funding requests, proposals, etc?

And most importantly, what will the new slogan be if we can no longer say “Stay crusty”? :cry:


Some questions:

  1. Is DexLab offering to lead this transition and the development of the new products?

  2. Does DexLab have the talent it needs to do this currently?

  3. Is there a development timeline yet?

  4. Are there any programs needed to support DOUGH or veDOUGH holders during the transition period?


Hey Ross,
Thanks for your comments, as mentioned on Discord a lot of those pieces will require full detailed posts/proposals as they get developed so that’s why I kept things high level and focused on the general direction.

About Lending: Yes, we are talking about a set of smart contracts native to the DAO which makes Auxo the only borrower and uses the treasury assets as backing to access fixed-rate loans when the capital is deployed in yield strategies.
In this scenario, the DAO takes on the smart contract risk of the strategy and the volatility on the APR it’s farming on. It gains in flexibility and speed of execution compared to, for instance, building a vault. It also reduces the attack surface since vaults executing complex strategies which are open to anyone are often subject to exploits and unintended manipulations with flash-loans etc. I’m a big supported of the idea that a DAO which suffers an exploit should make everything in his power to make their users whole again assuming they have the funds for it, the lending concept his consistent with that reasoning.

About xAUXO: The short answer is yes, one representative which can be changed at any time.
Mainly the reason for that is related to the fact that I think of xAUXO as a complete hands-off solution, a scenario where xAUXO holders delegate to single addresses it’s likely to result in a situation when only the xAUXO holders which selected an active representative effectively voted which is defeating the purpose in my opinion as many will end up without rewards. I personally don’t find the idea of electing a representative very dangerous as people might think as long as they can be changed/removed at will.

Another option that could explored is simply reaching consensus that veAUXO inside xAUXO will never vote but it’s always considered eligible for distribution, this policy effectively redistributes voting power proportionally to veAUXO holders. Appreciate any thoughts on that if you have any.

Regarding compensation, I think it’s worth exploding that into a different post and diving deeper into the details of how the operations will run. In general, I’m envisioning a progression of posts/discussion which roughly looks like this:

  1. Auxo Rebrand + Gathering support for rebranding
  2. Migration dynamics
  3. Framework for treasury operations & risk
  4. Other deep-dives on the single modules

I believe reaching consensus on 1 and 2 are the minimum requirement to get started, most of the other topics and details can be discussed as development takes place.


Hey @jnova addressing some of your questions here:

  1. Yes Dexlab is offering to lead this upgrade (unless governance decides differently)
  2. Yes, Dexlab is already leveraging on external talents fully integrated in the core team dev workforce
  3. More info available very soon on a dedicated post
  4. Yes. From an DAO operations stand point everything will keep having full functionality until the upgrade to AUXO takes place (e.g treasury farming distributions, SLICE compounding to veDOUGH, etc). On top of this, some additional options connected to the AUXO upgrade will be soon available for token holders.

Hope this helps!


Reading this: “AuxoDAO uses its protocol-owned treasury assets to farm multi-chain with the goal to provide liquidity” and wondered what chains were you considering?

One major drawback I had using piedao, that I found limited my activity, was prohibitively expensive gas costs. Are we going to move to a layer two that could make it less costly to invest? I would suggest Arbitrum, if we haven’t already picked out a solution.


Auxo is the natural evolution of iterating on our vision and focusing activities on what works and expanding them. It gives us the chance to fix a couple of things in the process and perform a long-overdue re-branding of the community discussed for over a year, in order to improve the perception of trust in the brand. Because of that the upgrade has been thought out in continuity with PieDAO.

Below we will develop some additional points to help increase our members understanding of the next steps and their implications.

Additional benefits

To recap, besides branding improvement, the upgrade to AUXO brings several benefit from a technical prospective:

  • It’s more gas-efficient to transfer

  • Enables gas-less approval (via EIP-2612)

  • Allows on-chain governance

  • LSD: Liquid Staking Derivative native to the protocol.

Upgrade timing

As you might have realized by now, AUXO is a lot more similar to what a pie used to be than DOUGH, in fact you can think about AUXO as a DeFi Farming Portfolio which governs itself. Because a lot of the modules around AUXO, for instance non-dilutive bonding, require a NAV price it’s important the upgrade happens relatively fast, the NAV price of AUXO in fact can only be computed once the entire upgrade is completed and there aren’t any leftover tokens that can bridge to the new systems. Failing to timebox the possibility to migrate would leave AUXO into a limbo-state where it is impossible to operate.

Timelock changes and their impact on the upgrade

Another interesting point to explore is the change of the Timelock contract which now supports a single lock per address compared to multiple locks. The are a number of technical benefits in doing so.

The old veDOUGH system created multiple vesting locks for each user. The new veAUXO system will have a single lock for all veAUXO tokens. This will make compounding easier, cheaper and clearer for most users. Anyone who wants multiple locks can simply use multiple addresses to achieve the same outcome. This type of lock is likely more familiar to the average DeFi user as it is a lot more similar to other veTokens.

User upgrade options

Because in veDOUGH users have multiple locks, mostly created through compounding, options will be offered to make the process as smooth as possible, some of those options are:

  • Aggregate all your locks in one-tx - Suggested option
    (all locks are aggregated with the longest timeframe in the array)*

  • Aggreate all locks to xAUXO in one-tx - Suggested option

  • Migrate a single lock to veAUXO
    (One per address, it’s possible to select a different address)*

  • Migrate a single lock to xAUXO
    (One per address, it’s possible to select a different address)*

Contract Upgrade Dynamics

Taking in consideration the need to a due date which brings finality to the upgrade process, the options below for different stakeholders are mapped between:

  • Before the upgrade
  • After the upgrade
  • Anytime

Options details

- Option When
veDOUGH Migrate to veAUXO (Users are asked to aggregate their locks into a single one) Before
veDOUGH Migrate to xAUXO (Minting fee applies) Before
veDOUGH Choose not to participate and exit to DOUGH After Upgrade-day all remaining locks expire
- - -
DOUGH Stake to veDOUGH to join the veAUXO migration. Before
DOUGH Burn my DOUGH Anytime
DOUGH Sell to the market Anytime
DOUGH Participate to the buyback Until Upgrade-day
- - -
eDOUGH Participate to the buyback Until Upgrade-day
eDOUGH Migrate to veDOUGH if my vesting time > 6 months Until DATE
eDOUGH Burn your eDOUGH Anytime
eDOUGH Keep vesting Anytime

Upgrade implications

More people stake ahead of upgrade, more AUXO rewards will be diluted at upgrade finality.

After the upgrade is finalized that becomes no longer the case, because new users bonding at NAV price does not change the APR (NAV lower, $ payout lower, APR constant).

The burning ritual

A Ritual of Letting Go, Cleansing, Intention, and Hope.

A great burning ritual will take place, because of the nature of Auxo, any token reserve outside of the amount used for market making don’t need to be kept in the DAO since the supply of Auxo can expand via bonding and there will not be no additional tokens used as incentives.

Burning Events

Burning events will begin in December, starting from the DAO reserve and ending with the leftover DOUGH in the liquidity pools to be dismissed once the upgrade is finalized. While the DAO will burn the vast majority of the token supply during the ritual, only 10% of the new supply of AUXO are minted to the treasury address to be utilized for liquidity pools and market making.

Ode to Auxo

Through the dark hours of this night
We burn to cleanse our Karma
Flame and fire and searing heat
Burn all my fears to ash
Forgive the pride that we have shown.

Now send your sparks up
On the breath of the wind
Up to the sun, moon and stars
May we be reborn from the ashes

Doer of the good gather good,
evil of evil reaps
Karma is as karma does

This night and every night
grant to me the light
The sacred yield be on my sight

The DAO will cleanse, and you can too.

Everyone will be given instruction on how to participate to the ritual using your DOUGH and eDOUGH.

Burn to let go.
Burn to cleanse.
Burn to hope.
Burn for good Karma.


Snapshot vote has been opened for the first stage [GATE 1] of this proposal towards the Auxo Migration

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