DCG Q2 2022 Financial Statements

bfoster

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Dash Core Group
May 31, 2018
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Attached is the DCG Q2 Balance Sheet and Income Statement.

I've had the Other Gain/Loss section expanded to provide more clarity on the different types of gains and losses.

Happy to answer any questions regarding this update.


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AgnewPickens

Administrator
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Mar 11, 2017
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I see an Unrealized non-Dash loss of 212K for Q2, is that DCG holding REITs and such on its balance sheet thru losses? When the issue
of DCG hedging the dollar was brought up, it was pointed out that the network never authorized DCG to "hedge" the dollar. Why is DCG
not holding all of its USD reserves in cash or cash equivalents?
 
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bfoster

New Member
Dash Core Group
May 31, 2018
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I see an Unrealized non-Dash loss of 212K for Q2, is that DCG holding REITs and such on its balance sheet thru losses? When the issue
of DCG hedging the dollar was brought up, it was pointed out that the network never authorized DCG to "hedge" the dollar. Why is DCG
not holding all of its USD reserves in cash or cash equivalents?
I am not aware of any authorization being required by the network for such a decision; however, this was disclosed on previous quarterly updates to the community. There are a range of different types of investments that we chose to offset inflation, nothing super risky (one REIT and a range of EQ, FI & ET funds).

This all being said, when those investments were made back in late 2021, the market has changed dramatically and we are not that far from the market performance during this time. We have been reducing our sell orders for comp related Dash since around June and we avoid selling the fiat investments unless we need fiat to cover expenses. We will be re-evaluating the fiat investment portfolio to see where and when we can shift into even more conservative investments but it is not prudent to shift prematurely when there is still opportunity to gain back our initial investments.
 
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AgnewPickens

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I am not aware of any authorization being required by the network for such a decision; however, this was disclosed on previous quarterly updates to the community. There are a range of different types of investments that we chose to offset inflation, nothing super risky (one REIT and a range of EQ, FI & ET funds).

This all being said, when those investments were made back in late 2021, the market has changed dramatically and we are not that far from the market performance during this time. We have been reducing our sell orders for comp related Dash since around June and we avoid selling the fiat investments unless we need fiat to cover expenses. We will be re-evaluating the fiat investment portfolio to see where and when we can shift into even more conservative investments but it is not prudent to shift prematurely when there is still opportunity to gain back our initial investments.
It was disclosed to the network, but never explicitly approved, when the Network disbursed Dash to DCG, we did not expect DCG
to do anything more than hedge Dash for a bear market. That is how the reserve fund was packaged and sold to the network, it was only
after the Q1 report that we saw DCG losing USD reserves on fiat investments. I am making an issue of it now because we are now
seeing a substantial loss in Q2 USD reserves due to this investment in fiat vehicles, and no it may not be prudent to divest right now at
a loss, but I will be soliciting feedback on a proposal requiring DCG to hold any reserves in cash or cash equivalents. DCG is a development
organization and shouldn't be playing the fiat markets with funds disbursed to them by the DAO, they are not the DIF.
 
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bfoster

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I understand the concerns of the current investment position but DCG is not "playing the market". We are literally trying to find ways to sustain ourselves through US inflation, a bear market in crypto AND a bear market in the fiat markets.
 
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AgnewPickens

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Moved thread here so the community can reply as well, did not realize this was posted in a closed channel.
 
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AgnewPickens

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You had mentioned in Discord that DCG has ~$1.2M in fiat investments. Is this being managed by a professional
investment firm or internally by DCG? Is there a firm advising DCG on investing in the markets, can you give us their
name?
 
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xkcd

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Yeah, I don't think we will be able to turn those unrealised losses around though. Fed Res raised 75 basis points and gave hawkish forward guidance, BOE just did the same today, biggest increase in 33 years. impact? A global margin call as risk assets, that's stocks and real estate fall as money to play ball with has to be returned to the central banks.

It is a pity that DCG decided to speculate on the DAO funds, all they had to do was sit on the cash, and heck start converting that cash back into Dash at $40. This poor mangement of network funds will play into my decision to keep funding DCG through this bear market.
 

bfoster

New Member
Dash Core Group
May 31, 2018
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You had mentioned in Discord that DCG has ~$1.2M in fiat investments. Is this being managed by a professional
investment firm or internally by DCG? Is there a firm advising DCG on investing in the markets, can you give us their
name?
Hi,

DCG did not hire any 3rd party investment advisors; we discussed and agreed internally what we invested in.
 

bfoster

New Member
Dash Core Group
May 31, 2018
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Yeah, I don't think we will be able to turn those unrealised losses around though. Fed Res raised 75 basis points and gave hawkish forward guidance, BOE just did the same today, biggest increase in 33 years. impact? A global margin call as risk assets, that's stocks and real estate fall as money to play ball with has to be returned to the central banks.

It is a pity that DCG decided to speculate on the DAO funds, all they had to do was sit on the cash, and heck start converting that cash back into Dash at $40. This poor mangement of network funds will play into my decision to keep funding DCG through this bear market.
It is unfortunate that we are still carrying unrealized losses but this strategy was not by any means irresponsible or non-standard practice. Keeping everything in cash also has clear disadvantages; we will continue to re-evaluate our positions on a regular basis to reduce realizing as much loss as possible.
 

AgnewPickens

Administrator
Dash Core Group
Chief Sock Advisor
Mar 11, 2017
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It is unfortunate that we are still carrying unrealized losses but this strategy was not by any means irresponsible or non-standard practice. Keeping everything in cash also has clear disadvantages; we will continue to re-evaluate our positions on a regular basis to reduce realizing as much loss as possible.
From a tax standpoint, would there be any further advantage to realizing some of these losses and clawing some of them
back thru a tax refund or credits?
 

Apoloniusz

New Member
Oct 24, 2022
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Hi,

DCG did not hire any 3rd party investment advisors; we discussed and agreed internally what we invested in.
Hello @bfoster do you know if it was DCG leadership that made this investment decision or if it was DCG Board members?

It would be helpful for the community to know as this outcome has a direct impact on the future viability of the development of this project. If we are able to direct questions to the actual individuals who voted for this, perhaps they can provide more context?

It would be good to hear from these individuals, as it's not clear if these individuals who made this investment decision still agree with this approach or not?

Is it just a coincidence that the former DCG CFO did not publish the DCG Q2 financial statements because of this poor performance before he resigned?

I'm also in full agreement with what @xkcd and @AgnewPickens have wrote.

Thanks.
 

bfoster

New Member
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May 31, 2018
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Hi @Apoloniusz My previous statement about DCG not hiring a 3rd party advisor was not correct. I have recently gotten access to the brokerage account and I've learned that it is in-fact a managed account. DCG provided guidance to them on our objective for the investments (i.e. to hold low risk investments to help offset inflation) but the selection of investments was a mutual collaboration with DCG and that brokerage team. Sorry for the inaccurate response earlier. The fact still remains that we will continue to monitor the current holdings to avoid realizing too many losses and to determine if it should be rebalanced in any way. I can also say that as of mid-November, the investments are up about 10% since the end of September so things are improving.