Treasury Optimization

Polli's treasury optimization is a specialized staking management solution designed for organizations, DAOs, and foundations managing large treasuries through multisig wallets. It combines automated optimization with customizable portfolio preferences, giving institutions full control over their staking strategy.

The entire optimization and automation configuration is defined and controlled by treasury managers, giving full authority over how assets are handled.

Who Is This For?

The treasury optimization product is built specifically for:

• Blockchain Foundations - organizations managing substantial native token treasuries
• DAOs - decentralized autonomous organizations with governance-controlled funds
• Institutional Investors - entities managing large staking positions
• Multisig Treasury Managers - teams requiring multi-party approval for fund access

Key Differentiators

Unlike retail optimization, the treasury product offers:

• Custom Portfolio Preferences - define your ideal validator portfolio and let Polli maintain it
• Multisig Compatibility - designed to work seamlessly with Cosmos multisig wallets
• Flexible Validator Selection - set specific validators, minimum/maximum allocations, and portfolio constraints
• Preference-Based Optimization - system works to achieve and maintain your defined portfolio structure
• Fee-Free Option - can be deployed without service fees for qualified foundation partners

How It Works

The system operates through a two-phase process:

• Applies your staking instructions - first ensures your on-chain delegations match your defined validator preferences, executing any required delegations, undelegations, or redelegations to reach your target allocation (within a ±5% tolerance).
• Monitors validator performance - continuously tracks uptime, commission rates, and slashing events. For closed validator sets, it watches your chosen validators; for open sets, it performs position-based ranking and scoring-driven rebalancing on a treasury-defined time cycle.
• Executes emergency redelegations - immediately moves stake away from jailed or critically underperforming validators, regardless of the regular optimization cycle.
• Compounds rewards automatically - once your delegation preferences are satisfied, the engine claims and restakes rewards across all your active validators in a single efficient transaction.

Once the multisig grants the necessary authz permissions, Polli takes care of executing your treasury's staking objectives with no manual intervention required. Treasury managers define and manage all preferences and automation rules through a smooth, transparent, and secure UI.

1. Define Your Staking Preferences

Create a Staking Instruction that defines your ideal portfolio:

• Validator Selection - choose specific validators you want to stake with
• Initial Amounts - set target delegation amount for each validator
• Min/Max Thresholds - define acceptable ranges for each delegation
• Closed Validator Set - optionally restrict optimization to your chosen validators only

This gives you complete control over your staking strategy while still benefiting from automation.

2. Custom Validator Scoring

Unlike retail optimization which uses Polli's default scoring (heavily weighted toward APR), the treasury product provides a fully configurable scoring engine that lets you define how validators are evaluated and ranked according to your organization's priorities.

Treasury managers can configure up to 7 weighted scoring factors with a fully customizable formula:

Score = (APR_Rank × W1 + Uptime_Rank × W2 + VotingPower_Rank × W3 + Slash_Rank × W4
       + Commission_Rank × W5 + Governance_Rank × W6 + BlockTiming_Rank × W7) / 100

Where W1–W7 are your custom weights that must sum to 100%. Each factor produces a rank value between 0.0 and 1.0:

APR Rank

The annual percentage return a specific validator offers, calculated based on real on-chain rewards. Validators are sorted by annual return rate. Higher APR = better rank.

APR_Rank = (totalValidators - position) / totalValidators

For reference, the Network APR is the average network return, calculated based on average network yield and commission across all validators using real on-chain rewards.

Uptime Rank

The percentage of blocks the validator successfully signed, calculated based on a fixed time period. Uses the validator's actual uptime rate directly - no positional ranking.

Uptime_Rank = 1.0 - (missedBlocks / totalBlocks)

Voting Power Rank

The validator's share of total network stake, indicating how much influence it has over consensus. Sorted by voting power, but lower is better - promotes decentralization.

VotingPower_Rank = (totalValidators - position) / totalValidators

Position is sorted ascending, so validators with less voting power rank higher.

Slash Count Rank

The number of times the validator has been jailed (penalized) for misbehavior such as downtime or double-signing. Each slashing event reduces the score by 5%. A validator with zero slashes scores 1.0.

Slash_Rank = 1.0 - (slashCount × 0.05)    (minimum 0.0)

For example, a validator with 3 slashes scores 1.0 - (3 × 0.05) = 0.85.

Commission Rank

The fee percentage the validator takes from staking rewards before distributing them to delegators. Lower commission rates produce higher scores.

Commission_Rank = 1.0 - (commissionRate / 100)

A validator charging 5% commission scores 1.0 - (5 / 100) = 0.95.

Governance Participation Rank

The ratio of governance proposals the validator voted on, where only proposals whose end date falls within the current assessment period are included. Measures how actively a validator participates in on-chain governance voting.

Governance_Rank = votedProposals / totalProposals

A validator that voted on 18 out of 20 proposals scores 18 / 20 = 0.9. If no proposals exist on the chain, the score defaults to 1.0.

Block Timing Rank (Lava specific)

A Lava-specific parameter showing the ratio of "good" blocks produced, where a good block is one with a block time of 10 seconds or more. Evaluates block signing performance against a configurable timing threshold.

BlockTiming_Rank = goodBlocks / (goodBlocks + badBlocks)

"Good" and "bad" blocks are determined by whether signing time falls within the configured threshold and direction.

For example, a foundation prioritizing network health might set uptime at 40%, governance at 30%, and distribute the rest across other factors - while a yield-focused treasury might weight APR at 60% with commission and uptime splitting the remainder.

After the score is calculated, a status multiplier is applied:

Status	Multiplier	Effect
ACTIVE	× 1.0	Full score retained
NOT RECOMMENDED	× 1.0	Full score retained - custom scoring overrides default safety penalties
INACTIVE	× 0.0	Score set to zero - excluded entirely

The final score is expressed as a percentage (0.0–100.0).

Key difference from retail scoring: With custom scoring enabled, validators flagged as NOT RECOMMENDED retain their full calculated score rather than being penalized. This gives treasury managers complete control - your scoring configuration is the sole authority over validator ranking, not Polli's default safety filters.

Custom scoring drives all treasury optimization decisions:

• Validator ranking and recommendations - validators are presented in order of your custom score
• Redelegation destinations - when stake is moved from underperforming validators, the custom score determines where it goes
• Open validator set rebalancing - for treasuries without a closed set, scoring-driven rebalancing occurs on your defined time cycle

Portfolio Management

Polli uses your custom scoring alongside your preferences to guide optimization decisions:

• Preference Alignment - system works to achieve your defined portfolio structure
• Performance Monitoring - tracks your chosen validators' health and performance
• Risk-Based Adjustments - only redelegates when validators are jailed or have critical issues
• Custom Rebalancing - maintains your specified allocation ranges

3. Intelligent Optimization

Once your portfolio preferences are established, the system provides ongoing optimization:

Compounding with Optimal Intervals

• Automated reward claiming - system monitors and claims rewards at optimal timing
• Cost-effective compounding - only compounds when rewards exceed transaction costs
• Proportional distribution - rewards are re-staked to maintain your portfolio balance
• Auto-claimed rewards handling - rewards automatically claimed during other operations are immediately re-staked

Smart Redelegations

The system protects your stake by automatically redelegating in critical situations:

• Jailed Validators - immediately moves stake from validators that are penalized
• Low Uptime Validators - redelegates from validators with persistent reliability issues (uptime ≤ 60%)
• Validator Health - monitors for operational concerns within your validator set

Redelegations only occur within your approved validator set (if closed validator set is enabled), maintaining your portfolio preferences.

Automatic Portfolio Alignment

When you first create or update your staking preferences, Polli calculates the required actions to achieve your target portfolio:

• Gap Analysis - compares current delegations to target allocations
• Strategic Redelegations - moves excess stake to validators that need more
• New Delegations - uses available balance to reach target amounts
• Undelegations - removes stake from validators you no longer want (if needed)

Once your portfolio matches your preferences, the system switches to maintenance mode - preserving your structure while optimizing rewards.

Required Permissions

Foundation wallets grant specific Authz permissions to enable optimization:

Staking Permissions

• MsgDelegate (/cosmos.staking.v1beta1.MsgDelegate) - allows compounding and new delegations
• MsgBeginRedelegate (/cosmos.staking.v1beta1.MsgBeginRedelegate) - enables protective redelegations
• MsgWithdrawDelegatorReward (/cosmos.distribution.v1beta1.MsgWithdrawDelegatorReward) - permits reward claiming
• MsgUndelegate (/cosmos.staking.v1beta1.MsgUndelegate) - allows undelegation (only when explicitly needed for portfolio adjustment)

These permissions are granted through standard Cosmos Authz module, with the multisig wallet retaining full ownership and control.

Safety & Control

The treasury product is designed with institutional security requirements in mind:

• Non-custodial - your funds remain in your multisig wallet at all times
• Limited permissions - only specific staking actions are authorized
• Multisig control - permission grants require multisig approval
• Revocable access - remove permissions through standard multisig governance
• No send authorization - system cannot transfer your principal or treasury funds
• Preference enforcement - system respects your defined validator constraints

Critical: Polli never holds, controls, or has transfer rights over your treasury. All optimizations occur on-chain using permissions you explicitly grant and can revoke.

Portfolio Management Features

Closed Validator Set

Enable "closed validator set" mode to:

• Restrict all optimizations to your pre-approved validators
• Prevent automatic addition of new validators
• Maintain strict compliance with your governance decisions
• Still benefit from redelegations within the approved set

Dynamic Allocation

Even with defined preferences, the system can:

• Adjust allocations within your specified min/max ranges
• React to validator performance changes
• Optimize reward compounding distribution
• Maintain portfolio health while respecting constraints

Preference Updates

Update your staking preferences at any time:

• Modify validator selections
• Adjust target allocation amounts
• Change min/max thresholds
• Enable/disable closed validator set mode

The system will calculate and execute the necessary transitions to achieve your new target portfolio.

Optimization Frequency

The treasury optimization engine runs on a scheduled basis:

• Preference alignment - executes immediately when new preferences are set
• Maintenance optimization - runs periodically to compound rewards and monitor validator health
• Protective redelegations - triggered when validator issues are detected
• Auto-claimed rewards - immediately re-staked when operations generate automatic claims

All actions respect your portfolio preferences and validator constraints.

Getting Started

1. Grant Permissions - use your multisig wallet to grant Authz permissions to Polli's optimizer wallet
2. Create Staking Instruction - define your ideal portfolio structure and constraints
3. Enable Optimization - activate automated optimization for your wallet
4. Monitor & Adjust - track performance and update preferences as needed

Your foundation's treasury will be optimized according to your specifications, maximizing returns while maintaining full institutional control.