Pyth Strategic Reserve V2 — Aligning PYTH Accumulation with Pyth Pro Revenue

[KemarTiti]

Summary

Pyth’s revenue crossed $10.4M in overall ARR in August, with Pyth Indices reaching $1.59M in fixed ARR. August 2026 report

The Strategic Reserve has operated smoothly, although months of practice have surfaced a few elements the DAO could adjust to optimize the process further.

This post proposes a refined Pyth Strategic Reserve V2, which would fully supersede the current Strategic Reserve V1 mechanism established under OP-PIP-87.

The proposed V2 strategy would:

• Accumulate 100% of the applicable DAO share from the broader Pyth Pro umbrella;
• Treat that umbrella as including:
  • Pyth Pro subscriptions;
  • Listing as a Service, or LaaS; and
  • Pyth Marketplace;
  • Pyth Indices, including fixed revenue and variable revenue share;
• Treat direct PYTH distributions from Douro Labs, if any, as completed PYTH accumulation;
• Apply the same policy to the DAO’s existing eligible non-PYTH Treasury assets;
• Apply it to future eligible non-PYTH revenue once repatriated to the DAO Treasury;
• Replace repetitive monthly transfer votes with a standing DAO-approved authorization; and
• Preserve the existing execution guardrails.

Douro Labs would retain its applicable contractual share. This idea does not propose changing the revenue splits.

Background

The original Pyth Token Phase 2 discussion established the objective of directing network revenue into a DAO-owned PYTH Strategic Reserve.

OP-PIP-87 implemented that objective through a treasury-balance-based mechanism:

• One-third of the DAO’s non-PYTH Treasury balance is transferred monthly;
• The Pythian Council executes PYTH purchases;
• Purchased PYTH is returned to the DAO Treasury; and
• Each monthly transfer requires a separate DAO vote.

That mechanism was designed before the current Pyth Pro revenue model and direct PYTH payment option existed.

Since then:

• Pyth’s revenue has grown substantially;
• Douro Labs has paid the DAO directly in PYTH;
• The DAO’s non-PYTH Treasury balance has been decreasing; and
• Purchases under the one-third mechanism have slowed significantly.

The reported purchase history shows the pattern:

• March 2026: approximately 2.75M PYTH ;
• June 2026: approximately 1.80M PYTH ;
• July 2026: approximately 1.14M PYTH ; and
• August 2026: approximately 669,662 PYTH.

The current mechanism/strategy is therefore becoming increasingly disconnected from the Pyth Pro growth and the evolution of the DAO treasury.

Proposed direction

1. Pyth Strategic Reserve V2 fully replaces V1

This proposal would supersede the Treasury-management and recurring-transfer mechanics established under OP-PIP-87.

The DAO would no longer rely on a recurring transfer of one-third of the remaining non-PYTH Treasury balance as the primary purchase mechanism.

The V2 strategy would apply continuously to:

• The existing eligible non-PYTH Treasury balance; and
• Future eligible revenue and assets received by the DAO.

The current Treasury conversion and the ongoing revenue strategy would be approved together. They would not be treated as two separate programs requiring two separate DAO votes.

2. Broader Pyth Pro revenue scope

For purposes of this proposal, Pyth Pro refers to the broader commercial group consisting of:

• Pyth Pro subscriptions;
• Pyth Marketplace;
• LaaS/listing on Pyth Pro; and
• Pyth Indices, including fixed revenue and variable revenue share.

The DAO would accumulate 100% of the applicable DAO share from all four categories.

This does not mean 100% of gross revenue. Douro Labs would continue to retain its applicable contractual share.

3. Direct PYTH distributions

If Douro Labs pays the DAO in PYTH:

• The PYTH would be sent directly to the official DAO Treasury;
• The distribution would count as fulfillment of the DAO’s PYTH accumulation policy; and
• No additional market purchase would be required (unless the DAO treasury accrued significant amounts of non-PYTH assets).

Direct PYTH delivery is economically equivalent to purchasing PYTH with the DAO’s revenue entitlement, while avoiding an unnecessary swap and associated market impact.

4. Stablecoins distributions

If Douro Labs pays the DAO in stablecoins:

• The USDC/USDT would be sent to the existing Pythian Council Ops/Squads execution wallet: GAdn7TZhszf5KTfwNRx3A2nP6KCRFEWucZubgdEqbJA2
• The wallet would act solely as a mechanical DAO execution agent;
• The USDC would be converted into PYTH under the DAO-approved execution rules; and
• The resulting PYTH would be returned to the official DAO Treasury.

The Council would not exercise independent discretion over the strategy. It would continue to act only according to parameters approved by the DAO.

5. Existing and future non-PYTH Treasury assets

The same policy would apply to:

• Existing eligible non-PYTH assets held in the official DAO Treasury; and
• Future eligible non-PYTH revenue once repatriated to the DAO Treasury, including Core and Entropy fees.

The intent is to accumulate as much PYTH as reasonably practicable rather than maintain a separate non-PYTH purchase base.

Cross-chain repatriation actions may still require their own technical or operational process. However, once assets are available, they should fall under the V2 accumulation policy without requiring another monthly purchase vote.

6. No Council-initiated PYTH sales

The Pythian Council and the Council Ops/Squads wallet would not be authorized to sell accumulated PYTH.

The wallet may:

• Receive eligible USDC or other non-PYTH assets;
• Convert those assets into PYTH under the approved rules;
• Return the purchased PYTH to the DAO Treasury; and
• Publish the required reports.

Any future DAO-approved use or distribution of PYTH would be a separate governance decision.

7. Existing execution guardrails remain unchanged

The current execution parameters would remain in place, including:

• Maximum 5% slippage;
• Maximum $25,000 per transaction;
• Preference for aggregators;
• Public transaction proofs;
• Return of purchased PYTH to the DAO Treasury; and
• Monthly public reporting.

What would change

V2 would replace:

• The one-third-of-Treasury purchase rule;
• Recurring monthly transfers to the Council Ops wallet; and
• Separate monthly DAO votes for each mechanical purchase.

The Strategic Reserve objective would remain unchanged. The difference is that V2 would align PYTH accumulation with actual DAO revenue and the full eligible non-PYTH Treasury balance, rather than with a shrinking residual balance.

Next Steps

• Gather community feedback on this framework

[Frozenmind]

I really like the direction here. The latest Pyth Pro revenue numbers make this feel particularly timely, and I think V2 sends a pretty strong message for PYTH.

Moving from 1/3 to 100% of the non-PYTH Treasury balance is quite meaningful. To me, it reflects a shift in how the DAO sees the role of that capital: as Pyth Pro revenue grows, there seems to be less reason to preserve a large non-PYTH allocation and more reason to use that revenue to accumulate PYTH.

That creates a very clear alignment: Pyth Pro grows → more revenue flows to the DAO → more PYTH can be accumulated and removed from the market. I think that is a powerful message for the token and creates a much clearer link between the success of Pyth’s business and PYTH itself.

From my perspective as a Pythian Council member, I also really like the simplification of the execution flow. A more predictable flow into the execution wallet would give the Council a broader window to execute purchases and spread them over time. This was also a point raised by the community in the July Purchase Report discussion.

For me, this is less about giving the Council additional discretion and more about making the execution of an already DAO-approved strategy more predictable and efficient. The Council still operates within the parameters approved by the DAO, but with a cleaner and more predictable process.

Overall, I think V2 is a meaningful improvement and much better aligned with where Pyth is heading.

[scp]

@KemarTiti

Thanks for the proposal. I support removing the governance overhead and automating the process, but I strongly prefer the Strategic Reserve to remain a fully market-facing, on-chain buyback mechanism.

My main question is where the PYTH used for direct settlement by Douro Labs actually comes from.

Under V2, direct PYTH payments from Douro would count as completed accumulation with “no additional market purchase required.” If that PYTH comes from Douro’s existing holdings rather than being purchased from the open market, then I don’t think this should be considered economically equivalent to an on-chain buyback.

The DAO is still receiving PYTH, but there is no new market buy associated with that portion of Pyth Pro revenue. If the direct-settlement PYTH comes from Douro’s existing holdings, then economically this could resemble Douro gradually reducing its PYTH balance against the DAO’s share of Pyth Pro revenue, rather than the DAO using that revenue to create new market demand for PYTH.

In other words, it could look more like Douro effectively DCAing out of its existing PYTH position through the revenue settlement mechanism, while the DAO accumulates those tokens, instead of Pyth Pro revenue being used to purchase PYTH from the open market.

That is materially different from:

Pyth Pro revenue → USDC → open-market PYTH purchase → DAO Treasury

With the current market-facing approach, the relationship is very clear and verifiable: Pyth Pro revenue generates actual market demand for PYTH, the purchases happen on-chain, and anyone can independently track the execution. As Pyth Pro revenue grows, this mechanism can also create a consistent and potentially growing source of market demand for PYTH.

So I would appreciate clarification on a few points:

1. Where does the PYTH in Douro’s direct-settlement wallet come from?
2. Is that PYTH purchased from the open market, or does it come from Douro’s existing PYTH holdings?
3. If it comes from existing holdings, why should this be treated as equivalent to a market buyback when no new market purchase occurs?
4. Why not keep 100% of the Strategic Reserve execution market-facing and on-chain, even if that means accepting some execution cost or slippage?

Personally, I support the full on-chain buyback model. I think the transparency and recurring market demand created by Pyth Pro revenue are important parts of the Strategic Reserve, not simply the final number of PYTH tokens that end up in the DAO Treasury.

To me, one of the strongest aspects of the current model is that it creates a direct link between Pyth Pro’s commercial success and market demand for PYTH. The more revenue Pyth Pro generates, the more PYTH the Strategic Reserve purchases from the market. I would prefer to preserve that relationship rather than replace part of it with direct transfers of existing PYTH.

[scp]

To add to my previous comment, I think the core issue here is the distinction between accumulation and buybacks.

I think the proposal is fundamentally mixing two different concepts: PYTH accumulation by the DAO and open-market PYTH buybacks.

If Douro Labs uses its existing PYTH holdings to settle the DAO’s revenue entitlement, that is effectively an in-kind or OTC-style settlement. The DAO receives PYTH, but no new PYTH is purchased from the open market.

That is economically different from the DAO receiving stablecoins and using that revenue to purchase PYTH on-chain. In that case, Pyth Pro revenue creates actual market demand for PYTH.

So I don’t think direct PYTH settlement should automatically be described as “economically equivalent” to purchasing PYTH with the DAO’s revenue entitlement. It depends entirely on where that PYTH comes from.

If the goal of the Strategic Reserve is simply to increase the DAO’s PYTH holdings, both mechanisms can achieve that. But if the goal includes using network revenue to create market-facing PYTH buy pressure, then they are fundamentally different mechanisms.

From SCP with Love

[lowkeigh]

I tend to share your point of view around this too @scp .

Removing the recurring governance burden makes sense as it was more of a formality rather than a true governance decision.

The buy backs however, I also agree I would much prefer a genuine on chain purchase rather than what is essentially an OTC settlement between the DAO and Douro. I acknowledge there are no doubt benefits to both approaches but for me I think the on chain routes positives far outweigh the latter.

I look forward to hearing the rationale from the team on this one.

[zenyas]

Thank you @KemarTiti for the proposal and the thoughtful feedback.

Douro Labs is committed to transparency in how the DAO’s revenue share is distributed. For future Pyth Pro-related DAO distributions, Douro Labs will continue transferring the DAO share of the revenue in USDC on a monthly basis.

This provides a clear and verifiable settlement path. Once received, the USDC can be converted into $PYTH through the DAO-approved Strategic Reserve execution process, with the resulting purchases executed on-chain and reported publicly.

Additionally, we support this v2 DAO treasury proposal as it further reduces the recurring monthly governance overhead for these recurring transfers.