Automate the Consolidation of Idle Funds into the Treasury Management Portfolio

Proposals
1

Non-Constitutional

Summary

  • This proposal seeks to establish an operating directive that would automate movements of any surplus and idle funds from DAO initiatives to the ATMC.
  • For all capital (excluding ARB tokens) that would otherwise sit idle and unallocated outside of the treasury under scenarios including but not limited to grant allocations that were not fully spent, program surpluses, fee kickbacks, revenue share agreements, and accrued AEP fees, funds can be automatically consolidated to the ATMC portfolio instead of first being sent back to the treasury and then requiring both an offchain and onchain vote.
  • As is standard practice with ATMC operating protocols, these funds will still be subject to OAT deployment approval. Furthermore, as always, the DAO will retain the right to clawback any of these funds via a Snapshot vote at any time.

Background

Below is a brief status overview of the main programs that hold idle capital/might hold idle capital in the short term unless renewed:

  • DDA v2 Program - Established to support early-stage activity on Arbitrum through a delegated grant model. The program’s v2 continuation phase had a budget of $4M spread across various initiative categories, including Gaming, New Protocol Ideas, Dev Tooling, and Education/Community/Events. The program has ended and still holds ~$380K in idle stablecoins. Instead of sending surplus funds back to the treasury, we propose that these stablecoins be moved to the treasury management portfolio. Funds were originally sent to 0xB7c1551BBEB47Eb86266153df5F9D7dA47F08308, from where capital has been distributed to separate subwallets.
  • Arbitrum D.A.O. Grant Program - The continuation program to DDA v2, which began in March 2025 and is still in progress, currently holding ~4.8M USDC with ~2.2M in committed grants that have not yet been spent. Funds were originally sent to 0xb9a05fCcc841202f1ee0dEee557C6abE5cbb6615, and, similar to the DDA v2 program, have been distributed across several subwallets from where expenses are paid and grants allocated. Once the program has ended, any surplus stablecoins would be consolidated into the TM portfolio in the case that the program or a similar continuation initiative utilizing these funds isn’t approved.

Rationale & Specifications

With this proposal, Entropy looks to activate funds that have been sitting idle for an extended period of time, not generating any yield for the DAO. Instead of returning the funds to the main treasury, where they would sit undeployed to any yield opportunities and require a full governance process to be withdrawn, consolidating them to the ATMC balance would allow for yield generation, which is beneficial for the DAO overall.

Additionally, the ATMC proposes to establish the return of leftover non-ARB capital from DAO-related initiatives to the treasury management portfolio as opposed to the DAO Treasury as an ongoing default procedure. This will help the ATMC maximize revenue for the DAO by further minimizing the “cash drag” effect resulting from the requirement of periodic cash sweep proposals.

In short, the two main benefits of adhering to this operational workflow moving forward are:

  • The DAO minimizes the opportunity cost of idle capital as it accumulates from a variety of sources
  • Operational and governance overhead is reduced by routinely consolidating funds into designated AF-operated wallets, while ultimate control remains fully with governance, versus being spread across numerous wallets with separate governance proposals for each transfer to the ATMC

On a case-by-case basis, funds will be moved to AF-chosen and -operated wallets immediately when feasible. Each specific ATMC deployment utilizing the new, consolidated funds will have to be approved by the OAT before activation in accordance with the ATMC proposal.

Voting Structure

This proposal will be considered approved if it passes through the Snapshot stage. The Snapshot vote will utilize basic voting with the options “for”, “against”, and “abstain”. If there are more votes “for” than “against”, and the combined number of “for” and “abstain” votes surpasses the non-constitutional quorum (pre-DVP) at the time the offchain vote is posted, the vote will be considered ratified.

Timeline

  1. Forum Period (February 25 - March 5): Requesting comments and time to edit the proposal with delegate/broader community suggestions
  2. Snapshot Period (March 5 - March 12)
  3. Approved actions will be executed as soon as possible
2

Thanks for the proposal. It does makes a lot of sense, in general, to allocate idle stables into yield bearing strategies, with the caveat of risk profile and liquidity being compatible and of secondary order to the operational needs of the programs involved.

I am just chiming in with a note which was already disclosed in private to Entropy: while, as stated, I agree on the general idea, we are currently discussing with OpCo first, and likely DAO later, about either a potential extention of season 3 or renewal. S3 and S2 funds would be part of this.

Albeit it might not happen, moving the funds before this discussion is over would be not ideal; that said, while is difficult to do hard projections, I do think that any decision, in favour of against, will likely happen before or around the second half of April on this very topic.