KPK Treasury Management Updates

DAO Programs & Initiatives Arbitrum Treasury Management Council
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KPK TM Monthly Community Update - January & February 2026

kpk is publishing the first edition of these monthly updates, designed to complement the Arbitrum Foundation’s ATM Council reports and provide the community with deeper insight into treasury activity, market context, and program execution. This report aims to enhance transparency by outlining recent developments, performance metrics, and the strategic considerations guiding ongoing initiatives.

Treasury Management

Infrastructure

kpk manages the Arbitrum treasury under a community-approved mandate, deploying capital across approved protocols while the Arbitrum DAO retains full control over funds and permissions at all times. This is enforced through a non-custodial setup: kpk holds no custody over assets, and every action it can take is bounded by onchain rules approved by the community.

The technical foundation is Safe multi-sig combined with the Zodiac Roles Modifier module. Safe provides a widely adopted, battle-tested smart wallet infrastructure already used across Arbitrum DAO. Zodiac allows the Safe owner to assign specific, customisable permissions to designated addresses, limiting them to approved actions, contracts, and parameters.

Together, Safe and Zodiac give the Safe owner complete control over assets, permissions, and system configuration, while enabling flexible, role-based treasury management that is transparent and verifiable onchain.

Active Management

Following governance approval, the Arbitrum Foundation converted 15M ARB into approximately 4.9M USDC for multi-manager allocation. ZRM (Zodiac Roles Modifier) was deployed and funds were transferred for kpk’s active treasury management in October 2025. Approximately $1.7M of stablecoins were deployed by kpk on October 31st.

During January 2026, $672,530 remained deployed in the Spark USDC vault and $990,510 remained deployed in Fluid. The amount remained consisten during February, with $675,208 deployed in Spark USDC vault and $995,588 deployed in Fluid.

Financial Update & Execution

Asset allocation to kpk:

  • Assets under management (AUM) of $1,664,226, with a capital utilisation of 100%.

  • Asset type: the capital is fully deployed in USDC-denominated lending strategies (Fluid (59.6%), Spark (40.4%)).

  • Yield generation: The allocated funds generated $8,773 (January: $4,328; February: $4,446) during the January–February period — equivalent to 3.21% annualised APY, consistent with the conservative, mandate-aligned risk profile of USDC-denominated lending strategies.

Protocol distribution:

  • The Endowment is deployed across 2 protocols, maintaining a diversified allocation within stablecoin lending strategies. The largest position is Fluid at 59.6% of total funds ($995,265). Further positions include Spark (40.4%). All positions are USDC-denominated lending deployments on Arbitrum.

    protocol distribution

Execution:

  • Number of DeFi transactions: 22 during January and February

  • Number of rebalancings: 4 manual rebalancings during January and February, in addition to the hundreds of automated reallocations and rebalancings executed by kpk’s deterministic agents, operating within the onchain permissions approved by the community

  • Risk monitoring and due diligence performed on the relevant protocols and assets

  • Close collaboration with the ATM Committee on ongoing operations as well as planning strategy expansion

Next steps

In early February, the OAT approved the expansion of kpk’s investment mandate to include syrupUSDC as well as kpk USDC Yield Vault v2 on Morpho.

Our operations will continue to include the already approved strategies and assets, with automated rebalancing and reward claiming running continuously. The next update will report on the initial deployment of the expanded mandate and its contribution to overall yield performance.

3 Likes
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Thank you for the detailed update. A few questions from a governance transparency perspective:

3.21% APY on $1.6M is this benchmarked against alternatives available on Arbitrum? Has the community evaluated whether this return justifies the mandate?

Additionally, with the mandate now expanding to include Morpho given recent discussions about Morpho’s relationships with other Security Council candidates was any conflict of interest review conducted before this expansion was approved……?

Asking as an independent observer, not as a challenge to kpk’s work. @MconnectDAO

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Arbitrum Monthly Community Update - March 2026

Introduction

KPK is pleased to present its March 2026 Community Update to the broader Arbitrum Community, aimed at increasing transparency and awareness around treasury activities.

Full report available here.

Market Performance

BTC traded in a wide range throughout March, opening the month at approximately $66,850 and rallying to a mid-month high of approximately $75,670 on 17 March, before pulling back following the FOMC meeting on 18 March. It closed March at approximately $68,140, up 1.9% month on month. The recovery represented a modest break in a prolonged period of weakness since late 2025, though the gains were concentrated in the mid-month rally window and largely unwound by month-end.

ETH outperformed BTC in March, opening at approximately $1,966 and closing the month at approximately $2,104, delivering a 7.0% monthly return and ending a prolonged multi-month decline (CryptoNewsBytes ETH Analysis). ETH reached an intra-month high of approximately $2,376 on 16 March before retracing alongside BTC after the FOMC decision. On-chain data indicated strong accumulation during the month, suggesting renewed institutional interest. Network activity remained elevated, though on-chain fee generation remained relatively subdued, reflecting the ongoing shift of activity to L2 networks (general industry trend, e.g. Ethereum L2 scaling overview).

Across the broader market, mid-caps and long-tail assets remained under pressure as BTC dominance continued to climb. Exchange tokens and L2 tokens underperformed as traders maintained a preference for more liquid majors and stablecoins.

Institutional Flows

ETF flows rebounded meaningfully in March. Bitcoin spot ETFs recorded net inflows of approximately $1.32 billion, marking the first monthly inflow of 2026 after January’s $1.61 billion in outflows and February’s $206 million exit (Investors.com ETF data). A concentrated seven-day inflow streak from 9–17 March accounted for approximately $1.47 billion, before the FOMC meeting on 18 March prompted a single-session $129 million outflow. Combined AUM across all U.S. spot Bitcoin ETFs reached approximately $128 billion by mid-March.

ETH spot ETF flows were mixed throughout March, with inflow days early in the month and outflows later in the period (ETF flow tracking platforms such as https://sosovalue.com/ and CoinGlass: https://www.coinglass.com/). Total assets under management in spot Ethereum ETFs stood at approximately $12.3 billion by month-end.

Market Structure & Dominance

Bitcoin dominance continued its steady climb, reaching approximately 56.1% by the end of March, its highest level since April 2021 (CapitalStreetFX analysis). The rising dominance, despite improving ETF flows, indicated that the risk-on rotation remained selective and concentrated in BTC rather than spreading across the broader digital asset ecosystem. Total digital asset market capitalisation closed March at approximately $2.4 trillion, broadly unchanged month on month, reflecting the offsetting forces of BTC recovery and continued altcoin weakness.

DAO Financial Update

Endowment Update

Asset allocation:

  • Assets under management (AUM) of $1,674,616 with a capital utilisation of ~100%.
  • The funds are fully deployed in USDC-denominated lending strategies (100% USDC). Note that USD-denominated stablecoin exposure is determined based on performance, rather than being restricted to a single asset.
  • Key transactions: Performed 4 manual executions to rebalance the portfolio and optimise yield.
    Additionally, KPK executed both automated and manual operations in response to the Resolv hack that happened on March 22nd. The exposure at risk on the kpk-curated Morpho vault was negligible, $1.1k exposure (0.11% of vault). No direct RLP exposure on the Arbitrum treasury, but the DAO had active positions in Fluid, which was affected by the USR depeg ripple effects. These positions were identified and successfully closed/withdrawn before any losses materialised. No DAO funds were lost.
  • Yield generation: the funds generated $2,994 for the month of March 2026. That is an annualised APY of 2.17% with the portfolio entirely allocated to stablecoins.
  • Marked-to-market valuation: Marked-to-market valuation decreased by $244, reflecting minor valuation changes in stablecoin positions. The portfolio remained stable as expected for a fully stablecoin allocation.

Protocol Distribution

The funds are deployed across 2 protocols, maintaining a diversified allocation within stablecoin lending strategies. The largest position is Aave at 59.6% of total funds ($997,882). Further positions include Spark (40.4%). All positions are USDC-denominated lending deployments on Arbitrum.

Protocol Allocation % USD Value Strategy
Aave 59.6% $997,882 USDC Lend / Borrow (Arbitrum)
Spark 40.4% $676,708 USDC Vault (Arbitrum)

In its day-to-day operations, KPK preserves a 60% maximum exposure to protocols and a 20% maximum exposure of the pool size. Protocol allocations are selected based on a combination of risk and returns, following careful due diligence.