Non-Constitutional: Stable Treasury Endowment Program 2.0

[thedevanshmehta]

@Argonaut

we agree it’s important to first assess the outcomes of the initial STEP program before allocating additional funds. By analyzing detailed reports and performance metrics from the first iteration, we can identify successes and areas for improvement, ensuring that the next phase is even more effective.

This is good feedback and one reason why we want to wait until the first report from STEP comes in before moving to any vote.

@Argonaut

Hypothetically, we might regret not selling earlier. To avoid the risks of speculation, it’s better to follow a consistent strategy like DCA. You could also set a rule to sell if the price increases by more than 10%, allowing you to capitalize on gains without getting caught up in emotional decisions.

Still thinking through the best way of liquidating. One option is dollar cost averaging to make sure there is a STEP held within a definite timeframe, creating predictability. Another is to be strategic in building up an endowment without compromising Arbitrums security, since the security of our protocol depends on ARB token price and we already have a $30 million endowment through the first program.

@Argonaut

Could you provide any specific data or analysis to support the statement? It would be interesting to see if there are financial models or historical precedents that back up this approach.

You can see Karpatkey’s report which did some financial modeling to try understanding how ALL expenses can be covered from yield earned.

@karpatkey

To achieve a desired diversification target, measured as the share of ETH vs the share of Stablecoins/RWAs, the DAO would need to allocate between $2.4 billion and $5.3 billion towards yield-generating strategies.

@karpatkey

In the optimal scenario where ETH value is stable or rising and conservative expense projections are applied, the DAO would need to allocate about 40% of its treasury to yield-generating assets.

If we follow a patient strategy where diversification for STEP can only happen above a floor price set by the earlier diversification programs, we should reach 10% of present expenses covered via yield (~250 million RWA endowment) with 5% of treasury.

That also leaves ample room for other diversification initiatives like the treasury manager proposal, GCP, etc