Appreciate the prompt reply @thedevanshmehta - Thanks a lot for the additional context ser!
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I went through all the comments and this looks good to me. I look forward to the STEP report before voting
Thanks for the feedback!
Which reports are you referring to again?
We have 2 monthly reports out already and the Dune dashboard too.
October: STEP Report - October 2024
November: STEP Report - November 2024
https://dune.com/steakhouse/step-dashboard/1b508c7c-63ec-42e9-86d9-c3a86d23766e
And for an overarching view of the growth of RWAs and STEPs proportion in it, we have this thread from Entropy.
There aren’t any other forthcoming reports before the vote except the monthly reports from Steakhouse.
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Hi @thedevanshmehta thanks for writing the detailed proposal! Can you confirm where the statement “99% of RWAs on Arbitrum are t-bills”, upon which the selection criteria is based, comes from? If it’s the latest report from @Entropy - my understanding is that only t-bill products were looked at. Would love to understand more.
Thanks for the question! Attaching the tweet where i referenced the information from in a photo.
one thing that would be good to see is the aggregated yield of the underlying instruments vs what we effectively get as a dao.
Let’s start from scratch, let’s say we have mostly tbills that generates a certain amount of yield on a yearly basis. My undertanding is that we will always underperform this metric just on costs on top from tokenization provider, which is fine: to me, this lower amount is de facto the cost to do business on chain and to advertise the growth of the ecosystem.
But it would be interesting to see this number, aka: if we just did put the initial capital in tbills vs here, what would have been the spread in performances.
I also understand this is not trivial because we are talking about different vehicles, deployed in different times etc. But was worth asking.
And if not doable for step1, maybe could be doable for step2.
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Yeah that’s a good question! If nothing else it would allow us to assess the “cost” of having a tokenized tbill vs a regular one. Once OpCo is live it would be possible to directly invest in t-bills vs only being able to use the tokenized version. As a DAO i think we should still stick to the tokenized version since we can track yield on Dune dashboards and ensure the correct amount is swept back into our treasury.
I wonder if @steakhouse or @GFXlabs have any data showing how much yield we are losing because we can only accept the tokenized version of tbills 
thanks for the answer.
To be clear, I think that the dao, opco, whoever, should usually as default go for the tokenized product. This initiative is half treasury related, half growth related, any forfeit yield if compatible with the mission is not really lost but just cost of doing business on chain and would personally like for it to be in this way. Maybe could make sense to have directly tbill at some point but just on the premise of risk management, which would compete to any cfo/manager.
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The short answer is that Arbitrum could get either more or less yield by holding tbills directly. It’s not rocket science to hold tbills, but there’s execution risk. Kind of like how an all-powerful monarch is simultaneously the best and worst possible government – it all depends on how good they are at what they do.
STEP generally prioritized safety and liquidity. Yield generation was, for at least ourselves, of secondary concern. Especially in the case of tbills and at this size of allocation, an extra 20 or 30 bps probably doesn’t offset even a small increase in risk that the funds become lost or stuck. NFA, DYOR, just our opinion when allocating within a universe of only very liquid, very safe, cash-adjacent assets.
As the conversation is moving forward, I will present here the same arguments I made in the TG channel:
IMO, it does not make sense to expand/renew this program now that the DAO approved the Treasury Management v1.2 proposal, which has 2 different committees, TMC (treasury management) and GMC (growth), and OpCo is going to a Tally vote.
The first iteration made sense as there was no structure in place. If STEP it is a treasury diversification strategy, it would fall into TMC mandate. If it is a growth initiative, under GMC. We are adding more costs, creating/keeping fragmented (or siloed) structures for something that should be managed at one place.
For STEP 1, we are already paying Steakhouse 174k for one year of reporting/management. As we are going to have proper structures in place, does it make sense to keep this as a separated treasury initiative over the years?
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Thanks for thinking through the feedback and writing it up!
So i have some thoughts here;
I view STEP as a hybrid between TMC and GMC. We had pretty big success on both fronts. So i would be hesitant to put it in either bucket.
But that’s not the main point i want to make, which is that even if we are changing our internal processes, external RWA projects know of STEP and have a good impression of it. Not to blow my own trumpet, but tell me one other program that gave out $30 million without controversy.
So my own take is, RWA has massively grown on Arbitrum since STEP 1 was announced. We should continue another edition of it with the same committee to build on the success and not try breaking anything which has been proven to work pretty well. Let TMC and GMC prove themselves before we put all our eggs in their basket
This one is punted over to another proposal. as it stands, I believe Steakhouse’ contract is until October. I hope OpCo is operational by then and can take over some of this work.
We appreciate the effort put into this proposal and overall, we support its objectives. Diversifying the DAO’s treasury and generating stable, uncorrelated yields are important for long-term financial sustainability. However, we have some questions and points for further consideration:
- Monitoring Committee Contributions: How will the DAO effectively monitor and evaluate the contributions of the STEP 2.0 committee members to ensure accountability and alignment with the program’s goals?
- Over-concentration on T-Bills: Allocating 99% of funds to U.S. Treasury bills introduces a high dependency on a single economy and makes the DAO heavily exposed to U.S. fiscal policy changes. Would this over-concentration pose risks to the program’s diversification goals?
- Lack of Differentiation: T-bills are standardized instruments with little variation between providers. This creates limited competitive advantage for providers launching on Arbitrum through the program. It’s worth considering how this could be addressed to make the program more appealing for innovative providers.
- Alignment with Broader DAO Goals: If STEP 2.0 proceeds, it will be crucial to ensure its objectives align with the goals and policies of the Treasury Management Committee (TMC) and Governance and Sustainability Committee (GMC) to prevent conflicts or misalignment in strategy.
- Cost Efficiency: Is there an opportunity to reduce the operational costs of STEP 2.0, such as streamlining reporting processes or finding efficiencies in committee management?
Thank you for bringing forward this initiative, and we look forward to seeing its progression.
Im overall supportive of diversifying treasury assets and put them to work. The general question im asking myself is, is this the right timing for going into T-bills?
We have onchain yield that is currently extremely high due to Ethena and and extrem usage of stablecoins overall.
Why arent we make use of these? It would be onchain (what we all want) and could be executed basically within minutes.
Interest rates are going down and so will the yield.
What we would do here is to take Tradfi assets and their associated risks (although very low), then tokenize them and put them into a smart contract (take the onchain risk). So we basically double the trouble for small single digit yield.
Maybe its not the best time now and we should rather seek for onchain yield and then slowly move into RWA. Otherwise the DAO will simply loose on yielding profits.
Im neither for or against the proposal because the overall idea totally makes sense if the risks associated can be minimized. But i do not think that the timing is great.
Im going to vote ABSTAIN.
I vote against this proposal on Snapshot.
I commend the team behind the development and implementation of STEP 1, as it has validated the thesis that Arbitrum can and should be a home for tokenized traditional assets.
That said, I am voting against it for two reasons:
First, the recent approval of Treasury Management v1.2 established a new committee to manage investments of ARB converted to stablecoins. Having two committees handling similar responsibilities through different channels and processes seems unnecessarily redundant.
Additionally, the results of STEP are just beginning to materialize in reports. It feels premature to vote on the renewal of a program only three months after its launch.
If the DAO intends to allocate additional resources to RWA, the newly formed committee should be responsible for managing them. However, I believe that if the DAO has just voted to allocate 10M to stablecoin investments, it reflects that this is the amount it deems appropriate at this time.
Secondly, as I have mentioned previously in other votes, I oppose the continued addition of isolated programs that use ARB to generate yield without a specific objective, projections, or long-term plan. While I support treasury management and investments, I disagree with the current approach, which lacks a comprehensive view of long-term needs and strategy.
Given that the OpCo has already been approved in the temp check and that treasury management will be one of its primary functions, I expect it to take on this responsibility as outlined, adopting an integral approach that considers the DAO’s medium- and long-term needs.
Thanks for your feedback and continued engagement! There’s one point I would like to push back strongly on;
There is a very specific plan here: for STEP to be Arbitrum’s flagship RWA program, where rather than grants we do a ton of diligence on your product and if found worthy, add it to our DAO treasury for prudent diversification
From our perspective, why have a RWA grants program when you can instead buy their financial product & force them to launch it here to get the business?
From a mature projects perspective, why care about grants when you can instead have the legitimacy of Arbitrum being a customer of your product? Plus for their investors grants are less important than showing market need for what they’ve built
We have already seen success with this approach, growing RWA TVL on Arbitrum from $100k at start of 2024 to over $150 million today.
I am voting FOR because I support the diversification of the treasury and the promotion of RWA growth in Arbitrum. However, a part of me says that it is a bit premature if the step reports are just materializing, but I still vote FOR because I think it is important to continue with ARB’s treasury investment strategies.
Excited to see this come live! This STEP program addresses a critical need for Arbitrum by diversifying treasury assets into stable, yield-generating instruments. this reduces the DAO’s reliance on volatile ARB token prices and we are in support of the proposal as a whole.
Some thoughts:
- While the objectives are commendable, expanding the program might be a little premature given the early stage of STEP 1’s implementation. Additional resources without fully evaluating the initial outcomes may lead to inefficiencies or missed learning opportunities. Also heavy reliance on U.S. Treasury bills (99% of RWA allocation) could expose the DAO to some risks but we think it’s probably good for now → nothing better though that we can think of.
- Maybe expanding the scope of eligible assets in future iterations to include other RWA sectors or high-yield on-chain opportunities, could be a good idea
Overall super interested in setting this expand.
I will be voting FOR this proposal in Snapshot as I believe that diversifying the DAO’s treasury with minimal volatility assets is generally a positive action. Regarding other delegates’ comments on a lack of evaluation of STEP’s first iteration, I think the Dune dashboard and the STEP Monthly reports are enough to consider the current STEP iteration as a successful program, achieving mitigation of risk and promoting the growth of the on-chain RWA ecosystem.
About the overlap of functions with the Treasury Management Committee (TMC) and Growth Management Committee (GMC) I share the sentiment that clarity and structure are essential for smooth governance. However, given that these committees are still in process of being fully established and that it will take time to develop their processes and resource efficiency, it makes more sense to maintain a proven program like STEP, which is already delivering positive outcomes for the DAO. When the TMC is running as intended, then we can revisit whether to transition the program under their oversight. For now, keeping STEP as it is strikes me as the right balance to continue supporting ecosystem growth and safeguarding the DAO’s finances trough diversification.
I also think expanding beyond US Treasury bills could be a good idea. The program could look into other conservative, yield-generating RWAs such as corporate bonds or similar low-risk instruments. This would further expand diversification and support a wider variety of RWAs in the ecosystem. Of course this has to be done by taking a measured approach, evaluating risk, liquidity and compliance.
I voted FOR the proposal on Snapshot. The operational expenses are low enough to be easily covered by the earned interest (by my calculations, expenses currently represent less than 30% of the profits - on a monthly basis). That said, I would like to see monthly expenses as a category in each report. ARB liquidation will be done by the Arbitrum Foundation, hopefully they will do it in a way that it least effects the price (e.g. OTC) 
I am mostly agreeing with @pedrob here; despite so, will vote in favour.
I think is worth hammering the table on one of the narrative in which arbitrum is leading, which is RWA. I would have rather preferred to see some changes, including either
- the program falling into the new one just voted for treasury management OR
- the program falling under opco.
Understanding that continuity here means moving relatively fast (relatively cause is ognna take months according to the timeline), the handover of the program would likely be such to further increment this time. For this reason, and knowing the very good professional background of Paper & Gang on these instruments, I prefer a continuation as it is. With a caveat: this, ideally, should be the last iteration of this program as it is. For the next one we will either have 1) opco up and running 2) treasury initiative going to expiration with a potential renewal if opco is not ready. I would like an handover of the program. To clarify, doesn’t mean it would need a new committee for example (but there could be a merit to reduce it if the current treasury management committee has some experience, to avoid surplus), nor that steakhouse won’t be the PM until the end of the mandate. But if in 6 months we want to add another 40, 50, $100M to the program, it should be done under either opco or currently elected treasury managers.
On a final note, I hope we will be able to diversify the issuers with the next RFP, obviously always while being compatible with the risk profile the committee will deem necessary. But I would like to see also new issuers, since the growth is one of the target of this program.
As a final note: please potentially reconsider the budget for the 4 committee members. It’s quite likely there should be more applications, and the budget might be on the low end here. An increase of 20-25% to 30-32.5k per member could be ok imho, knowing that there is in these programs a somehow linear effort based on the amount of applicants.