Thank you to all the Delegates and community members who voted to pass the proposal with overwhelming support!
Before moving the proposal to Tally, we are adding the process through which the Arb will be converted to USDC and look for any feedback/comments if any.
In the process, we are requesting for 30% additional Arb in notional USD terms to make sure that there are $4M in the multisig in the end of the process due to any price actions, and whatever is extra, will be returned back to the DAO post the conversion.
In addition, if there is an important downturn in the value of Arb from the beginning of the Tally vote towards the end which affects the value received in USD terms significantly, we would potentially putup a second vote to re-fund the leftover USD needed as per the original $4M request.
Questbook will work with Aera, in collaboration with Gauntlet, thanks @Matt_Gauntlet for your help with this collaboration.
The following description is from the Aera team on the process of converting the Arb received to stablecoins.
As part of their engagement with the DAO, Questbook will be leveraging Aera to diversify out of the ARB tokens into USDC. Aera has engaged with the DAO previously to create a detailed report on treasury management. This report spoke in-depth about execution dynamics for ARB and specifically around the onchain impact of small and large ARB liquidations, particularly that there was outsized market impact relative to the size of liquidations from having grantees in individuals selling ARB themselves. Aera introduces a concept of Protocol Owned Execution (PoE), where the DAO would own the execution out of the governance token via Aera to achieve better execution on the whole.
In the context of the Questbook proposal, the flow for using Aera looks like the following:
To clarify how this works:
Questbook multisig will be the owner of the Aera vault. This gives only the Questbook Multisig the ability to withdraw and deposit from the vault at any time, as well as select which assets can be held, and which DeFi protocols can be interacted with.
The Guardian of the Aera Vault will be Gauntlet. Gauntlet acting as a guardian submits rebalance transactions against the vault to sell ARB for USDC.
Execution will be done in batches to prevent a outsized price impact. Furthermore, Aera has the ability to conduct operations under specific slippage requirements, if desired.
The Aera vault has hooks in place that prevent >3% loss per day due to guardian interactions, and it disallows interaction with anything not previously approved by the Owner (Questbook Multisig).
Questbook is looking to generate $4M in USDC from selling ARB. One risk here is that price fluctuations in ARB bring the initial ARB allocation below the needed $4M USDC notional. While there is fundamentally no way to mitigate this entirely (From Mar 13th - 19th the price of ARB dropped >30%), it is possible to hedge this by asking for a sufficient buffer. Given historical drawdowns a 30% additional ARB buffer (in notional USD terms) should be sufficient.