Reallocate Redeemed USDM Funds to STEP 2 Budget

Proposals
1

Reallocate Redeemed USDM Funds to STEP 2 Budget

Non-Constitutional

This proposal has been worked on in collaboration with the entire STEP 2 Committee where consensus was reached on this proposed path forward.

Abstract

The Arbitrum DAO held approximately $3.5 million in USDM, a yield-bearing stablecoin from Mountain Protocol. This treasury asset purchase was a part of the STEP 1 program. Following Anchorage Digital Acquiring Mountain and the announced wind-down of USDM, the Arbitrum Foundation has already redeemed the entirety of the DAO’s USDM position, which is now in USDC. This proposal reallocates the fully redeemed funds (~$3.5M USDC) to the STEP 2 budget.

Motivation and Rationale:

This is a straightforward administrative action to ensure the assets allocated to STEP remain yield bearing. At an estimated 4.5% on $3.5M, the DAO is missing out on ~$13k per month while these funds sit in USDC. Given the extremely recent review of RWAs and acceptance of the STEP 2 allocation, this is a simple path forward that the committee believes should enable these assets to get to work in high-quality yield-bearing assets.

For further context, the STEP 2 budget has been partially liquidated, but some of the allocated ARB is still awaiting swapping. Additionally, none of the STEP 2 funds have been allocated yet (in progress).

Specifications

This proposal, if passed via Snapshot with more votes For than Against, will enable the Arbitrum Foundation to move all funds redeemed from USDM into the previously approved STEP 2 allocation:

Budget

This proposal requires no additional funds from the DAO and will proceed to Snapshot Thursday June 5th.

Disclaimer The information provided in this proposal is for educational and informational purposes only and does not constitute financial, legal, or tax advice. Nothing in this proposal should be interpreted as an endorsement, recommendation, or advice to engage in any specific transaction, strategy, or investment. The information is presented “as is” without any warranties of accuracy or completeness. Delegates should consult with professional advisors for specific guidance before making any financial, legal, or tax-related decisions. Use of this committee recommendation is entirely at your own risk.

8 Likes
2

…and more than 3% quorum, right?

3

Camelot supports this proposal as it represents the most logical step forward given the circumstances. The reallocation of redeemed USDM funds to the STEP 2 budget is, in our view, a straightforward administrative action.
We obviously believe these funds should be allocated as soon as possible to avoid losing any interest on the principal.

More importantly, we think this precedent should set a standard for similar cases in which the DAO needs to recover stablecoins and wants to redeploy them quickly. For future instances where external factors force the redemption of approved treasury assets, we shouldn’t be required to go through a snapshot vote for redeployment into previously approved allocations. Such administrative decision should fall directly into the entities managing the treasury of the DAO.

4

Straughtforward yes

Also agree with @Camelot here making this a precedent or even better an autonated decision. Then as it’s the dao treasury might still require an onchain vote.

Which gets me thinking, cant proposals go onchain directly? Because maybe there is no need to put this through snapshot and can go directly to tally

5

The proposal itself is correct and timely (the closure of yield from USDM was announced only on May 12).
Of course, all funds should remain within the STEP program.

However, I have a question:
The closure of USDM is related to legal risks faced by the RWA in the United States.
:speech_balloon: Are there any other similar assets within STEP that could be exposed to the same risks?

1 Like
6

Gauntlet approves this procedure.

7

Smart treasury management means putting idle funds to work and this proposal does exactly that. With STEP 2 already approved and ready to deploy, reallocating the redeemed USDM (now USDC) into high-quality, yield-bearing assets ensures we’re not leaving money on the table.

:chart_increasing: Let’s not let ~$13K/month in potential yield go to waste while we wait. This is a no-brainer move that aligns with the DAO’s goals of sustainability and strategic asset use.

Full support from me, let’s make Arbitrum’s treasury as productive as its protocol. :white_check_mark:

8

gm, in favor.

Going forward, I think the STEP process should be structured to avoid needing proposals like this.

Conditions change for one of the approved assets → Treasury Management Committee should be able to optimistically announce a reallocation into the rest of the basket.

The DAO would then have xx days to veto the move.

1 Like
9

This seems like an entirely reasonable course of action.

I have to note that the disclaimer at the bottom of the post feels almost farcical. The entire OP should not be interpreted as an endorsement or advice to engage in any specific strategy. Okay then..

Disclaimer The information provided in this post is for educational and informational purposes only and does not constitute financial, legal, or tax advice. Nothing in this post should be interpreted as an endorsement, recommendation or intent of the poster to vote in any particular way. The information is presented “as is” without any warranties of accuracy or completeness. Reader should consult with legal professionals before, during and after reading this post. Replies are posted entirely at your own risk.

10

The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb) and @Euphoria, based on our combined research, analysis, and ideation.

We support this reallocation, it’s the right step given the USDM redemption and the fact that STEP 2 allocations have already been approved.

That reasoning makes sense that the $3.5M in USDC is currently idle, and the DAO is missing out on yield while the rest of the budget is still awaiting ARB swaps. Given that context, prioritizing this reallocation makes sense. Going forward, it might be helpful to formalize this logic, when liquid funds are available and yield loss is significant, they should move first within an approved allocation.

We also agree with @Camelot & @maxlomu that if assets within an approved structure are redeemed due to external changes, reallocating them into the same basket shouldn’t require another full governance cycle. A defined process, optimistic execution with a DAO veto window, would make treasury operations more efficient while preserving accountability.

11

yes it should be reallocated asap. This is kind of a no brainer.

12

The following reflects the views of GMX’s Governance Committee, and is based on the combined research, evaluation, consensus, and ideation of various committee members.

We support this proposal. It’s a low-risk, high-reward move to put idle funds back to work in already approved STEP 2 assets.

We also agree with Camelot and Max in the future, the committee should handle similar cases without a full vote, but with a 7-day veto period for delegates to object if needed.

Let’s pass this proposal now and improve the process later.

13

With USDM wound down after Anchorage Digital’s acquisition of Mountain Protocol, we support reallocating the $3.5M USDC to the STEP 2 basket exactly as approved (WTGXX 30 %, USTBL 35 %, BENJI 35 %). We also echo @Camelot, @maxlomu and @Euphoria that similar redeployments should be handled administratively—with only a delegate veto window—rather than a full governance cycle.

1 Like
14

LobbyFi’s rationale on the price and making the voting power available for sale for this proposal

The auction will be made available and the instant buy price will be set at 0.1% of LobbyFi’s VP market value in ETH terms (approx. 2.4 ETH)

15

FranklinDAO supports this reallocation. Reallocating the USDC to the STEP 2 basket is a straightforward choice.

We echo what other delegates have said. Similar redeployments should be handled administratively with a veto window rather than a full governance cycle. When approved assets are redeemed due to external factors substituting into the same allocation shouldn’t require another vote; this sets a good precedent for efficient treasury operations while still maintaining reasonable oversight.

16

I voted FOR

1 Like
17

Voting YES, for the reallocation.

18

We will vote FOR this proposal. It’s quite straightforward, high-ROI treasury move: shifting the redeemed $3.5 million from idle USDC into the already-approved STEP 2 money-market sleeve instantly restores ~4-5 % annual yield and adds no new risk or operational complexity.

1 Like
19

The following reflects the views of the Lampros DAO governance team, composed of Chain_L (@Blueweb) and @Euphoria, based on our combined research, analysis, and ideation.

We are voting FOR this proposal in the Snapshot voting.

As mentioned in our previous comment, we support reallocating the redeemed USDM funds into the approved STEP 2 basket. The reasoning is sound, and this action helps avoid unnecessary yield loss while staying aligned with the original intent of the STEP 2 program.

20

I have voted FOR this proposal. The allocated funds, as determined by the DAO, are critical to preserve, especially with the wind-down of USDM. This vote aligns with my previous support for the STEP 2 Allocation.

As other delegates have noted, adopting an optimistic voting approach for these decisions could enhance the DAO’s efficiency (I also mentionned this previously in this comment [CONSTITUTIONAL] AIP: ArbOS Version 40 Callisto - #59 by 0xAlex )