1. Purpose
The Arbitrum DAO recently passed a proposal (Tally | Arbitrum | Treasury Management V1.2) that seeks proposals from qualified entities or individuals to manage its treasury, including ARB, Stablecoins, and ETH assets.
The Treasury Management Committee (TMC) is tasked with ensuring that in particular ARB and Stablecoins assets are used efficiently, generating yield while aligning with the DAO’s long-term growth and sustainability goals.
This Request for Proposal (RFP) aims to identify suitable treasury management strategies and partners who can optimize the use of these assets, ensuring financial stability, security, and the generation of yield through on-chain strategies.
2. Scope and Objectives
The Treasury Management track has been allocated 25M ARB tokens, with specific goals for both the ARB and stablecoin reserves. The breakdown is as follows:
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ARB Asset Management: Proposals should focus on managing 25M ARB tokens, with the primary objective of generating yield through ARB-only on-chain strategies. Of the total 25M ARB, 10M should be actively deployed in ARB-only on-chain ecosystems to maximize risk-adjusted returns, safeguarding it from unnecessary risk as principal protection and liquidity are top priorities. Strategies must leverage DeFi protocols, liquidity pools, or other on-chain opportunities to generate yields.
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Conversion to Stablecoins: A key requirement is the conversion of 15M ARB into stablecoins or other cash-like assets over three months. Applicants must detail how they plan to minimize slippage and market impact over the 3-month conversion period for 15M ARB, including tentative timelines, liquidity sources (DEX, RFQs, etc.), and trade size constraints.
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Stablecoin Deployment for DAO Liquidity Needs: Once the 15M ARB is converted into stablecoins, these funds may be allocated to very low-risk, yield-bearing strategies or cash-like assets. The stablecoin reserve will be utilized for covering DAO’s dollar-denominated expenses and addressing service provider contract shortfalls. Proposals should clearly outline the management approach for the reserve, addressing the risks associated with the selected strategies, potential risks, and emergency exit plans, given the intended purpose of the funds.
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Diversification & Stability: Proposals must prioritize risk-adjusted returns and liquidity management. A diversified approach is required to balance the DAO’s growth objectives with prudent risk management. Both the ARB and stablecoin reserves should be managed to ensure the long-term stability of the treasury, with clear mechanisms for ensuring that funds are used efficiently while minimizing risk exposure.
3. Application Process
All interested parties must submit proposals via the Arbitrum DAO forum. Proposals must follow the instructions outlined below and meet all specified requirements.
- Forum Message:
- Name.
- Email.
- Point of Contact.
- Company Description.
- Brief, Non-Confidential Summary of your proposed strategy (1–3 paragraphs).
- Proposal Submission:
- Submit your proposal as a detailed PDF document via Google Drive.
- Ensure the document includes all necessary sections outlined in the Submission Requirements (outlined below).
- It is up to the service providers to disclose any proprietary technology, systems, or competitive advantages they wish to share. It is solely the responsibility of the applicants to decide what to disclose in their proposal.
- Link to a Google Drive with the proposal. The following emails shall have access to the proposals:
- Questions & Clarifications:
- Questions must be submitted via the forum by the Questions Close Time.
- Publicly posted questions and answers will remain visible to all participants to ensure fairness.
- Other Considerations:
- The TMC reserves the right to split the 25M ARB among several managers or strategies. Proposers are encouraged to specify whether their strategy can be scaled up or down.
- All assets remain under the Arbitrum Foundation’s custody; managers will not directly hold funds.
- Selection is not guaranteed; the DAO retains final approval via Snapshot.
4. Submission Requirements
Proposals must include the following sections:
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Executive Summary: Provide a high-level overview of the proposed treasury management strategy, including the approach to managing ARB and Stablecoin assets.
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Strategy Description: Detail the proposed on-chain strategies for managing ARB and Stablecoin assets, including specific platforms, methods, and risk management.
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Experience & Track Record: Provide evidence of prior experience in managing similar assets, with specific examples of successful treasury management or yield-generating strategies.
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Risk Management Plan: Describe the risk mitigation strategies that will be employed to protect the DAO’s assets, including strategies for volatility and market risks. These strategies should be detailed for various market conditions, including both normal and stressed environments. For example, strategies should address scenarios such as the potential depeg of USDT or USDC on Arbitrum. Additionally, include a section detailing time-to-liquidity and any lockup periods. Clarify how strategies will be unwound in emergencies (e.g. if the DAO needs cash quickly).
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Expected Outcomes: Provide projections for yield generation, risk-adjusted returns, historical returns, historic exit liquidity from the strategy, utility, and any other performance metrics that can be used to evaluate success. For example, explain how your proposed ARB-only strategies will leverage or support Arbitrum-native protocols, drive ecosystem growth, or create synergies with other on-chain services. Proposers may consider using well‑established protocols vs. newer or more experimental protocols—please explain the tradeoffs and rationale.
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Implementation Plan: Outline the steps involved in implementing the strategy, including any phases, timelines, and key milestones. Ideally, further split the implementation plan into three phases. The implementation plan must cover all three phases.
a. Conversion of 15M ARB to stablecoins over a 3-month period.
b. Deployment of the stablecoins.
c. Deployment of 10M ARB into ARB-only on-chain strategies. -
Compliance & Legal Considerations: Ensure that your proposal adheres to the legal and regulatory requirements related to the Foundation & DAO’s assets and operations.
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Reporting & Transparency: Outline how performance will be tracked and reported back to the DAO and/or the TMC, with details on the frequency and format of reports. Proposals must include a section on the metrics and dashboards used for continuous monitoring (e.g., risk exposures, yield breakdown, VaR estimates, etc.). Describe how these metrics will be communicated to the TMC, for example, monthly, on request, via a live dashboard, etc.
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Compensation Structure: Clearly state your proposed fee structure or compensation model for managing the treasury, including payment for the service, and any upfront, ongoing, or performance-based fees. Provide a breakdown of how these fees will be calculated and any conditions tied to compensation.
Please note that proposals should acknowledge that ultimate custody of funds remains with the Arbitrum Foundation, and no assets will be transferred directly to third parties.
5. Evaluation Criteria
Proposals will be evaluated based on the following criteria:
- 25% – Experience & Track Record: Demonstrated ability to manage treasury assets, with a strong focus on security and yield generation.
- 25% – Risk Management: Well-defined and robust risk management strategies that ensure the protection of assets and maintain market stability.
- 15% – Alignment with DAO Goals: The extent to which the proposal aligns with the DAO’s growth objectives and contributes to providing utility within the Arbitrum ecosystem.
- 15% – Expected Returns: Clear projections for yield and performance, with a thorough understanding of associated risks and liquidity constraints.
- 20% – Transparency & Reporting: The ability to provide regular, transparent reporting and continuous monitoring of asset performance.
6. Selection Process
The TMC will evaluate proposals and provide a recommendation. The final decision, including any allocations, will be voted on by the DAO via Snapshot.
6.1 – Evaluation Team & RFP Administration
- The Treasury Management Committee (TMC) will administer this RFP.
- Proposals will be reviewed and scored by the TMC.
6.2 – Scoring & Shortlisting
- The TMC will thoroughly review each proposal’s detailed PDF, including confidential sections.
- Each submission will be evaluated against the DAO’s objectives and the TMC’s risk criteria, applying the Evaluation Criteria (Section 5).
- After scoring, the TMC may shortlist one or more proposals for additional due diligence or final consideration.
6.3 – Recommendation by the TMC
- After completing its review, the TMC will provide a public summary of how each applicant performed on key factors (e.g., risk management, track record, projected yield).
- The TMC will present its recommended proposal(s) to the Arbitrum DAO, including relevant justifications and proposed allocation amounts.
6.4 – DAO Decision via Snapshot
- The final selection of any treasury manager(s) will be subject to a DAO vote via Snapshot.
- The TMC does not grant final approval; instead, it submits its recommendation for the DAO’s independent review and decision.
- Should the DAO vote against the TMC’s recommendation, the TMC will re-evaluate and may present a revised recommendation, reflecting any feedback shared by delegates.
6.5 – Fund Deployment & Ongoing Oversight
- Once a proposal is approved by the DAO, the Arbitrum Foundation—serving as custodian of the funds—will enact the DAO’s decision to deploy treasury assets accordingly.
- The TMC will continue to monitor performance, and adherence to the agreed risk parameters, and will flag any concerns to the DAO if a manager deviates from its mandate or if market conditions change.
7. Timeline for the RFP Process
- RFP Release: 22.01.2025
- Questions Close Time: 12:00 UTC Tuesday, 4 February 2025
- Proposal Submission Deadline: 12:00 UTC Thursday, 6 February 2025
- Evaluation Period: 7th February – 19th February 2025
- Snapshot Vote for Final Selection: 20th February 2025
8. Terms & Conditions
- Legal Considerations: All proposers must comply with the Arbitrum DAO’s governance requirements. The successful proposer will be required to enter into a legally binding agreement with the Arbitrum Foundation (on behalf of the DAO) to formalize the partnership.
- Confidentiality: Certain aspects of the proposals, particularly those involving proprietary strategies, may be treated as confidential. Proposers will be required to submit non-confidential summaries for public review.
- Payment & Compensation: Compensation for selected treasury managers will be contingent upon meeting specific milestones and performance targets outlined in the Treasury Management Agreement. The compensation structure may include milestone-based or performance-based fees, and will be subject to DAO approval before any disbursements are made. The Arbitrum Foundation, acting as the custodian, will facilitate all approved payments according to the terms ratified by the DAO.
9. Contact Information
For any questions or clarifications regarding this RFP, please contact the Treasury Management Committee using the emails above or via the forum.