[RFP Process] Request for Proposals: Treasury Management Services for Arbitrum DAO

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:

  • 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.

  • 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.

  • 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.

  • 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:

  1. Executive Summary: Provide a high-level overview of the proposed treasury management strategy, including the approach to managing ARB and Stablecoin assets.

  2. Strategy Description: Detail the proposed on-chain strategies for managing ARB and Stablecoin assets, including specific platforms, methods, and risk management.

  3. Experience & Track Record: Provide evidence of prior experience in managing similar assets, with specific examples of successful treasury management or yield-generating strategies.

  4. 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).

  5. 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.

  6. 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.

  7. Compliance & Legal Considerations: Ensure that your proposal adheres to the legal and regulatory requirements related to the Foundation & DAO’s assets and operations.

  8. 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.

  9. 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.

3 Likes

Our Questions:

  1. Could you please clarify what is meant by the following point?
  1. If this pilot program proves successful, are there any plans to expand the treasury management initiative?
  2. Will there be a separate program manager, similar to the STEP initiative?
  3. After the council’s review, will the full proposals be made publicly available to the DAO?

Thank you for your time and clarifications.

1 Like

Thank you for your questions. Let’s address them one by one.

Clarification on 6.5 – Fund Deployment & Ongoing Oversight

  • Once the DAO approves a proposal, the Arbitrum Foundation will handle actual asset deployment as the legal custodian. Each proposal may require different steps, but the Foundation will enact whatever the DAO decides.

Future Expansion

  • There are no immediate plans to expand this pilot program. Any expansion will depend on its success and would ultimately require a DAO decision.

Separate Program Manager

  • The TMC itself is overseeing this initiative. We are not introducing a separate “program manager” role similar to STEP at this time.

Public Availability of Full Proposals

  • Not all full proposals will be made public, especially if they are rejected or contain confidential details. However, for any proposal recommended by the TMC and passed by the DAO, the TMC will share a clear public summary that includes the rationale and main points.

  • Note that if the DAO wants to require that all proposals be made fully public, it should pass a vote to that effect before the submission window opens, so that applicants are aware of the disclosure requirement in advance.

1 Like

Name: WINR Protocol
Email: dev@winr.game
Point of Contact: Olaf Kaunen - Business Development

Company Description: WINR Protocol is a decentralized liquidity infrastructure designed for high-velocity gaming, DeFi, and yield generation. With over 50 years of combined blockchain experience, the team has built a capital-efficient, on-chain ecosystem that maximizes liquidity utilization while ensuring sustainable returns.

Brief, Summary of Proposed Strategy

WINR Protocol presents a multi-strategy approach to optimize the 25M ARB and converted stablecoin reserves within Arbitrum’s treasury. Our strategies focus on generating sustainable, risk-adjusted yield while reinforcing ecosystem growth.

Name: WINR Protocol
Email: dev@winr.game
Point of Contact: Olaf Kaunen - Business Development

Company Description: WINR Protocol is a decentralized liquidity infrastructure designed for high-velocity gaming, DeFi, and yield generation. With over 50 years of combined blockchain experience, the team has built a capital-efficient, on-chain ecosystem that maximizes liquidity utilization while ensuring sustainable returns.

Brief, Non-Confidential Summary of Proposed Strategy

WINR Protocol presents a multi-strategy approach to optimize the 25M ARB and converted stablecoin reserves within Arbitrum’s treasury. Our strategies focus on generating sustainable, risk-adjusted yield while reinforcing ecosystem growth.

  1. High-Leverage Perpetual Trading (ARB Deployment: Up to 10M ARB)
  • Mechanism: Deploy ARB into WINR’s on-chain perpetual trading infrastructure, enabling leverage up to 1000x while capturing trading fees.

  • Yield Potential: Estimated 12-18% APR, sourced from trading volume and platform fees rather than speculative risk.

  • Risk Management: Non-custodial, with dynamic liquidation protection ensuring risk is capped to trader margins.

  1. Single-Sided Liquidity Pools (ARB Deployment: 5M ARB + Stablecoin Deployment: 5M in Liquidity Pools)
  • Mechanism: Utilize WINR’s single-sided pools, allowing Arbitrum DAO to provide ARB and stablecoin liquidity while mitigating impermanent loss.
  • Yield Potential: 8-14% APR, dependent on market demand and protocol incentives.
  • Risk Management: Non-custodial pools, enhanced capital efficiency, and automated risk hedging mechanisms.

This approach ensures that Arbitrum DAO’s treasury is efficiently allocated, with high liquidity, optimized capital utilization, and minimized risk exposure. Each strategy leverages Arbitrum-native DeFi mechanisms, driving ecosystem growth and transaction volume while ensuring DAO treasury stability.

Our full proposal, including risk assessments, implementation timelines, and reporting structures, is available via Google Drive.

Proposal Submission Link: https://drive.google.com/file/d/11Xq_VhzBrNl-EAxgPJo_odSVl64NcwRW/view

We look forward to further discussions and providing additional insights on how WINR Protocol can maximize value for the Arbitrum DAO.

Name: XBTO x Anthias Labs
Email: charlie@anthias.xyz
Point of contact: Charlie (Anthias Labs)

Background on XBTO

XBTO is a digital asset firm founded in 2015. We have the following business verticals: Designated Market Making, OTC & Derivatives Trading, Custody, Treasury & Asset Management, Tokenization, Infrastructure & Data. XBTO evolved from a proprietary trading firm to a full-service digital asset provider designed for institutions.

Background on Anthias Labs

Anthias Labs is a boutique on-chain advisory firm focused on DeFi risk management and system design. We specialize in risk management, risk monitoring, and governance advisory. Anthias has built risk monitoring systems for DAOs including Aave, Euler, and Compound among others.

Proposal Summary

XBTO and Anthias Labs will collaborate to convert ARB to stablecoins and deploy ARB on-chain via proprietary methods that XBTO can implement given our institutional background along with Anthias Labs’ DeFi-native risk management background.

Conversion to Stablecoins (over 3 months)

XBTO can fully execute this conversion of ARB to stables by employing our High-Frequency Trading (HFT) algorithms across the most liquid Centralized Exchanges (CEXes) where the ARB token is being traded, such as ByBit, OKX, etc. XBTO will run our TWAP algorithm, with a duration of 3months, setting up a no-worse price at $0.40, which we believe is a strong support level. Moreover, we may decide to take advantage of a significant move up around the $1-1.2 price interval. The TWAP equates to 166k ARB tokens/day, approximately $83k/day, which is less than 0.2% of the daily volume. Therefore, it will be very smooth and have no market impact. We would also like to mention that we have the capacity to convert much more than 15m ARB to Stablecoins over the course of 2025 if the DAO should desire this down the road. XBTO proposes that we do this for the Arbitrum Foundation for free, incurring all the trading fees ourselves.

Treasury Alpha Solution (TAS) for ARB tokens

As part of the agreement of supporting the Arbitrum Foundation in its ARB conversion to Stablecoins, XBTO proposes that we engage in the following ARB yield generation strategy. The Arbitrum Foundation lends to XBTO 10m ARB tokens for 1y. The Arbitrum Foundation sells to XBTO a 1y Call Option on 10m ARB tokens, with 5m notional on a strike 120% of the current spot price (approx equivalent to 0.6 at the current spot level of 0.50) and the remaining 5m notional on a strike 160% of the current spot price (approx 0.80). This establishes 2 firm price targets at which the Arbitrum Foundation can take profit on 10m ARB tokens. For the loan of the ARB tokens and the selling of the Call Option structure, XBTO pays the Arbitrum Foundation an amount of 500k USDT at the end of our contract, which would be an approximate 10% annualized return on the USD value of the ARB tokens. These returns can be returned back to the DAO. The Option (Warrant) allows XBTO to mathematically trade the Convexity (also called Gamma), namely the second-order derivative of the Option with respect to the Spot Price of the ARB token. This puts us in a position to buy ARB tokens when the price drops below the strike and to sell ARB tokens when the price moves higher above the strike.

This has a beneficial, stabilizing force on the market as it significantly reduces jumps in the price, creating a smooth and continuous price. Our algorithm therefore sits on the opposite-side of the market forces, enabling strong market liquidity for the token and giving investors greater confidence in the price action. Throughout this activity, XBTO generates a return - as mentioned above, this return comes from the inner volatility of prices - there is no hidden risk, no credit risk from lending the ARB tokens, etc. We will conduct these activities using our battle-tested HFT algorithms on top tier reputable CEXes as well as DEXes if we see attractive arbitrage opportunities. As part of our Gamma trading activity, empirically we have observed that our participation on a single liquid exchange can become up to 10-15% of volume i.e. we add significant liquidity to markets as part of our strategy Lastly, we can create a new Fund share class, with returns denominated in ARB. This will be a truly unique proposition for ARB token holders looking to generate returns with P&L denominated in ARB.

More information on how we are approaching risk management with Anthias Labs and compliance is in the full proposal linked below.

Full proposal here:

Company: Aera

Email: traver@gauntlet.xyz

Point of Contact: Traver (Governance Lead)

Company Description:
Aera is a solution for optimizing DAO funds autonomously and on-chain. For most DAOs, treasury funds (e.g. reserves, treasuries, safety modules, backstops) are not actively managed or adjusted based on market conditions. For DAOs, this can lead to an inability to maintain a runway, cover liabilities, and benefit from growth in the market. Aera provides DAOs with a one-stop, non-custodial solution for managing treasury funds efficiently and transparently. The Aera protocol consists of vaults, which are constructed on a per-protocol basis and can hold a combination of stablecoins, native tokens, and other cryptocurrencies. Aera was built and incubated by the team at Gauntlet.

Brief, Non-Confidential Summary of your proposed strategy (1–3 paragraphs):
Aera Finance is an autonomous, non-custodial, and data-driven protocol for DAOs to manage their treasuries. It is currently utilized by DAOs like Compound, Morpho, Euler, and others, and is being used by DAO programs such as the ARDC and ADPC. This proposal outlines a partnership between Aera and Arbitrum for treasury management. Aera will be used to programmatically swap native governance tokens into stablecoins with minimal price impact/slippage to earn passive, risk-adjusted returns.

The Protocol-Owned Execution strategy uses off-chain logic to monitor onchain liquidity, model price impact, and plan the execution of active and passive trading within a three-month period.
This proposal then utilizes Aera to provide trustless treasury management for the Arbitrum DAO. The proposal utilizes an Aera Stablecoin Yield Strategy and an ARB Yield Strategy targeting low-risk yield on the Arbitrum network.

Because the Aera vault is non-custodial, the owner of the vault (whether the MSS, TMC, DAO Governor contract or the Arbitrum Foundation) can unwind or withdraw strategies at any moment. Gauntlet, as the Guardian, will actively manage risk using Gauntlet’s automated risk systems. This allows Gauntlet to monitor risk and execute strategies while the DAO maintains custody.

Name: Pelli Wang
Email: pelli@bracket.fi
Point of Contact: Pelli Wang (Co-founder, COO)

Company Description and Proposal Summary:
Bracket is building a secure on-chain strategy management platform to connect assets to the best yield generating opportunities on-chain. Today, we have an ETH+DeFi vault that is professionally managed to deliver enhanced yield beyond the base rewards captured by LSTs and LRTs. We also have a Stablecoin Vault (currently in private mode) that will be the ideal vehicle to help the Arbitrum DAO’s goal of managing their stablecoin for long-term growth and sustainability.

While other money management platforms exist, Bracket’s approach is unique in being fully on-chain and not requiring traditionally long lockups nor high minimums.

The Stablecoin Vault aims to generate market-neutral yields within the DeFi ecosystem by capitalizing on inefficiencies and arbitrage opportunities, while minimizing exposure to market volatility.

The Vault employs investment strategies adapted from traditional finance such as

  1. Liquidity provisioning
  2. Futures basis
  3. Yield arbitrage
  4. Tactical leverage / special situations

Full proposal here: https://drive.google.com/file/d/1ImA5MdMW0qaHbChzT4PgSiW0XGl2kQAW/view?usp=sharing

Company: @karpatkey
Email: jy@karpatkey.com
Point of Contact: JY (karpatkey)

Company Description

karpatkey is a leading treasury management firm specialising in serving DAOs and crypto-native organisations. With over $1.2B in non-custodial AUM, karpatkey partners with L1s (Gnosis, dYdX), infrastructure projects (ENS, Safe), and DeFi protocols (Nexus Mutual, Cow, Aave, Balancer) to optimise treasury assets while prioritising security, risk-adjusted returns, and operational transparency.

Brief, Non-Confidential Summary of Proposed Strategy

karpatkey’s strategy for Arbitrum Treasury is built on three main pillars: Tooling, Portfolio Management, and Risk Management.

  • Tooling: Secure, non-custodial treasury management using Safe + Zodiac Roles Modifier Module, ensuring Arbitrum Foundation retains complete control while granting karpatkey predefined permissions. This battle-tested infrastructure, trusted by DAOs like Gnosis, ENS, and CoW, guarantees security and flexibility.
  • Portfolio Management: A balanced approach combining stablecoin diversification and management, ARB-only yield strategies, and hybrid strategies.
  • Risk Management: 24/7 risk monitoring, covering multiple levels of risks, including smart contract vulnerabilities, liquidation risks, depeg risks, etc. A structured risk framework ensures proactive threat detection and mitigation.

The following strategies have been designed and back-tested to optimise for risk-adjusted returns:

  • ARB-Only Strategy: the strategy involves transforming ARB into a yield-generating asset by using it as collateral.
  • Options Strategy: selling volatility and earning options premium. This allows the portfolio to utilise idle ARB to earn stablecoins and leverage on the high implied volatility of ARB tokens.
  • Stablecoin Yield Optimization: across whitelisted assets, protocols, pools, rebalancing strategy based on their yield, volatility of the yields, risk assessment, and cost of rebalancing.
  • Liquidity Provisioning (ARB-USDC Hybrid Strategies): provide liquidity on leveraged trading venues

Link to the full proposal.

Name: Avantgarde Finance & MYSO Finance
Email: erik@avantgarde.finance
Point of Contact: Erik, Head of DAO Governance at Avantgarde

Company Description:

Avantgarde is a DeFi-native asset manager that specializes in non-custodial, on-chain strategies and advisory services for a range of DAOs, foundations, and crypto natives. We have been active in DeFi since 2016, notably as co-founders of the on-chain asset management protocol Enzyme, and bring decades of TradFi experience to help DAOs and Foundations optimize treasury management strategies, improve financial sustainability, and support long-term growth. Our combined experience as both builders and users of on-chain asset management infrastructure also give us a unique perspective on operational best practices for enabling DAOs to allocate treasury assets efficiently within DeFi. Prior to DeFi, the team has extensive investment and operational experience at firms such as Goldman Sachs, Blackrock, Valour, and Genesis.

MYSO is a DeFi protocol specializing in on-chain structured products, enabling HNWIs, treasuries, and asset managers to generate upfront stablecoin income by writing bespoke covered calls and cash-secured puts on a wide range of ERC-20 tokens. The protocol sources institutional liquidity by partnering with leading trading firms, ensuring competitive pricing and efficient matchmaking for large-sized trades. By enabling trustless, on-chain settlement, it eliminates counterparty risk, allowing users to write options more efficiently. MYSO has collaborated with numerous treasuries, including Telos, Evmos, DIA, and Across, as well as several HNWIs. The protocol has undergone security audits by Omniscia, Trail of Bits, Statemind, and ChainSecurity and is backed by leading crypto-native investors, including HashKey, Wintermute, GSR, Nexo, Huobi, and CMT.

Brief, Non-Confidential Summary of Proposed Strategy:

The proposed strategy outlines three parts to managing the DAO’s ARB and stablecoin holdings, including an innovative approach to generate meaningful yield on the DAO’s ARB with robust risk management. Initially, 15 million ARB will be converted to stablecoins over three months using an on-chain covered call options strategy on MYSO, generating upfront premium stablecoin income and mitigating potential price declines during the conversion. The covered call parameters will be optimized to balance yield with principal protection.

Following the ARB conversion, stablecoins will be deployed across the Arbitrum DeFi ecosystem. The strategy will focus on diversification across established and battle-tested protocols like Aave and Compound, which offer sufficient liquidity and have a proven track record. Beyond these core holdings, the strategy may selectively incorporate allocations to other opportunities within the Arbitrum DeFi landscape, including liquidity pools on Uniswap & Curve, and/or fixing a portion of the portfolio’s yield via Pendle. Allocations will depend on the prevailing on-chain yield environment, potential to enhance overall portfolio yield, and ability to improve the diversification profile of the strategy, while adhering with the DAO’s defined risk tolerance.

A separate covered call options strategy will be implemented via MYSO on the remaining 10 million ARB to generate additional yield. This parallel strategy allows the Foundation to earn competitive yields on ARB on-chain and non-custodially with minimal conversion probability, which can be further mitigated by writing puts as buybacks. This approach addresses the RFP’s requirements for liquidity and principal protection, ensuring the ARB remains accessible while generating income.

Full proposal link

  • Name: Armando A.

  • Email: Armando@augustdigital.io

  • Point of Contact: Armando A. : Institutional Business Development

  • Company Description:

  • August is the infrastructure layer bringing the prime brokerage experience to DeFi rails. August has a network of institutional LPs, relationships with leading protocols in areas such as money markets, risk curators, yield trading, L1s, L2s. OTC Credit solutions for yield strategists. The ability to offer structured products via integrations with derivatives.**

  • Upshift (August’s retail product) leverages August’s smart contract wallet foundation to provide a non-custodial vault infrastructure for asset managers to manage DeFi yield at scale, unlocking yield opportunities to the masses that are traditionally restricted to institutions.

  • Upshift was launched in Q3 2024 and now has over $280M TVL across partner vaults. The team is led by Aya Kantorovich, former founding team of FalconX, and Alexandre Elkrief, Head of DeFi at LedgerPrime.

  • Brief, Non-Confidential Summary of your proposed strategy:

❖ Arbitrum-Only Options Vault (Up to 10M ARB): A dedicated vault for Arbitrum token (ARB) deposits that employs covered call options to generate premium income while maintaining exposure to ARB. Yield potential 20%+ annualized. The strategy aims for:

➢ Principal protection through risk-reducing options strategies.
➢ Risk-adjusted returns via income generation without excessive risk.
➢ Liquidity management for flexibility in asset withdrawal.
➢ Full on-chain transparency for stakeholders.

❖ Single-sided AMM Pools Strategy (Up to 15M ARB): A strategy to unlock liquidity by implementing single-sided AMM pools where ARB tokens are converted into Stablecoins over 3 months gradually. Yield potential 8%+ APR dependent on market demand and other incentives, which will:

➢ Focus on risk-adjusted returns by concentrating liquidity in high-demand assets.
➢ Provide liquidity diversification to reduce reliance on single assets.
➢ Open new liquidity venues, attracting more projects and fueling ecosystem growth.

The August/Upshift proposal is part of a broader vision to provide sustainable and efficient DeFi strategies on Arbitrum. With the lower transaction costs on Arbitrum, these strategies are designed to enhance the profitability and accessibility of options trading and liquidity provision, opening up new opportunities for both retail and institutional participants.

August/Upshifts full proposal is available via Google Drive. Link: https://drive.google.com/file/d/1A-V0psvNdUdzW1R3Jai0E70aNWmKUYfY/view?usp=sharing

We are excited about the opportunity to engage with the Arbitrum DAO and look forward to discussing our proposal in detail. We are eager to collaborate and explore how our ideas can contribute to the ongoing growth and success of the ecosystem.