STEP Committee Recommendations

The STEP committee comprising @GFXlabs , @northlakeslegal , @Nethermind , @steakhouse and @karpatkey , with the Arbitrum Treasury and Sustainability Group as nonvoting facilitating member, have come to consensus on recommended allocations between selected products

To not spread the amount too thinly and increase operational or default risk causing loss of principle, we selected only 6 products from the shortlist of 17 shared earlier. Specific amounts to each provider were mostly on the basis of existing AUM (the three tiers were below 100 million, above 100 million, and the topmost).

We commend all applicants who applied under the program.We hope to make 1% treasury diversification via RWA ecosystem growth an annual occurrence so if you are disappointed at not making the list, do try again next year! The extensive documentation provided by each applicant has demonstrated how far the space has come.

The applicants selected and amount allocated (in ARB) is given below

Securitize BUIDL - 11 million

Ondo USDY - 6 million
Superstate USTB - 6 million

Mountain USDM - 4 million
OpenEden TBill - 4 million
Backed Finance bIB01 - 4 million

Some general reflections

  1. As a committee, we found it hard to balance the conflicting objectives of ecosystem growth and principal protection. As many delegates indicated during the vote that RWA ecosystem growth is a priority of the STEP program, we threshed out a more equitable distribution.
    For future iterations, we suggest making the relative priority of objectives more clear. For example, if ecosystem growth is the most important, a single yes vote from any committee member should be enough for a provider to get included in an allocation instead of a majority. There could also be clear stipulations in future programs on how much extra allocation can go to existing providers versus new ones.

  2. While De-Fi support programs succeed through user or liquidity incentives, RWA providers care most about their AUM. We need some innovation for what ecosystem support in the RWA space can be that goes beyond AUM, such as subsidizing obtaining Moody ratings. We hope to see good work coming on this front from the recently approved RWA program from Areta.

  3. Some additional considerations the committee considered for narrowing the list from 17 providers

  • No investment restrictions, especially worrisome if a provider can use leverage and hedging at discretion of the manager. As one of the committee members expressed, we need something beyond common sense that stops a provider from taking our money and putting it into Argentinian peso bonds.
  • Segregated portfolio companies with multiple portfolios are an added risk. Bankruptcy remote is not just having separate bank accounts, creditors look at whether entities are in actuality separate (their own board meeting minutes, payroll with staff, etc) so that the subsidiary entities do not get rolled into the parent one during proceedings.
  • Products with a tiny AUM, exposure to a single ISIN or having fund managers without extensive prior experience or outsourced to third parties are riskier bets
  • Providers using their own proprietary blockchain or solely that of a competitor were passed on in this round
  • Decentralized governance of underlying assets which require additional due diligence and/or have exposure to the Foundation for the same add an extra layer of unpredictability
  • Redemption procedures have a lag period measured in weeks or months or are limited to a single stablecoin that is not USDC, USDT or DAI or require a bank transfer
  • Insufficient documentation such as not providing a PPM, investment memo, counterparty for reverse repos, guidelines, restrictions, having annual audits only or from unknown auditors or managers
  • High fees that are uncompetitive in the current rates environment
  • Appears unlikely unlikely to develop secondary market liquidity to underwrite against
  • Operationally burdensome and requires more active oversight than is desired since individual issuances mature without auto-roll

Next Steps

We will keep a comment period of ~10 days before moving for Snapshot approval of the recommendations on Monday 1st July.

We shall host office hours on this link with members of the committee on Wednesday (28th June) at 330 pm UTC to address any questions. We will also try attending the later part of the open governance call just prior to the office hours. We will not take individual questions on why a particular provider was not included and keep the conversations to a more general level.

We hope this has been and will continue to be an educative experience for all members of Arbitrum DAO!


Hi, Is there somewhere I can see links to the websites of these organizations to understand what they are?


Thanks for the question! I have edited the original post and hyperlinked to the recommended providers application on the forum, which has their websites and much more information.

Let me know if you need anything else, you can also drop by the office hours with members of the committee this wednesday .


Looking forward to the snapshot in July>

Just one question:

  • why you choose to give more money to Securitize BUIDL ?
    This is the only site that does not open, but simply asks to register.
    Others have detailed descriptions of their TVL, expected profitability and so on.
1 Like

Securitize has the highest existing AUM of any provider ($481 million)

We don’t want STEP to constitute a high portion of any providers AUM so we weighted it according to how much they had, in the three tiers mentioned (highest, above $100 million, below $100 million)

It is also a big win for us that they have applied & will be on arbitrum !


I’ve voted for this proposal due to its balanced approach to ecosystem growth and risk management, alongside the clear selection criteria used for allocation.


I think you guys give us a specific layout, still, balance is tricky, keep going!

Overall, we think these allocations are reasonable. Could you explain a little more about the process of implementing this allocation and both timelines and steps regarding how the funds will actually be allocated?


Thanks for the questions ! If the vote passes, the ball gets handed over to the arbitrum foundation to execute the allocations. I expect it to begin once each provider has passed KYC checks, still maybe around september-october at the very latest (more likely August). The program manager would also be taking over the operation of the program once the foundation is through with the checks.

We’ll also be writing up a lessons learnt post, for future guidance in running a STEP program. Hope that helps !


We support the STEP Committee’s recommendations because they focus on six rwa providers , which helps avoid spreading resources too thin. Additionally, we appreciate the committee’s call for clearer priorities in the future. We are also interested in learning more about the exact timeline and details of the proposal’s execution.
If ARB continues to drop, will that affect the execution time? If so, what would be your plan for that?

Voting FOR the proposal, the list of projects seems reasonable and we can start diversifying the treasury.

Thanks for the feedback, we need to work to ensure that priorities are clear and reflected in all the subcommittees being created.

However, I noticed from a previous post that dollar-denominated assets have been favored.
I think we should reconsider this for future allocations to further diversify the risk and exposure of our treasury.


Will post my rationale here later :slight_smile:


We agree in principle, but the assumption is that Arbitrum needs to pay future expenses denominated in dollars. So some kind of currency hedging (or explicit, open-eyed, informed acceptance of currency risk) has to be included. That kind of hedging increases both costs and complexity.

Generally speaking, a premium should be placed on simplicity when designing treasury management systems. DAO governances don’t usually have good asset management expertise (or ability and appetite to monitor hired experts).

All of this doesn’t make non-USD investments impossible, immoral, or ill-advised. Just that there are extra safety considerations so that governance cannot accidentally hurt itself by disregarding such risks.


I voted FOR this proposal on Snapshot. The committee recommendation of service providers seems reasonable and consistent with the original mandate. I am aligned with the additional considerations listed for screening out service providers.

Can you share more information about the reporting plan? I’d like to make sure we have plenty of time to review a report on the performance of each provider in advance of the next round of RWA investments from the DAO treasury.


I voted for this proposal. The proposed committee seems good to me with experience in different areas.


DAOplomats is voting “For” this proposal.

We are happy to see the STEP trial run take form. There were a handful of strong candidates and having gone through the list of those selected, we were confident to support the committee’s recommendations.

We also support introducing a cap to existing projects seeking extra allocation in future iterations.


I voted “FOR” on this proposal.

The distribution is reasonable, and it is the culmination of the first part of the STEP trial run. It is important to notice that this framework leverage the knowledge of the screening committee to suggest the allocations, similarly as the LTIPP program. This structure seems to be a good fit for a lot of initiatives within the DAO.


I voted in favor of the proposal. I support the committee’s recommendations as they seem good and reasonable, allowing the diversification of the treasury. I also appreciate the approach that was used and the clear criteria for allocations.


Blockworks Research is voting FOR this proposal on Snapshot.

We are pleased to see progress towards treasury diversification, an important step for achieving treasury sustainability for the DAO. The candidates for the committee appear strong, capable, and reasonable, giving us confidence in supporting the recommended allocations listed. The proportional distribution of amounts based on AUM is rational and justified.

We would also like to echo the point made by others that a structured reporting plan to monitor the performance of the RWA providers listed here would be beneficial for the DAO for future planning and accountability.