The Treasure ARC has voted against this proposal as drafted.
Rationale:
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Proposed management fees are unreasonably high for the services being provided. We would like to see a materially increased level of proposed services or a significant decrease in cost. Additionally, we would like to see a de minimis management fee with a performance fee incorporated to incentivize and align the investment advisers with the success of the program.
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At the proposed level of committed capital, we would expect to see an institutional quality, actively managed, diversified investment program (e.g., a number of sub-strategies, diversification of platforms and counterparties, periodic reporting obligations, audit partners, performance benchmarking, projections/models, a risk management framework, investment objectives, restrictions, and guidelines).
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Diversifying assets and concentrating counterparties, in our view, is not a net benefit to the diversification of risk. As of August 20th, Aera had ~$42m TVL across the platform. As a matter of best practice and to reduce aggregate risk, we should seek to (i) diversify counterparties with defined maximum exposure guidelines (e.g., no more than 10% of AUM maintained on a single platform), and (ii) place restrictions on the percent of total counterparty TVL we are willing to occupy (e.g., capital commitment can be no more than 15% of counterparty TVL).
That said, we do think this is a needed initiative and the ARC is happy to work with karpatkey and any other parties to scope out and design an institutional quality investment management program for the DAO to benefit from.