No, as far as providers have disclosed their strategies, none of them involve using leverage.
- Holding Strategy: Protocols will maintain the majority of holdings, only shifting higher on the risk curve when directed by the DAO. Since these funds are intended to cover expenses and pay service providers, we prefer to avoid unnecessary risk.
- Risk Diversification: To mitigate potential issues, like a provider underperforming or a black swan event triggering a flaw in their risk management strategy. We favor spreading risk across multiple providers rather than concentrating it in one area.
In addition to the core deployment on AAVE and Compound, various providers have offered:
- Avantgarde:
- Provide liquidity on stablecoin pools via AMMs like Univ3, Balancer V2, Curve, and Camelot.
- Manage PT tokens on Pendle.
- Deposit on platforms such as Fluid and Balancer V3.
- Karapatkey:
- Offer liquidity on ARB-USDC pairs across Uniswap, Camelot, Vertex, or GMX.
- Gauntlet:
- Whitelist vaults on Uniswap, Camelot, Compound, Euler, and Morpho.
Ultimately, any additional deployment will only proceed if the rewards justify the extra risks. The TMC remains conservative, ensuring that funds reserved for paying service providers are not exposed to unnecessary risk.
We don’t believe this will be an issue. Converting 15M ARB to stablecoins over a three-month period would mean liquidating approximately 84k ARB daily.
Over the past six months, an average of 11M worth of ARB has been sold per day on Uniswap pools to USDC and USDT, with the lowest daily sell volume being around 2M.
In any case, we believe that if their liquidation strategy is properly executed, it will have no noticeable impact on the market.
Additionally, by distributing ARB from the outset, providers can begin allocating it to their stable strategies making this process more seamless.