For the two proposed strats on Arbitrum, both offer unique benefits and potential concerns, some thoughts:
Stablecoin Allocation Strategy:
- Liquidity and Stability: Converting ARB tokens into stablecoins provides the DAO with a stable asset base, reducing exposure to ARB’s price volatility which ensures predictable funding for ongoing operations and initiatives.
- Diversification of Management: By distributing the stablecoin management equally among three partners—Karpatkey, Avantgarde & Myso, and Gauntlet—the DAO benefits from diversified risk exposure and leverages varied expertise in asset management.
Concerns:
- Execution Risk: The process of converting a large volume of ARB tokens into stablecoins needs to have proper slippage and swapping constraints
- Counterparty Risk: Entrusting external partners with asset management introduces its own level of risk that is hard to quantify
ARB Allocation Strategy
- Ecosystem Engagement: Deploying ARB tokens into on-chain strategies can enhance engagement within the Arbitrum ecosystem, potentially increasing the utility and demand for ARB
- Yield Generation: Strategically investing ARB tokens into yield-generating protocols can provide the DAO with additional revenue streams, contributing to the treasury’s growth.
Concerns:
- Risk Management: The current ARB proposals lack sufficient risk management and clear operational details, leading to low yield projections as highlighted in the proposal. This uncertainty poses a risk to the principal investment.
- Market Volatility: Big one, and pretty straight forward
Overall, we are leaning towards trialing both and deciding down the road which one to expand more upon.