Had to cool off for a couple of days before being able to provide a proper feedback.
I am voting as suggested by threesigma in the following way.
But this vote is not an endorsement of what was done so far, and comes from the believe that we need to increase the speed of execution from 0.1 miles for hours to 0.15 miles per hours.
Let me break down the proposal.
The Good
The stablecoin strategy are likely good. I am ok in dividing in equal parts in all the 3 parts. I am also ok in karp and avantgard charging a management fee: in the shortlist of protocols i see for both univ3 and camelot v3. Makes me think there is a management of liquidity in a v3 range that might change over time, or at least be manually assessed, since there is no mention of a third party ALM. Managing liquidity is not trivial, and stable pools are all beside stable despite the name.
I am expecting this portion of the strategy to be not only succesfull in yield but useful for the check account of the dao and i am also happy to have avantgard and karpatkey to have a more active role operationally wise in our dao, with gauntlet also consolidating it.
The Bad
The fact that we can’t come up with a proper arb strategy is, to be blunt, quite bad. We all know that, as asset, has only value toward governance; is not not spread enough to be an hub of liquidity (and this maybe can change in future), we don’t have staking out yet so is not a collateral good ebough. This is a quite obvious.
But the fact that, as a dao, we can’t find a way to properly utilize arb at minimal risk and minimal yield for us speaks loud about the state of the ecosystem. I will go back to this but it shows that 1) we need to prepare programs that are more tailored to what we can effectively do in our ecosystem 2) we need to improve the state of arb as a token, in term of utility.
The Ugly
I am honestly still puzzled why the vote was not separated between stable and arb strategy: there was more than 1 suggestion, and if someone has a strong feeling against the current arb approach rule wise it would have to potentially stop even the stable part of the program to push, for example, for a change in rules. This choiche was not only imho quite straightforward but also suggested by some delegates.
Between this proposal, and the GMC, is pretty clear that while both the committees and organizer were well intended, there were issues regarding the risk approach and the availability of options on the table.
We had a very good opportunity to not only create yield for the dao, but also increase the usage of arbitrum native protocols as a signal to external parties that yes, the dao sustains aligned and native protocols. This will be true only in part and applies both here and to the eth side of the treasury.
My STRONG expectation is that, once we move forward with the stable here, and the eth in gmc, we create right away a second proposal in which
- the risk parameters, while tight, should be commisurated to be able to take risk in protocols that allows us as a collective to use intensively the most important arbitrum protocols. Is not about to retrofit / tailor fit, is about being realistic on what we can do today in our chain
- the financial goals should be such that, if we can’t find a “good enough” source of yield for single side arb, we can instead pair arb with other assets, such as eth or stables, to provide for example liquidity in v2/v3 pools or as collateral for perps
- the operations of the committee should be such that, if there is a protocol/vault potentially deemed useful, it can work directly with the protocol operator, to both adjust the application and even tweak if needed some parameters of the vaults in case there is the possibility (which is not there most of the time but asking has 0 cost in life).
I want to stress one final concept. Is relative easy to quantify financial risk of deploying capital here or there in term of projected yield based on market conditions.
What is not apparent, most of the time, is the risk we incur as a DAO by not supporting the stakeholder protocols of our ecosystem. If, as a dao, we don’t promote their utilization by being the first customer on the line, why should we expect others to come to us in the first place?
Note: i have been quite harsh in the judgment above. This is not against single components of the committee or entropy: we have crafted on paper an idea, and this idea has been carried forward while in part being very risk adverse and in part sticking to what we voted for. Which, on paper, is totally fine, and I am sure the committee had to evaluate ton of applications with some (several? most?) not even written in the proper way risk wise. But we need to start pushing toward the last mile here, be proactive, understand how to go toward the goal we want and do the legwork we maybe didn’t expect we had to do. So my harshness is not about badly judging this initiative or the participatns, is in reality just a way to stimulate everybody to be in war mode.