TMC’s Proposed Allocations

DAO Programs & Initiatives Treasury Mgmt v1.2 - TM Track (ARB and Stables)
81

Thank you @threesigmaxyz!
This makes more sense.

Just a detail that the offchain snapshot vote type of basic voting forces the vote choices to always be For, Against, Abstain, and it’s the single choice voting vote type that allows proposal creators to choose custom vote choices, for voters to only chose one of them, like:

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82

Will there be an on-chain vote on this topic?

Judging by the voting results, the ARB strategy should be put to a separate vote, since no one voted against this strategy, but a third of voters voted for both strategies.

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83

In preference to deploy both strategies, but at a minimum we should deploy the stable strategy.

All partners have a strong track record so I’m in favour of using them too.

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84

Thanks for putting together this proposal. I appreciate the thorough analysis and agree with TMC’s recommendation: YES on the Stablecoin Allocation and NO on the ARB Allocation.

Why I support the Stablecoin Allocation:

  • Converting 15M ARB into stablecoins, although not the most perfectly timed move given recent price action, is a solid move to start building up a financial cushion for the DAO. Having some stablecoins on hand is important to make sure the DAO can stay afloat during rough markets (i.e. build a treasury that will last 2-4 years even if the entire market collapses by 90% and stays there for some time).
  • We all know how long these proposals can take to get written, voted on, and implemented. Waiting around for a perfect market scenario isn’t always practical—especially if that moment never arrives. It’s smarter to take some steps now and put the DAO in a safer position.

Some suggestions for future Stablecoin diversifications:

  • Many projects tend to buyback native tokens heavily at peak prices and diversify at the bottom. We should aim to do the opposite: build up stablecoins when things are going great and do nothing (or potentially stock up on ARB) when markets are weak.
  • I’d love to see the DAO pre-approve a high-level strategy and pick a couple of reliable providers to implement it, e.g. identify how much the DAO needs for 2-4 years of runway, diversify up to that amount when ARB market cap is above fair value; halt diversification efforts (or buyback ARB) when market cap is below fair value. That way, we don’t need to spin up an entire new proposal every time we sense it might be smart to diversify, which will help us act faster when the market is hot for us to sell ARB into.

Why I don’t support the ARB Allocation deployment:

  • Even if we can generate 10–30% returns with DeFi strategies, service providers take a chunk in fees, so even if the yields are decent, they can shrink pretty quickly.
  • I don’t see the DAO treasury as a hedge fund or investment pool. In my view, we can generate far higher returns by investing in things that allow us to control our own destiny—investing in people (contributors), marketing, growth initiatives, and acquisitions. The returns from making Arbitrum better and more widely used will be far lower risk and higher upside than the returns generated by financial assets.
  • The other issue with handing off ARB in the treasury to service providers for yield generation is that it can distract us from our main goals. We should keep our eyes on shipping products and growing the ecosystem rather than drifting our focus into hedge-fund territory (which benefits service providers at the expense of tokenholders).
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85

@threesigmaxyz
If the voting is going to be split into two, what about deploying both Strategies? Or what about if the voting go against deploying the Stable strategy? And favor Arb strategy, what will happen to the stable strategy?
(Suggesting it should be split into three instead of two…… deploying Both Strategies should be added.

If it have to split into two it should go on Yes deploy both strategies and No don’t Deploy both Strategies (deploy only Stable strategy)

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86

ARB and Stablecoin strategies (allocations) are independent of each other, there’s no interdependence. It is possible to deploy one without deploying into the other

87

After listening to the community feedback and an inconclusive snapshot result, we have broken these into two separate votes:

Let’s continue the conversation in the new threads.

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88

We have chosen to vote for the first option of “Deploy Both Strategies” because we believe it balances growth and stability, the Only Deploy Stable Strategy option while considerable (and was ultimately the winner) we believe it prioritizes caution by sacrificing key opportunities:

  • ARB strategies offer up to 30%+ returns (vs. 0% by not deploying), offsetting risks with diversification (50/50 between managers) and dynamic adjustments (e.g. option strikes).
  • Stables (8-12%) are safe, but concentrating everything on them ignores ARB potential and exposes the DAO to depeg or low demand risks in DeFi.

Strategic diversification:
Combining stables (low risk) and ARB (high risk/reward) protects against volatility and leverages multiple scenarios (e.g. ARB upside + yield in stables).
Voting for Only Deploy Stable Strategy loses this synergy, betting only on a stable scenario.

We also consider that there may be “hidden costs” when voting for Only Deploy Stable Strategy:

  • Selling 15M ARB to stables could depress their price, harming the DAO and the ecosystem.
  • Keeping 10M ARB idle generates inflation or depreciation losses, with no performance trade-off.

For all these reasons, voting for Deploy Both Strategies is not “risky”, but strategic: it maximizes resources with active management, diversification and alignment with Arbitrum’s growth.

89

I have voted FOR both strategies. Broadly, I support yield production on treasury held assets. I’ve worked with a majority of the parties involved and can vouch for their strong competency. I do hold reservation to the price impact of selling 15M ARB, but assuming OTC this risk can be offset. Further, I would be interested in seeing the yield proceed go toward token buyback and should the program end fully, a repurchase of ARB with the stable balance.

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90

I voted FOR #3 Only Deploy Stable Strategy as recommended by the TMC as my first choice and #4 Deploy Nothing as my second choice. While the stable strategy converts 15M ARB into stablecoins (over three months) and could, in current market conditions, create significant selling pressure and negative sentiment among ARB holders, I support it given that estimations show no potential impact to market price, and that the process will be done by the Foundation - as well as for its benefits to DAO stability and because it ensures service providers get stable USD payments. Splitting the funds among Karpatkey, Avantgarde/MYSO, and Gauntlet ensures diversification and balanced risk exposure, as the TMC highlights. With that in mind, I voted for #4 Deploy Nothing as my second choice as the ARB strategy in current market conditions did not appropriate, especially given the complexity of the financial instruments proposed, having to look for counterparties for the calls, selection of strikes, etc. The ARB strategy may be worth revisiting when market conditions improve and additional details highlighted by the TMC as missing are added.
As a side note, I’d like to re-iterate that it would be desirable that instead of a management fee, a performance fee is charged. Karpatkey charges management fee only, and Avant charges both. This would better align incentives between the organizations managing the funds and the organization having its funds managed.

This makes sense. Proposals live on Snapshot, I’ll post comment rationale on each thread upon voting.

91

I have voted FOR on both TMC recommendations. This proposal marks a significant step towards enhancing our treasury’s health. Though, I echo some of the commentary above in that there should be an effort to limit downside pressure on the token price.

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