We appreciate the feedback provided and want to address both of the following comments head-on.
In summary, we directly agree with some of the concerns regarding stablecoin yield and have been monitoring sustained changes between stablecoin and RWA returns. As a result, the ATMC is already in the process of actioning portfolio reallocations to reflect the changing on-chain yield environment with a narrower opportunity set.
As noted in our March monthly update, the OAT has approved a ~$4.5M stablecoin reallocation from Gauntlet’s USDC Prime Vault on Morpho toward syrupUSDC. The withdrawal from Morpho is being executed in gradual tranches to minimize user impact, but it is in progress, with two tranches already completed. On top of that, the OAT has approved a second strategic allocation into USDai that is projected to perform above the current sUSDe/sUSDS rates by >100bps. Combined, these two rebalances are projected to bring blended stablecoin yields above 4%, roughly 150bps above the current stablecoin portfolio 30D MA APY, and meaningfully above the current benchmark rate for RWAs.
On any question of timing and why reallocations to comparable opportunities were not actioned sooner, stablecoin yields on a portfolio-weighted basis only meaningfully and sustainably fell below the RWA portfolio average yield at the end of February.
Per the IPS rebalancing framework and triggers (Section 6.5.2), the monthly review trigger for position-level rebalancing is 100bps below benchmark, or 100bps vs comparable-risk alternatives. Even comparing existing positions to sUSDS (as an example mentioned in response to the proposal), the Morpho Gauntlet Prime vault did not breach this level until recent weeks, although the ATMC had already initiated the reallocation process based on proactive monitoring of the yield trajectory. Portfolio level exposures can’t be meaningfully shifted on a few days or weeks of data that could quickly revert, but once there was sufficient evidence that yield compression would be stickier rather than just temporary, reallocation proposals were already out to the OAT by the time the rebalance trigger threshold was reached.
Regarding the benchmarking question: at present time, the IPS (Section 6.3.2) benchmarks stablecoin yield against the AAVE V3 USDC supply rate on Arbitrum, which has itself fallen roughly in half YTD from ~3% to ~1.5%. It’s worth noting that outside of the AAVE V3 USDC supply rate, most DeFi yields have compressed by a similar magnitude. The stablecoin portfolio has meaningfully outperformed that benchmark, but we recognize that benchmark outperformance alone may not suffice when realized returns are trailing a risk-free equivalent rate in Treasuries. We think there is merit to the viewpoint that the benchmark rate could be unified between stablecoins and RWAs, allowing for allocating more capital to treasuries when they offer comparable or even superior returns at meaningfully lower risk than most DeFi opportunities. With stablecoins roughly composing just ~10% of total portfolio weight, and RWAs at ~50% of portfolio weight, the composition already does reflect some of this view, but the reallocations in progress further align projected returns for incremental portfolio risk incurred. We will continue evaluating whether a benchmark adjustment unifying the two rates is warranted as part of the next IPS review cycle.