Convert 50% of Community Treasury to USDC

Link to Snapshot:
https://snapshot.org/#/yokaihouse.eth/proposal/0xd1791023592d937c912e96fe4ae07cdd6728c7fc21871781aae1cebc8bc60e30

  • Main concept:
    Convert 50% of the Community Treasury to USDC over the next month.

  • Temperature check:
    Link your Temperature Check Thread

  • Current status:
    Idea

  • Budget:
    Currently 218.1649 ETH in treasury, propose 100 ETH to be converted to USDC.

  • Schedule:
    33.3 ETH to be converted within 3 days of passing vote, 33.3 ETH to be converted between August 29-Sept 3rd, 33.3 ETH to be converted before the Merge (Mid-September). After each executed trade, the community will be informed.

  • Risk:

  1. We sell ETH at the wrong time. Mitigation: Sell ETH in thirds from now til up to the Merge to get a better averaged entry.
  2. Stablecoin depegs. Mitigation: Use USDC which is backed 1:1 by USD.
  3. ETH keeps mooning. Mitigation: We still have 50% in ETH to have exposure to any upside.
  • Value:
  1. Our community treasury worth will not be as volatile and we can lock in a portion of our gains.
  2. We are taking advantage of the recent gains by ETH leading up to the Merge.
  3. We shouldn’t have all our assets in something so volatile.
  4. Even if ETH crashes our treasury will have enough in stablecoin to fund future development for many months/years.
  • Team: Trade will be executed by Capsule House team and have final say on when to execute trades.

  • Quorum: a 15% quorum must be reached for this proposal to be passed (1500+ capsules must vote)

2 Likes

should proposal include a target at which to buy back eth?

I like the idea, I also think the USDC could be deposited into the UMAMI USDC vault, which mints GLP as a market maker for the GMX perps platform and gives 20% APR in USDC and can be removed without any cooldown. There are numerous other strategies that can also be as synthetic yield for the remaining ETH, such as selling OTM options on Dopex. Happy to discuss further.

1 Like

I like where your head is at. I’d be curious on the strategy you propose for this!

Would be interested to hear more. We can explore something like that on a second proposal.

I think in general we want to keep a large some in USDC. But if ETH ever crashes low enough, we can make a second proposal to buy

So multiple strategies depending on time frame, different risk exposures and the level of active management. Thankfully the Arbitrum ecosystem has a lot of composable derivatives that give us a lot of flexibility and liquidity for the treasury. I would recommend 3 routes for the USDC:

-UMAMI USDC vault - 20% APR and nearly zero lockup
-Sell weekly ETH puts - Buy the dip strategy and scaling back into ETH if it dips and collect premiums
-Sell ETH atlantic straddles - Short volatility, likely unnecessary because it requires more active management

For the remaining ETH:
-Sell OTM calls, would have to discuss the level of exposure in case of assignment, but ideally would be be far OTM.
-Deposit into JonesDAO vault for management, so far earning ~10%APY

I like this idea would be interested to see what the votes are gonna be like

GM fam ! I would say you don’t get my vote on this one for multiple reason.

-First i would say the idea to protect our funds is a very good idea but what you propose isn’t web3 in anyway.

-USDC isn’t a decentralized token, could be frozen at anytime…

-Are we all cypherpunk ? 1eth is 1eth, we don’t care about the fiat value of our coin, we want freedom not centralized system, just my opinion !

-If you want to manage treasury there tons of “risk free” tools to hedge the funds and grind more coin like JerryC said, but need a very cautious approche and management and split accros multi protocols to avoid rug, hack etc…

Overall i like the idea but not the method.

Hi 0xjxb, answering a couple of your points

-USDC isn’t a decentralized token, could be frozen at anytime…
No undercollateralized stablecoins exist in sufficient liquidity for defi as a whole. I find it unlikely Circle will indiscriminately freeze USDC in addresses unless they’ve interacted with OFAC sanctioned addresses.

-Are we all cypherpunk ? 1eth is 1eth, we don’t care about the fiat value of our coin, we want freedom not centralized system, just my opinion !
Not sure what you’re insinuating by this - but at the end we are a web3 community that needs to pay artists and taxes. Artists may want to be paid in USD or ETH, and having both affords us the flexibility of being long ETH.

-If you want to manage treasury there tons of “risk free” tools to hedge the funds and grind more coin like JerryC said, but need a very cautious approche and management and split accros multi protocols to avoid rug, hack etc…
There is no such thing as “risk free” in crypto - Anyone that says otherwise is lying. Instead of splitting across multiple protocols, I prefer to identify the protocols that have the risks that I’m willing to take.