• General
  • RFC: Strategic Treasury Alignment for jUSDC

Summary

Jones DAO is proposing a mutually beneficial strategic partnership with Klima DAO. Jones has developed their jUSDC and jGLP advanced strategy vaults which provide depositors with superior and transparent amplified yields on both USDC and GLP.

We are confident that a deposit from the Klima Treasury into the jUSDC Vault will significantly enhance both the productiveness of the Klima Treasury and the growth of Jones DAO, leading to continued growth of the Arbitrum Ecosystem.

Motivation

The team at Jones has known about Klima’s mission since its inception and were always keen to take Carbon Offsets seriously. Also, both teams emerged from the Olympus community and have been looking for the right opportunity to strike a partnership.

Jones DAO has recently completed a Carbon offset with Klima, which you can see here: https://www.klimadao.finance/retirements/jonesdaogov.eth/1

We are hopeful that this Carbon offset will be seen by our peers in the Arbitrum ecosystem, motivating them to follow in our footsteps and using Klima to do so. We’re committed to helping the Klima team make these connections.

When seeking partners for our jUSDC Vaults, we have remained focused on onboarding high-quality, DeFi-native teams from the beginning. To perpetuate Klima’s treasury and allow them to continue on their mission, we think jUSDC is a uniquely compatible, audited, low-risk, high-return strategy which we will outline in detail below.

Klima, and the vibrant underlying community, include all of the characteristics of an ideal, high-quality partner. A strong and growing Klima Treasury is in the interest of anyone building at the cutting edge of ReFi - it will benefit all builders and communities.

jUSDC Architecture & Yield

jUSDC and jGLP deliver superior transparent yields with liquidation proof smart leverage in the background. Additional details on this mechanic:

Functionality

GLP is currently the most lucrative and scalable yield in DeFi, with over $400m in TVL earning consistent yield from trading fees on GMX. Built on GLP, jGLP and jUSDC are two distinct and efficient products for both risk-on and risk-off users respectively.

The jGLP Jones Vault borrows from the jUSDC Jones Vault to leverage GLP, enhancing its yield and delta, bringing the price behavior very close to the broader crypto market. jUSDC earns lending yield from the leveraged GLP, staying delta and gamma neutral.

It’s important to note - the leveraging & deleveraging of jGLP is what will keep collateral ratios and the principal jUSDC stable. This unique architecture results in yield, efficiency, and safety far greater than other GLP-based products.

jUSDC: Gamma Neutral Stablecoin Vault

  • Pristine stablecoin yield: ideal for risk-off users. Transparent and on-chain, with enforced lending parameters to ensure delta and gamma price neutrality. The APR is expected to beat yields offered on crypto blue chip money market and lending platforms.
  • Superior architecture to GLP hedging models: no short gamma risk, no basis risk, zero delta and zero gamma exposure, no constant hedging costs. Since jGLP leverages GLP’s already high yields, Jones is able to create a much higher base from which to reward jUSDC depositors than our competition. This means: even during periods of yield compression, jUSDC depositors will be rewarded through our vault incentives - including non-GLP related products.
  • As a USDC Stablecoin Vault, jUSDC accrues all of its yield in USDC.

If you want to learn more about jGLP Vaults, you can head to our docs or read our whitepaper.

jUSDC typically yields 6-8%.

Check out the DeFiLlama data here: https://defillama.com/yields/pool/dde58f35-2d08-4789-a641-1225b72c3147

Proposal

If this proposal is well received, we would like it to become a KIP. If that KIP passes, we propose that the Klima Treasury would be whitelisted for the jUSDC vault, granting it the ability to deposit tokens.

Discussion around the amount of tokens is to be left to the discretion of Klima DAO.

Looking forward to know what the community think about this 🙂

Thanks for the proposal guys and congratulations on the offset.

I think pursuing a whitelisting is worthwhile and I believe the vault is a good product for housing some of the excess USDC.

I will defer to the Klima team on the quantity of that idle USDC and an appropriate allocation. I’m also interested as to how this would work cross-chain given Klima’s base on Polygon.

    Having vested interests in both protocols, I think this is a great idea.
    More liquidity for jUSD and more yield for KLIMA.
    I would love to hear counter arguments though as well as a list of the potential risks.

      ZZRush Thanks for the confidence ZZ! We think a revest is a long road and that mission requires a long runway!

      Hope we can help!

      As a member of both DAO's (Jones and Klima) I am in support of this proposal as I believe it to be beneficial for both protocols.

      Benefit for Klima: Earning yield on stablecoins is a foundational aspect to any treasury in an effort to offset operational expenses at the most basic level. jUSDC is an ideal option to fulfil this need in my opinion.

      I also defer to the Klima team to determine a suitable amount to deposit should Jones be whitelisted.

        Welcome to the Jones DAO community, great to see your proactivity and engagement with the KlimaDAO governance process.

        I’d be keen to see more information from Jones DAO regarding the risks and benefits. I would also be keen to see a cost / benefit assessment from KlimaDAO policy & operations.

          @Shreddy thanks for bringing this to the Forum mate. As you would know, KlimaDAO has historically maintained a highly conservative treasury management operation, limited mostly to market making decisions on its protocol-owned liquidity pools. However, we are actively reviewing several different options to better utilize our idle assets - many of these involve tapping into off-chain sources of yield, such as tokenized US government bonds.

          In terms of the amount, the current thinking is that we would propose to the community that the DAO take a staged approach - depositing a smaller amount (e.g. $100K) at first, and then slowly scaling up to perhaps one-third of our available USDC of 8.3M. We might propose using multiple vendors to diversify risk.

          As we go through this process though, it would be great if you could provide further information for us and the community to understand the following:

          • How would you propose bringing our USDC from Polygon into these vaults on Arbitrum?
          • Beyond smart contract risks, what other sources of risk should be considered? Could you explain those?
          • Are there any reference customers like KlimaDAO who have already deployed treasury assets into jUSDC/jGLP?
          • Are there any access requirements to the vaults (e.g. max or min deposit amounts, vault removal times etc.)?

          Cheers

            rittaaka Hey Rittaaka! Thanks for the comments, have you peeked at our documentation yet? We would love to answer any specific questions you might have!

            Hugh

            Hey Hugh, thanks for the comments!

            The Arbitrum official bridge is the best way to bridge from any chain - would be happy to introduce you to that team as well. They could use some carbon offsets!

            WRT non-SC risks, jUSDC is a pristine asset in that the way jGLP is built and even with max leverage, all potential losses are directed at the jGLP side of the equation which is why jUSDC should (aside from SC risks) remain accruing interest (Currently jUSDC yields over 20%!).

            We have had two proposals pass, one for Sperax and one for Redacted. We have also worked privately with other DAOs but are not able to disclose amounts or whom as requested. I will say that we have sourced 5 deposits from projects so far.

            As far as access, jUSDC has a unique feature in that unlike AAVE utilization will not freeze withdrawal functions. We do this by enforcing a GMX retention which de-levers the jGLP vault based on your withdrawal. As you may know, GMX has a minting retention in order to mint GLP and as such, we pass that to the jUSDC withdrawer. We also outline this in greater detail in the whitepaper which I can unpack also for the treasury team! There is also a 24 hour lockup on withdrawals from jUSDC side which helps lower any potential attack surface.

            Hope that helps, happy to discuss more!

              nach211 thanks for addressing Hugh's questions, look forward to digging into the details of this proposed strategy for maintaining the treasury's purchasing power on idle USDC.

              I reviewed the docs on the jGLP/jUSDC, just want to make sure I'm understanding correctly: the returns on the jUSDC side of the system are "coupled" to the underlying GLP/GMX trading fee accrual, right? So they fluctuate with GMX volume?

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