I love this proposal, this will help KlimaDAO expand into multichain and identified as a Multichain refi solution.
RFC: Strategic Treasury Alignment for jUSDC
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.
WAGMIcapital Thanks for the kind words!
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
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?
MarcusAurelius Exactly, and because jGLP introduces leverage it supercharges yield for jUSDC holders.