Summary: Seek permission to whitelist Aave & Curve for staking of idle USDC reserves.

Background: The DAO has additional USDC reserve assets from KIP-13 that are no longer being utilized for liquidity provisions. The DAO is now seeking the tactical ability to stake idle USDC in Aave and Curve to mitigate depreciation from inflation and debasement.

This is NOT a long-term treasury strategy, but simply a tool to generate reasonable, low-risk yield on idle treasury stablecoins until they are allocated to a strategic initiative.

Motivation: Whitelisting Aave and Curve will allow KlimaDAO to earn yield on idle USDC reserves and help the treasury mitigate inflation while supporting the Polygon Network, with minimal risk and opportunity cost.

Aave is a decentralised non-custodial liquidity market protocol where users can participate as depositors or borrowers. Depositors provide liquidity to the market to earn a passive income (https://docs.aave.com/faq).

Aave USDC:

Curve is a non-custodial exchange letting users and decentralised protocols exchange ERC-20 tokens with low fees and low slippage. To achieve adequate exchange volume, Curve needs a high volume of liquidity, and therefore offers rewards to liquidity providers.(https://resources.curve.fi/lp/understanding-curve-pools)
Curve Aave USD pool:

Risks: The main risk is smart-contract risk, which is minimal using a thoroughly audited platform like Aave or Curve.

Once funds are staked, it is relatively frictionless to exit the staked position. KlimaDAO could swap out of this particular position via DEXs, but it will lead to slippage. The protocol operates in a trust minimized system that is controlled via smart contracts, and thus risks are minimal utilizing our USDC in Aave.

Protocol Analysis: The Policy team has assessed Aave and Curve’s TVL, audits, protocol age/risk, our targeted investment and strategy type, and determined it presents minimal risks. The Policy team requests permission to whitelist Aave and Curve to deposit idle USDC.

Risk Analysis_Aave
Risk Analysis_Curve

Polling Period:
The informal forum poll begins now and will end April 4th 18:00 UTC. Assuming in favor, this vote will go to Snapshot.

Poll

This poll has ended.

Wouldn't we need a lot more than 2-3% to mitigate inflation?
Or is this the highest yield to be found given the criteria?
I'm a smooth-brain, just trying to understand.^^

    Is earning $UST on Anchor Protocol (20%) worth considering or too risky?
    I'm 'for' regardless 🙂

      jellyfish Yeah, with how USD is performing you're probably quite right. This is really a short-term, risk-off measure. Pretty much a substitute for what we are doing now, which is just holding USDC on our books while we decide an optimal strategy.

      We could certainly get risk-on yield elsewhere, but we're in an in-between spot with this USDC. Ideally the risk-on deployment aligns with our strategic role as the decentral bank of carbon, instead of assuming risk solely for nominal yield.

        optima Gotcha, thanks for clarifying!
        And I assume one restriction is that these funds have to stay within Polygon, correct?

          NomYap Yeah... the yields would certainly be more attractive, haha.

          I think we should be pretty risk-averse, as we have carbon-centric strategic goals and this is really short-term while we decide a risk-on deployment that aligns with Klima.

          Is this APY on a non-restricted basis - ie, you can withdraw anytime? Isn't Nexo offering much higher rates for USDC on Polygon?

            Sirob Correct, withdrawal any time without penalty. Risk-off, blue-chip platforms, decentralized and permissionless. AFAIK Nexo isn't decentralized & non-custodial, they are more of a fiat on-ramp to defi?

            The new NEXO bridge pools have like 17%, yeah, there're certainly more rewards out there - but come with priced-in risks as well.

            Main hope here is just to whitelist a non-controversial, widely accepted top-performing platform, time-tested and rigorously audited, so we can not worry about risk while we devise a strategic deployment of this USDC.

              Sirob I wouldn't be comfortable with NEXO because it would require a custodial wallet.

              optima Right yes, if the goal is non-custodial and decentralized, Nexo is not the right one.

              11 days later
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