- I just made up some numbers from thin air for the sake of example.
- I know.
Good-good-gooooood!
Good-good-gooooood! (Get rid off all the MIMs 
)
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You have topped up my trust in your abilities, and I am thrilled to learn it was just an exercise in deconstruction for the masses. (such quantitative analysis has thus far been uncharacteristic of you Sky, where, or why, have you been hiding this side of you… such eloquent writing to boot!)
Now that we’ve gotten that out of the way, let’s return to the underlying issue: Tether. The concerns pertaining to USDT are not to be generalized as an argument against Stablecoins. I’m sure you are familiar with the protocols aversion for disclosure. This opaqueness is a Tether signature, and as such, makes USDT a target for a bear raid. As an aside, I am unsure how bond yields factor into this discussion. I believe you used “negative convexity” to reference the asymmetric trade of shorting a stablecoin that is capped at 1. Unless you were specifically referring to a concave shaped yield curve?
What happened with UST should be viewed the same way as the events surrounding the de-pegging of the Italian Lira from the ERM in '96. The de-pegging of the Lira preceded a much more significant, and capital intensive, assault by predatory hedge funds against the British Pound which resulted in the Pounds decoupling from the ERM (predecessor of the Euro) and a massive windfall for the fund(s) behind it. The charts Z0li shared look very much like a probing of Tethers defenses. The footprints are there. It’s just a matter of whether you want to see them or not.
So let’s summarize for main street: The argument against a concentrated position in Tether is not an argument against Stablecoins. It is specifically an argument against Tether. It is not about algo backed, asset backed, or crypto backed, fully backed, partially backed, or backed by camel hairs. It is about the potential of an ongoing market operation that just filled its coffers with the blood of UST turning its sights on USDT. And as is the nature of predatory markets, when there is blood, the kill is a foregone conclusion. UST just painted a target on the back of Tether. UST proved a bear raid with the intent of forcing a de-peg is not only possible, but EXTREMELY profitable. The other stables do not have this hanging over their head.
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I’m seeing how much to diversify out of Tether. Please see the comment above I made.
I don’t have any issue with the fundamental backing of Tether. However, there are some nuances around the redemption mechanism in Tether, that while USDC, BUSD, PAX can be redeemed (via Silvergate SEN for example) 24-7; there are some limitations timing with USDT redemptions simply on a 5 day EST business hour ability (and having far fewer redemption agents so to speak). There is a further 0.1% to redeem Tether. You might also recall that USDC (“USD”) is the major FTX margin currency as well, and BUSD and USDC are the larger lending currencies to/from trading firms at this point in time.
Thus, when the market is on a bear trend and funds are net leaving risk space (so net out of crypto and into say US T Bills), the price risk is skewed against the less easy to redeem stablecoin - simply because the “teller” window isn’t always open.
Thus, at prices now at >.9990 (recall the redemption fee), I am more inclined to reduce the USDT position at this time due to the mechanics above.
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I think diversifying out of USDT to a certain extent is okay. But not sure we should completely exclude it… there are a limited number of suitable stablecoins to diversify across, so it makes sense to keep some just for diversification (although perhaps a smaller allocation). Also, once the risk-off market gives way to a more bullish environment, USDT tends to provide a much higher APY than some other stables. We should also be looking at expanding the treasury cross-chain for stablecoin diversification opportunities as well (think USDD, which is overcollateralized). Farming opportunities are better outside of just avax/eth as well as increased diversification for the treasury:
TRON - USDT/USDD LP (20-25% APY) @ Sun.IO
AURORA - USDT (21% APY) - Aurigami.Finance
AURORA - USDC (11.22% APY) - Aurigami.Finance
Regarding 3A, I think something along these lines would be good:
- Stable-coins risk:
a. USDT 25% (about 52 mm USD)
b. USDC 25% (subject to temporary raise for redemption)
c. DAI 15% (there is a lot of overlap here with USDC, as it is backed by USDC)
d. MIM 20%
e. USDD 10% (earn 20%-25% APY)
f. Other Stables 5% (BUSD, TUSD, LUSD, YUSD, etc.)
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Overall, I think this make sense.
It makes it easier to define/manage expectations on how the treasury should be managed, regardless of who is at the helm.
Like @Deal I’d be good with an initial 5% for VC investments. Could be 2.5% increment as we go along if required.
We will need to think on how we manage these votes. I dont believe the current process is efficient enough to deal with those properly. Including, how to deal with changing our risk portfolio.
Maybe we need some kind of council to review these things/propose them to the DAO when required 
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The stablecoin limits i think can be flexible and I don’t mind changing these all at some certain time. We can increase some risk limits (though in practice they may not be met).
More importantly is that we set some precedent of the limits being made.
Also, its really about dealing with things like Convex… which has pretty much cost wonderland twice as much as the UST debacle and more. I’m surprised this hasn’t caused an outright mass revolt in the community so far.
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Perhaps, only for the VC allocations, we form a committee whose members have voting authority delegated to them via an election, and this committee collectively seeks out and approves allocations to early stage projects. Again, strictly for the VC allocations and absolutely not for the general management of the treasury. Also, would not use the multi-sig for this as the qualifications and experience required are very different than those on the multi-sig.
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This is an absolutely spot on point. We must defer to you to address this while making sure you are unobstructed to do so. Perhaps seek guidance from an “inner circle” if you feel it necessary, even though this is within your authority as TM. Should you find factors obstructing you in any way, it may be easier to remove them this way, and if necessary, you could lean on governance to remove any obstacle. The absence of a mass revolt likely has more to do with the gravity of certain forces that are doing more harm than good to this project. If anyone has seen the MEME circulating Twitter regarding the roll Abra and MIM (and Convex) played in the UST heist, perhaps now is the time to break free from that overhang.
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Tough crowd on this one! 207 views only!
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After today’s crash: buy BTC with all our USDT and buy Ethereum with all our MIM? Or should we wait a couple days? Dead cat bounce tomorrow? What do you think about the market?
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Again, with deference and respect to our TM, this is not advice re. how to manage the WL treasury. I am just a degen ape on the receiving end of an unconscionable number of unsolicited firehoses delivering more raw data than any sane human being should ever be exposed to.
Here are the TLDR summaries in bullet point:
- Most, if not all stables to have their peg tested. This asymmetric trade is money on the ground waiting to be picked up. Trade structure is challenge.
Structure short positions OTC directly with big counterparties like Gemini, Circle, maybe Copper.co (avoid keeping assets on Copper.co due to key sharding policies). This has been working and still available, although for a fully decentralized protocol, those counterparties might not be available… would have to investigate.
- Not too late for short exposure to BTC, ETH. Gemini writing puts for hedge funds looking to get short in size.
Dangerous game by Gemini. As stampede heads for exit, negative gamma for put writer (i.e. Gemini) will accelerate price declines (as we saw on Monday). ETH will get to $980 handle very fast in this scenario. BETA Finance was able to short wETH but now borrow rate is > 1000% for ETH. 178% for BTC and positive carry for AVAX of 2.5% as of this writing.
Brief waves of buying have been limited to weak shorts taking profits prematurely, met with massive selling. Avoid picking bottoms until Wed’s FOMC announcement.
- Stable dominoes to continue falling:
USDD/TRON will likely repeat UST/LUNA verbatim.
Binance could come under pressure in the days ahead and will have to expend substantial capital defending BUSD peg, in the process losing customer trust as they manage outflows, which tends to magnify a run on reserves.
USDD/UST playbooks almost identical. Talks are swirling around DAI being the next target as the syndicate behind these attacks continues to fill their coffers in preparation for the main event: USDT. It’s coming. Result of this unclear. DAI… USDC…
- Margin Liquidation Operations as a source of profit. Perhaps this is an area we can put some R&D into to become an active liquidator. Perhaps there’s an algo out there that would let us become operational very quickly? Worth considering. The liquidations are delivering steady and consistent streams but require large cash reserves ready to go.
Remember: Multi-Sigma outlier in Crypto is something around 40-55 sigma event. What this equates to in reality, who the fuck knows. ETH offered at $980 perhaps by end of week (although I put this out last month, we’re very close to it now so not as shocking).
- Fed considering “shock and awe” to catch up to and get ahead of markets trajectory on inflation expectations. Hopes to avoid repeat of Volcker’s Fed, (when Paul Volcker walked financial markets to the edge of death in a game of chicken with bond traders). With 50bp priced in, the Fed hikes by 75bp to 100bp to shock the market into a selling climax, then awes the market by suggesting consumers crushed by double whammy of collapsing stocks and surging gasoline, mass layoffs, terminated real estate market, all having the “desired” effect of removing excess Covid liquidity. (i.e. one big hike will put Fed into “wait and see” ).
In an extreme risk off environment, like now, correlations spike to 1 across asset classes and remain there persistently. For example, BTC 90day beta to SPX is now at 92%!! 
Could we be on trajectory for a MASSIVE margin call against MicroStrategy’s BTC holdings. He was dumb enough to announce at what price BTC would have to get to for there to be a margin call on MSTR’s holdings. That was very dumb. Hedgies love it when their targets voluntarily undress and expose everything.
This post might not be appropriately placed, perhaps moderators could create a dedicated discussion board where market color can be shared and debated without interrupting the main thread?
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We should create some AI/ML model that can simplify that data for you / us.
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I think this works for sure. we absolutely need something in place prior to SkyH’s exit to ensure our treasury is both protected and set up for success as we cannot predict what will come post exit of SkyH. While it may not be perfect for everyone, we dont have the luxury of time on our side with Sky leaving soon. This is a pretty damn good strategy and provides me a level of comfort after Sky exits that i would not have otherwise. I’m all for this, it gets my vote
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It is indeed in the best interest of the DAO, the treasury should be protected, all token holders should have the say in what or what not to invest in especially now that we are going to not have a TM anymore in a couple of weeks.
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dani is not a dependable guy. he has changed . his actions recently shows he doesn’t care about the community as he did in the past. if I had to guess its because there is less money to be made in bear market
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Topic has been approved for RFC:
https://dao.wonderland.money/t/rfc-dao-governance-over-treasury-actions-and-strategy/18541?u=nalx
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