[DISCUSSION] BitDAO - Greater Participation in Decentralized Stable Assets

Proposal Title: BitDAO - Greater Participation in Decentralized Stable Assets

Authors: Don from Continent DAO; Nakameowdough from DCB

Date: September 20, 2022

Who is involved? Continent DAO, Decentral Bank and contributors from MakerDAO Growth Core Unit.

After the Tornado Cash episode and the recent exclusion of USDC from Binance markets, a series of discussions about an impending regulatory crackdown have been more frequent in the crypto industry, to promote a larger decentralization and stability to BitDAO treasury, here are the main objectives of this proposal:

● Decentralization of stable assets (initially $150M in USDC and USDT)
● Profit acquisition (+4M USD estimated revenue)
● Security (Committee creation)
● New use cases ($BIT) ~ With $USN, $DAI, $MKR, $NEAR and others.

Read the full proposal here

29 Likes

Thanks for writing this, @Don. In general, I agree that there are significant issues with holding so much of the treasury in USDC and USDT, and that these assets carry significant censorship risk. I think we need a strategy for how we can reduce and manage this risk, and I appreciate your raising this topic here.

In my opinion, I’m not sure that converting only a relatively small percentage is the right strategy, and I’m also not sure that the proposed assets are ideal for solving the issue. For example, DAI is mainly collateralized by USDC, and in the event of censorship by Circle, could end in a nightmare scenario in the current configuration. Additionally, USN would have to be bridged, which would expose the treasury to added bridge risk.

Some other possible solutions I can think of might be to use LUSD (which had a really solid proposal here) and RAI (which is one of the most interesting stablecoin projects in the space, but may lack the sufficient liquidity for our needs)…

Another possible solution in this bear market would be to go ahead and convert the existing stables in the treasury to ETH. I think this would send very strong positive vibes to the ETH ecosystem, and be a good long term investment for the DAO, while de-risking away from stablecoin assets that in general feel highly risky right now.

Just my 2 UST for now :upside_down_face:, would love to hear what others thing.

12 Likes

Hey thanks @jacobc.eth for encouraging me to write about this. I agree that the $150M funds would not make enough impact to ensure stability of the treasury, but it would be a good start for us to stipulate all the procedures and process with the committee on more choice of assets and volume of amounts.

I agree that LUSD and RAI would be a nice addition. But we need to be well aligned with all the points that this proposal seeks to example be profitable.

I made some security suggestions in the document that can mitigate risks with USDC and bridging attacks.

Regarding the idea of converting everything to Ethereum, this would be a very high risk trade, but with the possibility of extraspheric gain, so we can combine the two ideas.

  1. Start the Committee
  2. USDT USDC exchanges. <> USN DAI ?LUSD ?RAI
  3. Ethereum continues to fall or some other moment of opportunity occurs (BlackSwan)
  4. Committee approved Stable <> Ethereum
  5. It’s done

What do you think about this?

8 Likes