We propose creating a $500k stablecoin reserve held within the Operations Account. This will come from the existing $7.8mm in USDC. $250k will be converted into DAI.
As outlined in the Stablecoin Asset Management Guidelines, the Treasury Working Group recommends creating a stablecoin reserve equal to anticipated USD-denominated expenses over a 3 month period within the Operations Account. The reserve will be funded from the $7.8mm in USDC. After the transfer, $250k will be converted to DAI for diversification purposes.
A follow-up IIP will outline how the funds will be made productive once they are in the Operations Account.
Funding a stablecoin reserve that is equivalent to 3-months of anticipated USD-denominated expenses will ensure that the treasury is sufficiently capitalized to address these expenses as they arise. Per the stated Goals and Philosophy of the Operations Account, the role of the Operations Account is to:
- Identify the primary sources and uses of funding
- Set and maintain target levels of stablecoin and high-quality liquid assets like ETH
- Provide for alternative responses or remediation plans to various scenarios
- Plan to deal with temporary, short-term, and long-term INDEX price disruptions
- Operate within working capital risk tolerance levels with oversight from the TWG
This stablecoin reserve follows our initial analysis of funding usage and begins the process of establishing a working capital management program.
A detailed post highlighting our thought process and any relevant discussion can be found here: Stablecoin Asset Management Guidelines.
Create a 3-month diversified stablecoin reserve by transferring $500k of USDC from the Treasury Account (0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC) into the Operations Account (0xFafd604d1CC8b6B3B6CC859cF80Fd902972371C1) then swapping $250k of the USDC into DAI once there.
DO NOT create a 3-month diversified stablecoin reserve.
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