Sorting Indexcoop’s stablecoin treasury

Finance Treasury
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Hi, this is my first draft post about indexcoop treasury.
On Behalf of shareholders.

Hi, good afternoon. I I know you saw what is happening in market situations like the Silicon Valley bank, Silvergate, USDC depegging, and everything else. Indexcoop’s Stables Treasury has most of the DAI and USDC, worth millions of dollars. We shouldn’t be celebrating if the pegged returns to $1.00, as the Federal Reserve will build new digital dollars and small banks won’t be bailed out. I think it’s best we change this strategy to avoid a black swan event. The Federal Reserve won’t do a pivot or bailout until interest rates are cut. This could have an even worse effect on the stock market and crypto market in the coming weeks or months. It almost killed Indexcoop’s treasury. USDC went from $1.00 to $0.80 and is now at $0.98. Hoping USDC returns to $1.00 is gambling; the high risk and high reward ratio is not good here and it is becoming C-grade from +A-grade.

There is a solution. I think it’s best to convert to ETH from Indexcoop’s stablecoin treasury when ETH hits $400 to $700 around. We should do this when the time is right and investors are out of powder, like during the 2020 crash event when there was no chance to buy at an average of $100 for ETH. Now Binance has bought ETH, BTC, and other assets for one billion dollars from BUSD stablecoins. I believe they made the wrong move and a very early decision, as it will create a black swan event if the stock market crashes due to the Federal Reserve and global problems. Binance will lose -50% to -70% of their value. It reminds me of Caroline’s tweet, “If you’re looking to minimize the market impact on your FTT sales? Alameda will happily buy it from you today at $22.” Guess what? It ended up with a zero price. We should wait, like the man last standing who Blackrock saved during the 2008 stock market crash event. The US government contacted Blackrock to clean up the mess from the crisis and manage the toxic assets that were owned by drums like Lehman Brothers, Bear Stearns, and others. Indexcoop’s vision is similar to Blackrock’s.

I know this is an unpopular option, but it is the best forward.

Indexcoop’s treasury is around $7m. $7 million can turn into $84,000,000 at ATH from buying $400 ETH average. The Indexcoop team can make a decision about entering ETH price, be it $400, $500, $600, or $700. It’s your call.

I did a quick math:

Buying $400 ETH average at $7 million amounts → ATH= $84,000,000 ($77 million gross profits)

$400-> ATH= $84m.
$500-> ATH= $67m
$600-> ATH= $56m
$700-> ATH = $48m

Indexcoop had a runway of around 27 months. Buying a cheaper ETH will increase Indexcoop’s runway; it could go up to 200-500 months and free up risk. The stock market crash will happen if the Federal Reserve wants to cut interest rates due to collapsing banks and other problems. ETH is $1670 right now (13/3/2023). If ETH is heading below $1000, we will see lots of liquidations worth billions of dollars. This is an opportunity for Indexcoop.

What do you think!:wink:

Sorry for my bad engilsh; English is not my first language.

Discourse: I have had a $INDEX heavy bag and I have been watching index coop’s growth for 800 days.

Twitter handle: @Marchanthedge

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Hey @LONGnostradamus

Thanks as always for the contribution. The vast majority of Index Coop’s cost base and expenses are in stable fiat currencies. I appreciate what you are saying above but generally speaking many of us do not believe in holding volatile risk assets on the books as they are obvs correlated with the market. This would mean the value of the treasury going down during bear markets when we need as much capital as possible to survive. Further more much of our current revenue and therefore future “cash flow” is already highly correlated with ETH/crypto.

Lastly, our business model is to concentrate on making the leading, on-chain, decentralised , structured products. Trying to trade/time markets with our capital could be compared to a business losing focus on hedge fund like activities.

Thanks

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Thanks for reply. I think a lot about it. I agree with you totally. One thing, what if the dollar lost -20-50% of its value in a year? Indexcoop’s purchasing power will be getting smaller while the Federal Reserve adds new $100 trillion dollars and stablecoins go “moon”. Employees will be asking for a raise in their wages or they will leave us. A balance sheet with 80% cash is still risky. I’ll give it a 4.00 grade, not a 0.25 grade; a +C grade. Have a look at every company’s balance sheets. Very small cash but high liabilities and other items. If Indexcoop had started in 2008, Indexcoop would have already gone bankrupt due to a -70% loss in purchasing power. However, I’m glad Indexcoop added 20% for MMI but still neutral. If we want to become blackrock or jp Morgan. use High liability, revenue and lowest cash as possible.

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As an Index governance token holder you are free to put this to vote. I would recommend a temp check in the forum first using the poll feature.

However I would advise that contributors have previously discussed this and delegated the responsibility to the Treasury Pod where there is strong consensus to remain in diversified stablecoins as per this recent post for the reasons as per my previous comment.

Thanks

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Polls was good ideas. My post will be expired in 2-3 months. We can revisit this anytime if indexcoop team has changed mind. Plenty times until see what market has changed situations.

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