Update on Proposed Approach and Request for Snapshot Voting
Specification
In order to initiate operations as per BIP-103, Karpatkey respectfully requests the Balancer DAO to take the following actions:
- Dismantle specific positions on the current multisigs on Mainnet, Polygon, and Arbitrum (as outlined in the Execution Details section);
- Bridge specific in-scope assets from Polygon and Arbitrum back to Mainnet (as outlined in the Execution Details section);
- Transfer all in-scope assets (totaling approximately $5,900,000 as of the day of this writing) to a new SAFE provided by Karpatkey and owned by the Balancer DAO (as outlined in the Next Steps and Execution Details sections).
Motivation
After internal discussion, the Karpatkey team has determined that the Balancer DAO would be best served by a simpler and more direct approach. Since Karpatkey has already been voted in as the treasury manager, there is no longer a need for further discussion or a new vote on the specific allocation of funds, despite having recently proposed the “Base vs Expanded allocation” approach.
To streamline deployment, Karpatkey proposes beginning with the base allocation and then expanding as needed. This approach takes advantage of the Zodiac Roles Modifier permissions preset that has already been created and tested for allowlisting specific functions and protocols related to the base allocation. Karpatkey intends to move forward with this approach and will propose future adjustments in accordance with the guidelines set forth in the original proposal. However, any future adjustments to the strategy, and thus the preset, will ultimately require the approval of the Balancer DAO through the execution of a batch of transactions to apply the adjusted preset.
Zodiac Roles Modifier preset to be applied
The original post proposed the following:
To increase flexibility and adapt to changing market conditions, Karpatkey suggests expanding protocols and functions to include ETH wrappers and unwrappers, swaps on Balancer and Uniswap v3. These swaps, except for regularly swapped reward tokens, are intended to provide Karpatkey with the ability to take immediate action in specific market conditions, such as a stablecoin losing its peg. The pools were chosen based on liquidity to maximize results for the Balancer DAO, but new permissions may be necessary as market conditions change.
The Manager preset consists of the complete list of permissions that Karpatkey asks the Balancer DAO to grant. This list can be found in this Annex Document. Through the Zodiac Role Modifier, the Manager preset will be applied to the Manager Role, which in turn will be assigned to Karpatkey’s Manager SAFE.
Future permissions and roles
Once the initial strategy is deployed, there will be a periodic need to adapt the portfolio to changing market conditions. If a particular strategy no longer provides sufficient yield, or if a particular pool in which the Balancer DAO has a position becomes deprecated and needs to be migrated, new permissions will be required.
In addition, creating new roles to improve or expand operations will also be necessary. Two new roles are planned for the near future: the Harvester Role and the Swapper Role. Both roles will be granted specific subsets of the Manager preset permissions and will be assigned to EOAs to automate certain tasks. The Harvester Role will be allowed to claim rewards, while the Swapper Role will be allowed to swap these rewards for ETH or stablecoins.
When deemed appropriate, Karpatkey will create a new forum post requesting the Balancer DAO to update the preset or deploy new roles. The post will include an explanation of why the permissions and/or roles are needed and the executable payload. The proposal will need to be passed by the community and, once approved, it will be executed by the multisig according to the DAO standard operating practices. It is important that this process is as simple and straightforward as possible, since every day of waiting may represent an opportunity cost to the DAO’s treasury. A summary of the new permissions and/or roles will be included as a separate section in every corresponding weekly report.
Next steps
The next steps for implementing this proposal are as follows:
- Karpatkey will create a new SAFE, deploy the Roles Modifier contract, and apply the Manager Role preset (as outlined in the Annex Document) to simplify the process for the Balancer DAO.
- Karpatkey will conduct a small-scale replication of the strategy for a second round of testing.
- Once the SAFE is created, tested, and permissions are applied, Karpatkey will transfer ownership of it to the Balancer DAO and remove themselves as owner.
- This proposal will be submitted to Snapshot for approval.
- If the proposal is approved, the Balancer DAO will execute the steps described in the Execution Details section.
Execution details
The following list is intended to serve as a clear execution roadmap for the Balancer DAO once (if) this proposal is approved:
- Dismantle the Balancer Boosted AAVE USD position on Mainnet and withdraw 100% of the funds in DAI.
- Dismantle WBTC + ETH position on Mainnet and withdraw the two assets in equal proportion.
- Dismantle ETH + GTC position on Mainnet and withdraw the two assets in equal proportion.
- Dismantle MATIC + USDC + WETH + BAL position on Polygon and withdraw the four assets in equal proportion.
- Bridge USDC and WETH from Polygon back to Mainnet.
- Dismantle WBTC + WETH + USDC position on Arbitrum and withdraw the three assets in equal proportion.
- Bridge WBTC, WETH + USDC from Arbitrum back to Mainnet.
- Transfer in-scope assets to the new SAFE. The approximate balances (as of the day of this writing) of in-scope assets that will be transferred are:
| Token | Price | Approx Balance | Total Value | Share % |
|---|---|---|---|---|
| USDC | $1.00 | 2,514,827 | $2,514,827 | 42.61% |
| AAVE | $79.50 | 16,907 | $1,344,129 | 22.77% |
| stETH | $1,542.51 | 312.86 | $482,590 | 8.18% |
| WETH | $1,552.80 | 266.81 | $414,301 | 7.02% |
| wstETH | $1,707.08 | 155.02 | $264,632 | 4.48% |
| DAI | $1.00 | 239,996 | $239,996 | 4.07% |
| WBTC | $21,007.20 | 11.06 | $232,289 | 3.94% |
| USDT | $1.00 | 218,949 | $218,949 | 3.71% |
| ETH | $1,553.00 | 122.82 | $190,733 | 3.23% |
| Grand Total | $5,902,446 | 100.00% |