Here are some additional comments that reflect the discussion during today’s meta-gov call.
The decision to sell ETH in the immediate future is to comply with the original request stated in the Endowment RFP to keep earned income risk-neutral with regard to USDC.
The current exposure of the DAO to ETH is approximately 96%, which is a notably high amount and poses a risk to the long-term survival of the DAO in the event of adverse market conditions persisting for an extended period.
While it would be ideal to sell the ETH at the highest possible price, it is not possible to accurately time the market. Hence, our immediate objective is to reduce the current exposure and bring the DAO’s balances to more secure and sustainable levels. We don’t engage in speculative trading nor do we attempt to time the market because that would be foolish.
If we sell ETH as proposed and the market improves, the potential downside would be selling too early, which is a risk that the DAO can live with. Additionally, it is expected that a bull market would bring additional activity and revenue to the DAO.
On the other hand, if we do not sell ETH quickly enough and the market deteriorates, the excessive exposure to ETH could jeopardize the DAO’s survival. Additionally, a bear market is likely to negatively impact the DAO’s revenue.
It is important to remember that the ultimate goal of the Endowment is to ensure that ENS remains operational for the next 10, 20, or 50 years, regardless of market conditions. While it is unrealistic to expect ENS to not be affected by market conditions, especially if they persist over time, the goal is to minimize the impact as much as possible. Given the choice between potentially missing out on upside by selling ETH too early and risking the survival of the DAO by not selling quickly enough, the decision to sell early is the preferred option.
Karpatkey is open to considering alternative strategies that align better with the community’s general preference as there is no obligation to execute the proposed strategy in the quickest possible way. It should be noted that selling approximately 13k ETH over a period of 2 months is also a form of DCAing. DCAing is a strategy that softens the market’s impact on the decision but does not change the final outcome.