ENS DAO Treasury & USDC/Stablecoin Risk (Due to SVB Bank Run & Circle Involvement)

Wow, if you are so dismissive of Ethereum, I don’t know why you are here? You don’t believe in the ethos or the mission. The world will fail, and you will just go alone with it, because you say:

If you are such a disbeliever of Ethereum, then how can you lead in ENS?
I am shocked to see members so bearish & anti-Ethereum ecosystem. If you do not believe in Ethereum, then why are they in the Ethereum & ENS ecosystems?

No I do not think this is the same at all whatsoever.
It is written into the USDC smart contract that funds can be frozen that are in your wallet.
But it is not written into the ENS smart contract that names can be frozen once in your wallet, right?

Unlike TC or ENS…the USDC smart contract is an acute, direct, & systemic risk (due to centralization & its admin keys), esp. when we have so a large percentage of the treasury stuck there.

Further, it is not the size of USDC that matters.
What matters is the amount & proportion of USDC being help via the ENS DAO treasury.
Yes, I agree that we should diversify stables, but I am shocked to see some members so bearish on Eth 7 Ethereum.



I’m not against also developing a contingency plan with limited emergency powers, I just personally prioritize the more “autonomous,” proactive solution over the privileged few, taking reactive measures, solution.


Erroneous! $3.5 billion dollars disrupted USDC ~ $0.20 . By your argument you are saying that our entire economy was at a 20% collapse over the weekend

:arrow_double_up: :arrow_double_up: :arrow_double_up: I think this is fair :green_apple: :green_apple: :green_apple: If anyone agrees with my logic, I would like to invite you to delegate your voting power to me

The events of the weekend were obviously quite stressful. Members of the Steakhouse team work as the Strategic Finance Core Unit at MakerDAO, which has $4B stablecoin exposure. We worked through the weekend on the topic analyzing news, reading balance sheets, and actively discussing with centralized stablecoin issuers, including Circle. We regret not taking the time to write something here but it was quite hectic, and, truth is, the best course of action was to do nothing at the time.

When the dust settles, it might be time to devise a more robust strategy for safekeeping precious ENS reserves for operations. If our advice can be of any help, diversification between fiat-backed stablecoins is always wise. For instance, there was quite some FUD lately around GUSD. Nevertheless, they were the best positioned for this rocky weekend (in terms of banking exposure). Oddly enough (or classic crypto), the winner of the weekend was USDT (we are not going to the extent of saying that USDT is all good though).

Beyond USD-stablecoins, exposure to other currencies can also be of value such as EUR-stables (still very early) or commodities (like PAXG). The matter of crypto-currencies was quite extensively debated already in this thread. Treasuries (avoiding bank deposits exposure) are also coming in the market and there are many teams wanting to use them. The space remains a bit early to service DAOs in the short-term, but might grow significantly in the next few months.


tldr @ thread, but now we know USDC didn’t collapse! Weeeeee!

+1 to @Steakhouse above - I’m 110% keen to get some stable diversity into the USDC held. At minimum converting x% of the USDC to LUSD.

I’m going to leave this conversation with this…

The value of USDC is essentially capped at 1 USD : 1USDC. USDC can crash just as fast a UST. Why? Because USD doesn’t have keys. USD can go poof ! “woa where did it go!!?” shrugs Holding USDC means we trust the people who are holding it’s reserves. Which also means the custodial chain of value is tacking another nTH degree of seperation from the DAOs control. The farther away that 1:1 ratio of USD:USDC only presents another nTH entity to insure that their treasury gets their settlement scrape before ENS DAO Treasury.

Collectively as a DAO-- Do we trust/know/work with the entities that are holding the backing of USDC in USD?

If we don’t even know who is holding all the cash to back, Then there is absolutely no damn reason we should be touching it. THAT is the first question we should be looking at when diversifying assets.
Not if it can stay pegged, or yield X% per quarter. I’ve never read one thing about SVB when we voted to put 15 million dollars into the hands of who? what? where? That was just as risky as going all in on some InuDogcrap Token that a degen copypasted the solidity. I admire the effort and sentiment behind the proposal. Nothing personal @James. It seemed good at the time.

Finance always teaches the lessons learned best believe if you have $100 in your pocket, there is someone somewhere holding on to the otherside of that bill. We should know them. Luckily all unscathed and money is 24/7.

Ethereum has unlimited upside.

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Agree with this. Although, diversifying stables across other bluechips also good IMO.

Also, worth revisiting 2 day timelock??

No! No! No! The fed backstopped and guaranteed one portion of the deposits. Everything is still at major risk as banks worldwide teeter on collapse. The financial position of the other holdings are arguably in much worse shape than SVB was. This is really, really bad, and we still haven’t got to the main threat, which is a US regulation induced KYC trap/blacklist.

The ENS ecosystem is definitely in violation of US securities law in the eyes of the regulators. It is not my personal belief that the ENS is, besides the probably DAO token being used and marketed as a security, but the regulation threat is broad and far reaching.

Any stable coins should have no blacklist function, and not being subject to the risk of a basket of other stables that have blacklist functions, so this excludes DAI. Any exchange to stables should be for short term, less than 3 months expenses, and those expenses should be transparent and audited (they’re not currently).

Also, worth revisiting 2 day timelock??

Better but won’t necessarily help to defend against an overnight action locking the stable coins. Might be ok if say they lock USDT, and you know it’s coming for USDC but there is time to sell at a massive discount.

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Hi all, @eek637 from Avantgarde. Thought I’d just weigh in with a couple of thoughts here, take it for what you will.

We think of stablecoin risk as the various ways in which the coin might lose value against its peg, and broadly categorize those risks into three buckets.

  1. Collateral risk: A peg is basically a guarantee that at any given point, you’ll be able to redeem your token for a certain amount of assets. Different stablecoins have different mechanisms to collect, hold, and value their collateral.
  2. Regulatory risk: Issuers of stablecoins may be vulnerable to influence (or capture) by regulators in the jurisdiction where they are domiciled (if any). Presumably any influence or capture by regulators could impede the smooth transfer of those tokens, which would make them less valuable. (Note: we are inclined to view the seeming coordination amongst US regulators as a proof point that Operation Choke Point 2.0 is a real thing, and that exposure to US-domiciled projects and companies should be carefully considered).
  3. Liquidity risk: A stablecoin is only a stablecoin if you can reliably sell it at the peg. Liquidity (in this case strictly defined as “how much of this token can you trade without moving the price materially”) enables a stablecoin to actually be stable, even if it’s fully collateralized and has zero regulatory interference.

There is unfortunately no option with zero risk in every bucket (and there are lots of nuances to how you might evaluate each stable in each bucket!). The best we can do, as holders of stablecoins who need to hold them in order to pay bills in fiat, is diversify our risks across these buckets so that the failure of one does not lead to catastrophe on our balance sheet. With that in mind, we’d suggest moving from 100% USDC to 1/3 USDC, 1/3 USDT, and 1/3 LUSD. We believe this allocation spreads risk across geographies and technologies.

Just our two gwei here - happy to talk more in-depth if anyone’s interested.


Thank you for posting this, the experienced perspective is helpful. I think this is a very prudent move and we should move forward with it.

This tranche of USDC was intended to ensure we hold 24 months of runway in stables. We can swap for diversity, but the USDC pile will continue to shrink the fastest because that’s what the stream to ENS Labs is denominated in. While 1/3 split to each token sounds good, we won’t want to rebalance this again until next year when we execute the budgets for Term 5 (Q1/Q2 of 2024), so we need a little bit more USDC. My math says we go with:
40% USDC
30% LUSD
30% USDT

At Term 4 budget time the WGs can try and pull from the LUSD and USDT to try to keep some additional balance as well.

Could we get some signals of “for” or “against” in comments or emojis? If this gets legs I’ll personally bribe @James to write the executable. :stuck_out_tongue_winking_eye:

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This is the first time someone posted here proper go at framework to think about stablecoins diversification, thumbs up for this :+1:


I still maintain that this is like diversifying head of a match :pinching_hand:


Current params are hugging very tightly operational requirements as it is :man_shrugging:

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This post was flagged by the community and is temporarily hidden.

They removed my previous comment, I’ve edited out any bad words with appropriate words

You’re expecting too much from a DAO that still doesn’t know how to TWAP or trade size. Throwback to when they converted 11M ETH to USDC with cowswap.

It’s sad that the DAO employs and pay so many people and still the execution is nowhere close to what you’d expect them to deliver. An avg CT person would know more about risk management and diversifying assets than a bunch of literates here.

Imagine swapping eth to USDC, which is now lower in value compared to what holding that same eth would have been. My brother in Christ, you could have just paid in ETH instead of swapping to USDC, but I think the DAO’s belief in ETH as a token is quite shaky. The amount of eth you swapped would be valued a few more millions rn had you not done that in the first place, @nick.eth @alisha.eth, bring back @brantlymillegan and learn from him.

Note: You can simply put your treasury in $BTC if you don’t know how to manage it. And stop removing my posts from the forum which are legit remarks of your performance, I’ve not used any inappropriate words or violated any rules

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Some additional context to this discussion, here Adam Cochran is arguing that for Bitcoin to be worth 1mUSD within the next 90 days - the whole world has to be in ruins, his narrative is a bit different from mine, but overall logic is aligned. Him saying that it is unlikely that banking system will completely collapse leading to price of Bitcoin jumping 1mUSD in 90 days, is like me saying that USDC is not going to completely fail because that would imply complete collapse of banking system.


Sure, that makes sense. We’re also happy to help write code if you get some traction here, let me know.