[Temp Check] Swap Portion of Treasury USDC to DAI

The DAI Saving Rates doesn’t add any risk (it’s one more contract but a very simple immutable one that runs for 3 years now). Using Aave is adding a wide array of risks but indeed with, usually, higher yield.

PS: Steakhouse is closely working with MakerDAO (we do finance and RWA management). @monet-supply presentation seems fair, I will just add that DAI ↔ USDC is free at MakerDAO (PSM-USDC-A).


In support of this proposal.

Recent regulatory developments around centralized stablecoins suggest that a crackdown could be coming in the short to medium term, making it all the more important to explore alternative approaches asap.

By using DAI and MakerDAO, the ENS DAO can take advantage of their battle-tested track record in the market and achieve a decentralized approach that can help mitigate risks associated with centralized stablecoins.

I encourage others to consider it as well.


Are there any hints that Circle could come under scrutiny by the SEC or another regulatory body and cause disruption to USDC? Makes sense to swap for a more censorship resistant stablecoin if that’s the case. Curious to hear from MG stewards as they could have a better read on this.

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It seems the recent actions around BUSD were targeted at Binance specifically, but broader regulatory pressure against centralized stablecoins can’t be ruled out.

I think DAI offers a valuable middle ground in the decentralized vs liquid/reliable tradeoff space for stablecoins. It has significant centralized collateral (USDC, other centralized stablecoins, etc) but because the DAI token is immutable it offers a layer of protection in case ENS itself were to face legal or regulatory threats.

Other stablecoins with more strictly decentralized collateral might be more resilient against regulatory risk, but have less liquidity, potentially higher cost to use, and more market risk.

RAI is solely collateralized by ETH, but tends to decline in value over time due to negative interest rates. And the current market cap is only about $8 million USD equivalent, meaning any sizable purchase by ENS DAO could significantly increase market price (market impact costs) and push interest rates farther negative. I think this could be an interesting addition to DAO treasury but would realistically not be able to accommodate a significant share of the DAO’s operational reserves.

LUSD is possibly more suitable, with a market cap of over $200 million and deeper liquidity, but a sizable purchase would still incur slippage/market impact costs on trading into and out of LUSD. The core mechanism itself also has some edge cases. For example if demand for LUSD spiked (eg due to ETH price crash forcing users to repay debt to avoid liquidation, or rush of users from centralized stablecoins into LUSD due to regulatory crackdown), this could lead to negative feedback loop where price spikes above $1.10, resulting in users allowing their position to liquidate at 110% collateral ratio as a cheaper option vs repaying, which in turn would make participation in stability pool unprofitable and lead to exhaustion of stability pool funds. So, LUSD has higher costs to use (due to liquidity constraints / slippage) and possibility that the stability and protection it provides may not be resilient in the cases where it is most needed. Similar to RAI, I think it could be a valuable addition to DAO stablecoin reserves but is not a scalable close substitute for liquid stablecoins like USDC or DAI.

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Yep. Swapping half of this tranche to DAI is a good move. We know USDC might be slightly more susceptible to some black swans. No reason not to take an easy and free move for safety.

I’m a little less sure that the Maker DAI Savings Rate contract is the right choice. The additional contract risk might be small, but I think we’ll soon have most of the treasury in various yield bearing contracts through Karpatkey’s strategies. We might want these tokens unencumbered.


I like the idea of swapping at least $5 mil to DAI.

Although also not sure one the second option, I think it should simply be held.


Sounds like you are considering a series of swaps, rather than just one single swap (USDC > DAI).

Yes sure, I think it could be healthy to have further discussions on this once the [EP3.4] [Executable] Fund the Endowment (first tranche) moves forward (if/when it does).

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I’m open to additional diversification (into LUSD and/or RAI) but this would be out of scope for the current proposal. Imo capacity constraints make these alternative decentralized stable assets less suitable for day to day operational funding.

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USDC currently at 0.97 and looking very unsturdy.

Diversification should definitely be addressed sooner rather than later.


Need to do it ASAP

Problem is though does it not need a vote

Might be a major fail away to happen for those that pushed for the sale


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DAI has also depegged, so the proposed action would not have insulated the DAO from what is happening in the market.


Yep, I was meaning something need to be done ASAP in general, I forgot that this thread was about DAI

Still no idea why ETH was deemed not good enough to hold

It’s not looking good at all, ENS funding could be wiped out due to putting it into USDC

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Curious to know if there are any financial advisors contributing to the DAO. It was odd in the first place to swap ETH for USDC after a 60% correction in ETH. ( why not swap a portion to fiat, usdc, gold etc) that would’ve generated twice the financial runway in 2022.

Even without the writing on the wall (fed officials illegally selling stocks at the top) understanding economic cycles is the key to financial literacy.

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There was nothing wrong with the proposal or the action taken. Diversifying ETH into USDC at that time was a sound decision and every “professional” who understands this space would agree.

Criticizing the decision during/after a black swan event isn’t helpful. If you or anyone else had concerns about the course of action, those concerns could have been credibly raised during the proposal process or at any point following the execution of the swap.


DAI is a good idea. For further risk bracketing, we should leave a portion at rest, no yield.

I would also suggest a smaller position in RAI which has unique properties.

Hi all, I haven’t been actively pushing this idea recently, but just wanted to note that the Dai savings rate is expected to be raised from current 1% to 3.49% in the coming weeks.

Also want to note, supplying DAI to the DSR does not cause any additional risk vs just holding DAI (other than a negligible degree of technical risk from the DSR contract itself potentially having an issue - unlikely given it is over 3 years old and has held millions of dollars in TVL over this period). If ENS decides to diversify a portion on operational treasury into DAI, there’s no risk related reason not to hold it in the DSR (or a tokenized wrapper of the DSR such as sDAI).


I agree that depositing DAI into the DSR carries less technical risk compared to simply holding DAI. However, it’s important to consider the potential implications of depositing DAO’s operational funds into a smart contract. This decision would require DAO members to take on additional responsibilities such as monitoring the position, assessing liquidity needs in advance, and creating multiple executable proposals.

On another note, at @karpatkey, we are currently developing a proposal to request the ENS DAO to authorize depositing DAI into the DSR for the Endowment, along with other proposed actions. If our proposal is approved, our intention is to transfer the DAI position on Compound (approximately $7.35M based on the latest report) to the DSR. Consequently, the ENS DAO would have exposure to the DSR through the Endowment.

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Thanks monet for this context.

As I mentioned before, we should keep some portion at rest, no yield. This avoids the risk described. There could be compiler bugs for instance. solc is not v1.

@cory.eth, yes. I think some context got lost in this thread so I’ll reset:

  • When the initial endowment deposits from the treasury were being contemplated, we had a tangential proposal to ensure we have a “bomb proof” runway of 24 months in stable coins.

  • That proposal passed in EP3.3 and we converted 10k Eth to USDC. Currently, that ~17 million is intended to stay in the treasury as stables, earmarked as the 24 months of runway.

  • This thread was started to ask the question of “Should that runway stay as 100% USDC, or should we diversify that across other stables DAI, Tether, etc.”

  • This is entirely separate from any endowment conversions.

This thread coincided with the USDC depegging, so it was a bit more topical in that moment. There hasn’t been much of a push since then to diversify this specific batch of stables. Maybe it’s best to close this particular thread for now unless there are strong feelings.

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