[1RC] Swap $ARB Tokens to USDC and Bridge to the Ethereum Mainnet

2.1 General Proposals
1

Simple Summary

  • Swap all 2,575,405 $ARB tokens in the 1inch DAO Arbitrum treasury for USDC
  • Bridge the USDC to the 1inch DAO treasury on Ethereum mainnet

Abstract

The 1inch DAO treasury on Arbitrum received an airdrop of 2,575,405 $ARB tokens in April of 2023. This proposal calls for using 1inch Limit Order Protocol to swap all $ARB tokens for USDC on Arbitrum One, then bridging those USDC funds to the 1inch DAO treasury on Ethereum mainnet.

Motivation

The primary motivation behind this 1IP is to maximize the value from the received $ARB tokens. By swapping them for USDC, a dollar-pegged stablecoin, we can put those funds to work to grow the 1inch Network. This action strengthens the long-term financial positioning of 1inch by reducing our exposure to volatile assets.

Specification

This is a signaling proposal as the 1inch DAO Treasury on Arbitrum is managed by a 7-of-12 multisig – all transactions specified herein shall be manually executed.

Transactions

  • 2,575,405 ARB tokens held in the 1inch DAO Treasury on Arbitrum shall be sent to an EOA controlled by 1inch Labs
  • The 1inch Labs EOA shall swap all $ARB tokens for bridged USDC (USDC.e) using 1inch’s Limit Order Protocol
    • The ARB price used will be 0.5% lower than the spot price at time of execution
  • The 1inch Labs EOA shall bridge all USDC.e funds from Arbitrum to the same EOA on Ethereum mainnet using the canonical Arbitrum bridge
  • Once the bridge process is finalized, the 1inch Labs EOA shall send all USDC to the 1inch DAO Treasury on Ethereum mainnet

Addresses

Rationale

Choosing USDC over simply holding $ARB tokens reduces the fiancial risks associated with holding volatile assets. In order to get the best swap rates for such a large amount, 1inch Limit Order Protocol will be used so that the trade can be executed with minimal slippage

Subsequently, bridging these assets to Ethereum mainnet allows the funds to be controlled directly via 1inch DAO governance using Snapshot’s reality.eth module.

Considerations

All DeFi transactions contain potential costs and risks that should be taken into account. These include transaction fees, bridge fees, or any slippage costs during the swap process. Potential bridge service security risks should also be assessed.

Financially, this proposal aims to de-risk the 1inch DAO Treasury.

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hey @DADAO, thank you for the proposal, can you please elaborate on the **Motivation **and the rationale of this proposal,

  • please include specifics on
  • why just ARB, not the other volatile assets in the treasury like BTC, 1INCH, WETH and ETH?
  • Furthermore why USDC, considering the sightly declining Market dominance of USDC over the past several months and the treasury also holds other stablecoins?
3

Hi DAODAO,
Thank you for giving the proposal.

We were slightly unclear about

why 1inch should turn all of ARB into USDC at this point?
why 1inch should not leave any ARB?

4

We have been experiencing a very volatile market, especially with Altcoins. From value preservation perspective, we should take the conservative approach and keep the DAO asset in stable coins.

5

While the DAOs would benefit from holding more USDC, we suggest that the authors of this proposal consider swapping other 1inch DAO assets to USDC, it is important to consider the 1inch DAOs relationship with the Arbitrium DAO while making this kind of decision.

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6

Hey @Baer.eth, the core team argues that $BTC, $ETH, and $WETH are historically the least volatile crypto assets (excluding stablecoins). So, selling those wouldn’t be of much value unless the treasury wanted to divest from all volatile assets and only hold stablecoins. Personally, I think holding more $ETH in the treasury might be prudent as a broader market upswing could be in the cards over 2024/2025.

Historically, $1INCH has been more volatile than ETH and BTC, but it is the project’s native token – I’d argue that the DAO selling $1INCH would send bad signals to our community.

Regarding the diversification of our stablecoin portfolio, the only large alternative to USDC is USDT. Tether (USDT) seems to have a lot of rumors/drama spring up a few times a year, but nothing seems to ever come of it. I’d be neutral in diversifying some of the DAO’s USDC to USDT.

DAI is great, but it is mostly backed by USDC it would only look more diversified when in reality it would not be.

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7

I do not understand why this is being proposed. I feel like this should be distributeed to the community akin to how there were distributions of Optimism tokens to people who used 1inch for their swaps. I realize it is a significant amount of cash, but the benefit of the Treasury to the community has so far been pretty subpar.

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Hey @RoundElephant, there is a brand new proposal-passed snapshot on the ARB DAO that generates yields by staking the ARB tokens. https://snapshot.org/#/arbitrumfoundation.eth/proposal/0xf22530295daee96dffd7f70854475c06216a4d3594929672f71c12bf638bb0c8

Here is a screenshot of the potential APR if the tokens are staked.

9

You’re right we will sell all our $1INCH tokens because of the volatility too.
So stupide…

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