Below is a proposal to add USDC to the GMC treasury:
Motivation: Encouraging external participation: By including USDC payments, we attract a diverse applicant pool, leveraging more GMC funds for protocol growth. Applicants can conveniently opt for RPL or USDC compensation.
Plan: Starting in September, the GMC converts 20% of inflow payments to USDC per month. Given the historical context, the current price of RPL is comparatively low. This prompts us to adopt a gradual approach to accumulating USDC holdings over time, rather than making a significant trade at the current price.
Statistics: The GMC receives about 3275 RPL per month. At an RPL price of $25, that amounts to $81,875, whereas $16,375 (20%) would be set aside for USDC. Obtaining statistics, such as the number of applicants favoring USD over RPL, proved challenging. Determining the optimal allocation was complex, given that a substantial portion of the funds would be reserved for prospective applicants who might not have engaged without the USD alternative.
Here’s a quote taken from @Dondochaka :
In an ideal world, for me:
- All applications specify payment amount as a USD value.
- Recipients choose payment denomination in either USD or RPL in their applications. If they choose RPL, their exchange rate is locked at that time.
- The GMC has a USDC reserve.
- RPL denominated payments are funded out of the current reserve.
- USD denominated payments are funded out of the USDC reserve, or by selling RPL at award time, determined at the discretion of the GMC. If there’s no USDC reserve, or not enough USDC in it, the latter option is used. For convenience, the corresponding amount of RPL could also be used, at the current exchange rate.
For bounties, because the recipient is not known up front, I suggest the payment denomination should always be in USD until the time that an applicant claims bounty completion, at which time they can change it. I tried to outline an approach that could utilize, but wouldn’t strictly depend on a treasury diversified against volatility–the other goal is to have a process that makes denomination and risk clear from the beginning, and to minimize the impact of RPL price changes to the GMC itself by neatly locking in exchange rates in a precise manner.
How does the protocol DAO feel about USDC diversification?
- Add USD to the GMC treasury, I agree with the proposal above
- Add USDC to the GMC treasury, but under different parameters (please explain)
- Keep everything RPL for now
Reasons I voted keep RPL for now.
- People can sell their RPL once received if they want USD no biggie
- People will see this as more “selling pressure”
- Payouts should be RPL equivalent to USD value agreed on date payout is being made and then this vote would be negated.
- Only way this benefits the GMC imo is if RPL/USD goes down. But then it’s almost like a hedge by the GMC which doesn’t promote confidence that the GMC think RPL/USD will go up.
Could be wrong with my interpretations but just my first impression of it
This is absolutely a hedge. RPL has proven to be a volatile token, no matter how bullish you are.
This reserve would give the GMC some ability to avoid selling RPL when it doesn’t want to, for instance right after a big selloff that takes the price far out of active liquidity ranges. There is volatility risk over the time that the GMC has funds earmarked for an award, but there is also volatility risk on longer time frames. Token price can hang out at the bottom of a range, outside of healthy liquidity, etc., for months.
Having a reserve has more important benefits than optimizing spend, however. The GMC could make hard commitments to long-term payments like the GMC admin salary, against a USD allocation, which it can’t do with RPL. If a full time hire has living expenses, there’s no way around it: they’re going to sell and if the price implodes, they’re gone. With a reserve, if RPL implodes we have some ability to fund repairs to the protocol.
I would contend that establishing a safety cushion to finance repairs in the face of a potential price collapse holds significantly more significance than any potential selling pressure amounting to around $15,000 per month.
Considering the elimination of the retroactive cap and the subsequent recalculation, we are effectively granting nearly double the amount of RPL to specific recipients. This impact could be mitigated substantially with a diversified treasury in place.
A forward-looking reallocation of 20% presents a gradual plan, offering the dual benefits of stability amid market volatility and heightened accounting efficiency. By adding USD we could extend the scope of potential applicants, enhancing the overall applicant pool.
Could we use another USD stablecoin?
I know USDC is the defacto and most desired by regulated entities, but I think Rocket Pool could use a more diversified USD stablecoin would be more advantageous for the community.
If we used FRAXUSDC, 3POOL (Curv), DAI, FRAX, or another top $500M defi stablecoin we could form a strategic partnership with the creators over time.
A strategic partnership with Circle is not of my interest for the community and so if we are going to diversify into a USD stablecoin, let’s choose a native & diversified option.
I support the diversification by adding a USD based stablecoin, but I would also suggest to use a more decentralized stablecoin such as DAI. We should support decentralization in this part, just as our aim is with staking.
Personally, I’m not opposed to DAI or any of the others. I would probably ask around the protocol and IMC what they recommend. I agree USDC is not the best asset on the decentralization front.
Totally personal opinion here, not trying to be an IMC rep or nothing.
In order of “like”: LUSD, RAI, USDC, USDT, DAI
However, liquidity is a real issue for the first two (especially RAI), and RAI also has complexity issues. I want to like DAI, but I actually find it likelier that DAI would get blocked by Circle than that the GMC would get blocked by Circle. I have some other concerns with Maker real-world stuff too, fwiw – the decentralized/company hybrid stuff isn’t exactly time-tested.
If I had my druthers, I’d say go LUSD if under $1.01. USDC otherwise. And swap LUSD to USDC if it hits $1.04 . But that’s kinda annoying and “just USDC” is pretty good imo.
Ah yeah of course, LUSD. I would suggest LUSD over DAI as well.
The GMC has made the strategic decision to allocate 20% of incoming payments each month into either USDC or LUSD. The administrator will apply their expertise to determine the optimal choice of token, considering factors like liquidity and prevailing market prices at the conversion moment. Their primary focus will be on LUSD, given its high degree of decentralization, unless it trades at a premium exceeding 2%.
(For future awards paid in LUSD, the amount will be paid in units rather than the market value converted to USD.)