This proposal outlines the allocation of the second tranche, comprising 16,000 ETH, from the ENS DAO to the ENS Endowment. Additionally, it introduces minor adjustments to the existing permissions preset for maintenance purposes.
Motivation
In March 2023, the ENS Endowment was formally established following the joint proposal by karpatkey and @steakhouse, after the successful execution of E.P 3.4 - Fund the Endowment (first tranche). The community had expressed a preference for a phased funding approach, leading to the decision to allocate the funds in two equal tranches over a six-month interval. As we reach this pivotal milestone, this proposal seeks community approval for the second tranche.
Endowment Update
Based on the most recent monthly report detailing the Endowment’s performance for August 2023, the Endowment has achieved:
$28.03 M of ncAUM (non-custodial assets under management)
100% of capital utilisation
An APY (annual percentage yield) of 4.1%
Monthly farming results of $93,841
A comprehensive review post detailing our collaborative efforts with the ENS DAO has been recently shared on the forum. We encourage community members to consult this post for insights into our achievements and ongoing initiatives.
Cumulative Revenues
In the 182 days since the Endowment was established, 173 ETH have been accrued through ETH-neutral strategies and $136,764 in stablecoin revenues via USD-neutral strategies. Operational reports were initially shared on a weekly basis and later transitioned to monthly updates, all of which were made available on the forum for community review.
The Endowment's phased initiation should also be taken into account when interpreting these results. Full capital utilisation was only achieved 49 days after the Endowment's inception, following the completion of the earned ETH-to-stablecoin tranche swaps. This staggered approach had a discernible impact on the reported financial metrics.
Taking into consideration the revenue generated during the most recent four months—after reaching 100% capital utilisation—the projected annual revenues at the current Endowment’s size stand at 367 ETH from ETH-neutral strategies and an equivalent of $351,654 in stablecoins from USD-neutral strategies. This results in a projected Annual Percentage Rate (APR) of approximately 3.4%.
Specification
Fund Transfer
Transfer 16,000 ETH to the Endowment (0x4F2083f5fBede34C2714aFfb3105539775f7FE64).
Permissions preset adjustments
In line with our commitment to streamline governance and reduce the frequency of voting events for the community, we propose targeted adjustments to the existing permissions preset within this proposal. Specifically, we are requesting three key changes:
Whitelisting the updated wstETH-WETH Pool and Gauge: As part of our ongoing optimization, we propose to whitelist the updated wstETH-WETH pool on Balancer and its corresponding gauge on Aura.
Revoking Permissions for Aura's bb-a-usd Pool: In light of the recent vulnerability disclosed by Balancer on August 24, 2023, we recommend revoking all permissions associated with potentially compromised pools. It's important to note that the Endowment had no exposure to these compromised pools at the time the vulnerability was made public.
Whitelisting the delegatecall function on Cow Swap: A minor bug was found in the existing preset configuration. Specifically, the signOrder function within Cow Swap's order signer contract is designed to be executed solely via a delegate call, a capability not currently supported by the preset. This oversight not only hindered functionality but also revealed a flaw in the SDK preset testing framework. The issue has been swiftly addressed and rectified in a recent commit to the codebase.
As is customary, we are presenting an updated version of the "Preset permissions - ENS Endowment'' document. This document comprehensively lists all permissions granted to karpatkey, with newly requested permissions highlighted in green and any revocations marked in red.
We are also sharing the payload to apply the proposed changes for your review. We strongly encourage community members with the required technical expertise to scrutinise the content and share their invaluable feedback.
Transactions
All transactions can be found in the following payload.
I'm in general in support of the long-term management of the DAO funds to ensure a healthy future for funding the project as a whole; my only concern has been the current emphasis on Lido. The management team has socially agreed to take the DAO's feedback to heart when deciding the investment direction, which has overwhelmingly been to reduce the stake in Lido, so I consider my concerns addressed.
Endowing funds to Karpatkey presents a significant risk to the Ethereum network as they rely heavily on Lido for staking services.
See further comments here: https://discuss.ens.domains/t/4-2-executable-fund-the-endowment-second-tranche/17743/5
Two things I consider true at the same time:
1. I believe Karpatkey does a great job at what they do
2. I disagree our approach to treasury management.
Currently, I think the ideal approach is holding ETH, performing a quarterly swap to USDC to maintain ~2 years runway, and at most, hold some portion of ETH in LSTs
This has been in the works/pre-planned for a while (everything is on the forum under the Treasury Management tag), and kudos to Karpatkey for being a trusted steward of the ENS Endowment thus far.
