Abstract
On June 12th 2024, the DAO held an election for the role of STEP program manager to oversee ~$30 million diversified into liquid, stable and yield bearing RWAs. Steakhouse Financial won the vote with 60% in favor of their selection, with fees of $174,000 quoted in their application.
The Tally proposal in April 2024 listed 100k ARB as program management costs, which converted to $86,581 in June-July 2024 by the Arbitrum Foundation. This is insufficient to cover one year of Steakhouse Financials fees. Note: even if the ARB price had gone up, they would not have earned more - all applicant fees were quoted in dollar value and not ARB.
This proposal seeks input on the right way forward, with the options to
- Approve only a 6 month contract from available funds
- Earmark additional funds from yield earned so they complete the one year tenure
- Not have a program manager, which will result in liquidation of the RWAs
- Conduct a new RFP to select a program manager for one year at $86,581
- Abstain
Motivation
On April 10th 2024, the DAO approved 35 million ARB for diversification into RWAs. Of this, 100,000 ARB was budgeted for the role of program manager. The Arbitrum Foundation got an average price of 87 cents per ARB, resulting in $86,581 to pay the program manager.
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In June 2024, applications for the program manager role opened up where all applicants listed their fees in dollars. Given the funds received from the 100,000 ARB sale ($86,531) are less than the amount necessary to pay the $174,000 listed in Steakhouse Financials application, we need to either shorten their term to 6 months or approve an additional 6 months pay (from yield earned via the program). We can also declare the earlier election null and void while putting out a call for program managers willing to serve at $86,581 for a year. If there is no program manager to oversee investments, assets are liquidated and returned to the DAO.
Rationale
While writing the Tally proposal, 100k ARB was budgeted for the program manager role based on a sample quotation received from another provider and the prevailing ARB price at the time.
Steakhouse financial and the other applicants prepared their budget in dollar value based on the sample provided instead of in ARB. As a result, the program manager role in the STEP program became under-budgeted and now needs approval from the DAO on provisioning either a shortened tenure of 6 months or additional funding to complete the one year. The additional funds will be requested from the yield earned on the RWAs (estimated at between $1-2 million per year) to prevent ARB liquidations. Alternatively, we can hold a new RFP seeking program managers at a fixed price of $86,581 for the year and invalidate the earlier election.
Specifications
The STEP program is one of the largest diversification initiatives at any DAO, seeking to diversify our treasury while simultaneously growing the RWA ecosystem. Given the complications that can arise in managing the large sums of money, it is imperative that the DAO have a capable program manager to recommend liquidations ,conduct firedrills, monitor interest payments to the DAO treasury, and track underlying changes in service providers.
Steps to Implement
After ratification of Steakhouse Financials role as STEP program manager and whether it is 6 months or 1 year, the Arbitrum foundation will sign an agreement with Steakhouse Financial and begin investments into selected RWA providers.
Timeline
Post on forum
Upload on Snapshot (Thursday, 12th September)
Foundation negotiates agreement with Steakhouse and pays the first 6 months of their payment from the initial 100,000 ARB budgeted for in the STEP proposal
After RWA yield is returned to the treasury, this proposal is taken to Tally requesting balance of $87,419 (provided one year tenure is approved in the snapshot)
Overall Cost
If the entire one year tenure is ratified, the cost to the DAO is $87,419 paid via yield earned from the program. If 6 month tenure is approved, the cost is needing another election for program manager in a shortened time. If the proposal is rejected, we liquidate all $30 million and return assets to the DAO. If a new RFP is held seeking program manager services for $86,581 for a year, we delay the start of the STEP program and possibly get a less capable pool of applicants at the lower price point.
There is no budget required for work done on this proposal as it has been paid for through a Thrivecoin ThankArbitrum firestarter grant to the treasury and sustainability working group
