In light of the recent collapses of Silicon Valley Bank and Signature Bank, as well as the resulting depeg of USDC, I am proposing to eliminate all exposure to traditional banking via digital assets in its treasury and diversify away from USDC. Given this was another potential bank-run scenario due to lost investor confidence in USDC’s peg, the severity of the systemic risk of digital assets with exposure to TradFi is now very clear and needs to be removed from PopcornDAO’s treasury
To preserve and potentially increase the monetary value of PopcornDAO’s treasury by rotating USDC into long positions of decentralized digital assets.
- Remove all exposure to TradFi in PopcornDAO treasury over time
- Diversify the remaining 1,523,931.93 USDC into LUSD and ETH
75% in LUSD
25% in ETH
- Deposit LUSD into the Stability Pool and earn ETH liquidation bonuses and LQTY rewards. This can be done using defisaver.
- Stake ETH on Lido for stETH and explore further yield-generating strategies for stETH
What is LUSD?
Liquity (LUSD) is a decentralized lending protocol that allows users to withdraw funds with zero percent interest loans when they leverage ETH as collateral. Loans are paid in LUSD, a dollar-pegged stablecoin. The Liquity protocol is non-custodial, immutable, and governance-free.
Liquity aims to provide several borrowing conditions in the market, and the main benefits are:
- 0% interest rate
- The collateral ratio of 110%
- No governance - all operations are algorithmic and completely automated
- Directly redeemable - LUSD can be redeemed for the underlying collateral at face value and at any time
- Censorship resistance - protocol is not controlled by anyone. Liquity’s token, LUSD, is a completely redeemable stablecoin. The system allows holders to exchange their LUSD tokens for underlying ETH collateral based on the face value of the redeemed tokens. This enables direct arbitrage when LUSD trades below $1 by creating a price floor for LUSD. Therefore, redemption is subject to a redemption fee, a function of the base exchange rate and the LUSD redemption amount. The minimum redemption fee is 0.5%. Fees are deducted from redeemed LUSD, reducing the ETH that redeemers receive in return.
Liquity provides liquidity without charging borrowers interest or recurring fees. ETH holders can use their collateral for liquidity. However, as an algorithmically controlled instrument, the protocol charges a borrowing fee (one-time fee) on newly withdrawn liquidity to support the peg to the U.S. dollar. Users can use their stablecoin LUSD to participate in the wider DeFi market, consisting of many different products designed to generate revenue.
Additionally, Liquity has incentivized new avenues for decentralization and growth by tokenizing and redistributing a significant portion of its protocol revenue to users and front-end operators.
Please vote on if you approve this proposal!