[BIP-162] Karpatkey Investment Strategy

In order to initiate operations as per BIP-103, Karpatkey respectfully requests the Balancer DAO to take the following actions:

1. Dismantle specific positions on the current multisigs on Mainnet, Polygon, and Arbitrum (as outlined in the Execution Details section);
2. Bridge specific in-scope assets from Polygon and Arbitrum back to Mainnet (as outlined in the Execution Details section);
3. Transfer all in-scope assets (totaling approximately $5,900,000 as of the day of this writing) to a new SAFE provided by Karpatkey and owned by the Balancer DAO (as outlined in the Next Steps and Execution Details sections).

Motivation

After internal discussion, the Karpatkey team has determined that the Balancer DAO would be best served by a simpler and more direct approach. Since Karpatkey has already been voted in as the treasury manager, there is no longer a need for further discussion or a new vote on the specific allocation of funds, despite having recently proposed the "Base vs Expanded allocation" approach.

To streamline deployment, Karpatkey proposes beginning with the base allocation and then expanding as needed. This approach takes advantage of the Zodiac Roles Modifier permissions preset that has already been created and tested for allowlisting specific functions and protocols related to the base allocation. Karpatkey intends to move forward with this approach and will propose future adjustments in accordance with the guidelines set forth in the original proposal. However, any future adjustments to the strategy, and thus the preset, will ultimately require the approval of the Balancer DAO through the execution of a batch of transactions to apply the adjusted preset.

Zodiac Roles Modifier preset to be applied

The original post proposed the following:

[quote="karpatkey, post:1, topic:4220"]

Base allocation

If this proposal was selected, specific functions within the protocols below would be whitelisted. More technical details regarding the whitelisting process will be provided shortly.

• Staking:
  • Lido
  • Stakewise
• Lending:
  • Compound v2
  • Aave v2
• AMM:
  • Uniswap v3 [/quote]

To increase flexibility and adapt to changing market conditions, Karpatkey suggests expanding protocols and functions to include ETH wrappers and unwrappers, swaps on Balancer and Uniswap v3. These swaps, except for regularly swapped reward tokens, are intended to provide Karpatkey with the ability to take immediate action in specific market conditions, such as a stablecoin losing its peg. The pools were chosen based on liquidity to maximize results for the Balancer DAO, but new permissions may be necessary as market conditions change.

The Manager preset consists of the complete list of permissions that Karpatkey asks the Balancer DAO to grant. This list can be found in this Annex Document. Through the Zodiac Role Modifier, the Manager preset will be applied to the Manager Role, which in turn will be assigned to Karpatkey’s Manager SAFE.

Future permissions and roles

Once the initial strategy is deployed, there will be a periodic need to adapt the portfolio to changing market conditions. If a particular strategy no longer provides sufficient yield, or if a particular pool in which the Balancer DAO has a position becomes deprecated and needs to be migrated, new permissions will be required.

In addition, creating new roles to improve or expand operations will also be necessary. Two new roles are planned for the near future: the Harvester Role and the Swapper Role. Both roles will be granted specific subsets of the Manager preset permissions and will be assigned to EOAs to automate certain tasks. The Harvester Role will be allowed to claim rewards, while the Swapper Role will be allowed to swap these rewards for ETH or stablecoins.

When deemed appropriate, Karpatkey will create a new forum post requesting the Balancer DAO to update the preset or deploy new roles. The post will include an explanation of why the permissions and/or roles are needed and the executable payload. The proposal will need to be passed by the community and, once approved, it will be executed by the multisig according to the DAO standard operating practices. It is important that this process is as simple and straightforward as possible, since every day of waiting may represent an opportunity cost to the DAO's treasury. A summary of the new permissions and/or roles will be included as a separate section in every corresponding weekly report.

Next steps

The next steps for implementing this proposal are as follows:

1. Karpatkey will create a new SAFE, deploy the Roles Modifier contract, and apply the Manager Role preset (as outlined in the Annex Document) to simplify the process for the Balancer DAO.
2. Karpatkey will conduct a small-scale replication of the strategy for a second round of testing.
3. Once the SAFE is created, tested, and permissions are applied, Karpatkey will transfer ownership of it to the Balancer DAO and remove themselves as owner.
4. This proposal will be submitted to Snapshot for approval.
5. If the proposal is approved, the Balancer DAO will execute the steps described in the Execution Details section.

Execution details

The following list is intended to serve as a clear execution roadmap for the Balancer DAO once (if) this proposal is approved:

1. Dismantle the Balancer Boosted AAVE USD position on Mainnet and withdraw 100% of the funds in DAI.
2. Dismantle WBTC + ETH position on Mainnet and withdraw the two assets in equal proportion.
3. Dismantle ETH + GTC position on Mainnet and withdraw the two assets in equal proportion.
4. Dismantle MATIC + USDC + WETH + BAL position on Polygon and withdraw the four assets in equal proportion.
5. Bridge USDC and WETH from Polygon back to Mainnet.
6. Dismantle WBTC + WETH + USDC position on Arbitrum and withdraw the three assets in equal proportion.
7. Bridge WBTC, WETH + USDC from Arbitrum back to Mainnet.
8. Transfer in-scope assets to the new SAFE. The approximate balances (as of the day of this writing) of in-scope assets that will be transferred are:

Token	Price	Approx Balance	Total Value	Share %
USDC	$1.00	2,514,827	$2,514,827	42.61%
AAVE	$79.50	16,907	$1,344,129	22.77%
stETH	$1,542.51	312.86	$482,590	8.18%
WETH	$1,552.80	266.81	$414,301	7.02%
wstETH	$1,707.08	155.02	$264,632	4.48%
DAI	$1.00	239,996	$239,996	4.07%
WBTC	$21,007.20	11.06	$232,289	3.94%
USDT	$1.00	218,949	$218,949	3.71%
ETH	$1,553.00	122.82	$190,733	3.23%
Grand Total			$5,902,446	100.00%

Specification

Karpatkey has prepared the Gnosis safe on Ethereum at 0x0EFcCBb9E2C09Ea29551879bd9Da32362b32fc89. It currently has the same signers as the DAO Multisig at 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f, aside from an extra 12th signer with address 0x7f87c1C42BeF332245F8B3cCAdD8224541CDaEcE.

The DAO Multisig signers will reject tx #38 which is failing on simulation and initiate a new tx to remove this 12th signer.

The DAO Treasury on Polygon at matic:0xeE071f4B516F69a1603dA393CdE8e76C40E5Be85 will initiate a transfer of "B-Polybase BPT" (contract 0x0297e37f1873D2DAb4487Aa67cD56B58E2F27875) in the amount of 26536547394777662718278 to the LM Multisig at matic:0xc38c5f97B34E175FFd35407fc91a937300E33860. From there, BPT will be withdrawn and all funds bridged back to Ethereum. USDC & WETH will be sent to the Karpatkey Safe 0x0EFcCBb9E2C09Ea29551879bd9Da32362b32fc89, BAL & WMATIC sent to the Treasury 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f

The DAO Treasury on Arbitrum at arb1:0xaF23DC5983230E9eEAf93280e312e57539D098D0 will initiate a transfer of "B-33WETH-33WBTC-33USDC" (contract 0x64541216bAFFFEec8ea535BB71Fbc927831d0595) in the amount of 532147981134526165239 to the LM Multisig at arb1:0xc38c5f97B34E175FFd35407fc91a937300E33860. From there, BPT will be withdrawn and funds bridged back to Ethereum. All funds will be sent to the Karpatkey safe 0x0EFcCBb9E2C09Ea29551879bd9Da32362b32fc89

The DAO Treasury on Ethereum eth:0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will send the following assets to the LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860, which will withdraw the BPTs and send the assets to the Karpatkey Safe 0x0EFcCBb9E2C09Ea29551879bd9Da32362b32fc89, except where indicated otherwise:

Aave v2 boosted pool (contract: 0x7B50775383d3D6f0215A8F290f2C9e2eEBBEceb2) amount: 682682196629189057534951 WBTC/WETH BPT (contract 0xA6F548DF93de924d73be7D25dC02554c6bD66dB5) amount: 58598401025232390138 WETH/GTC BPT (contract 0xfF083f57A556bfB3BBe46Ea1B4Fa154b2b1FBe88) amount: 7725430893893258147597 Note: GTC will be returned to the DAO Treasury.

The DAO Treasury on Ethereum eth:0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will send the following assets to the Karpatkey Safe 0x0EFcCBb9E2C09Ea29551879bd9Da32362b32fc89:

USDC (contract 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48) amount: 2139935999712 Aave (contract 0x7Fc66500c84A76Ad7e9c93437bFc5Ac33E2DDaE9) amount: 16907280000000000000000 stETH (contract 0xae7ab96520DE3A18E5e111B5EaAb095312D7fE84) amount: 312988890260928536597 wstETH (contract 0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0) amount: 140236048902346440000 weth (contract 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2) amount: 61323265453850206284