BIP-66: Migrate DAO lzUSDC holdings to USDC.e

Proposal:

Migrate DAO Treasury’s lzUSDC/wFTM & sFTMx/lzUSDC Beethoven Pool Tokens to sFTMx/USDC.e 70/30 BPTs.

Motivation:

The Fantom Foundation has announced support for Wormhole bridged USDC.e, with plans for it to act as the canonical stablecoin on the Fantom network. Layer Zero is also winding down support for their bridged USDC. These developments will likely see USDC.e become both the most dominant and most supported USDC version on Fantom.

Beethoven X DAO holds ~$240k of lzUSDC/wFTM ‘Fantom Layer of the Opera’ BPT, and ~$210k of lzUSDC/sFTMx ‘Layered & Staked Fantom Opera’ BPT. Migrating these holdings to BPTs with USDC.e will support the Fantom Foundation’s vision while moving to a version with greater long term support prospects.

Treasury’s USDC.e/lzUSDC/axlUSDC ‘Trio of the Stables’ position will be maintained, in order to aid Fantom network’s migration to USDC.e while generating volume and fees for the DEX.

Impacts/Risk Assessment:

• This migration would entail a shift of risk exposure from Layer Zero’s lzUSDC to Wormhole bridged USDC.e
• DAO Treasury holdings are a significant portion of our DEX lzUSDC TVL. Therefore the migration will greatly reduce our direct volume and fees from lzUSDC pools, while increasing volume and fees from USDC.e pools
• Alignment with Fantom Foundation’s vision will help Beethoven X to maintain positioning within the Fantom ecosystem

Impact on Beethoven X Treasury:

Following the passing of BIPs 64 & 65 which increased the monthly amounts for contributors and infrastructure, Treasury requires an additional ~$16k of stablecoin holdings to fulfil the minimum specifications of BIP 57. This amount will be sourced from the dissolution of FLotO and conversion of it’s lzUSDC to USDC.e, leaving ~$104k of extra stablecoins from that BPT. The ~$120k of wFTM in FLotO will be converted to sFTMx and paired with ~$51k of USDC.e, leaving ~$54k of additional stablecoins above the minimum requirement of Tenets 1 & 2 of BIP 57.

These movements would result in a net increase of assets assigned as risk level 0, while reducing the amount at risk level 1.

All of the above figures are liable to change between writing and execution of the proposal, due to FTM price changes and consequent shift in the values within the BPTs being dissolved.

Specification/Execution Plan:

Following approval of this proposal, Music Directors will break Treasury’s ‘Fantom Layer of the Opera’ & ‘Layered & Staked Fantom Opera’ BPTs. The lzUSDC will be converted to USDC.e which, alongside the sFTMx and wFTM, will be used to form USDC.e/sFTMx BPTs. A portion of the USDC.e will be redirected as stablecoin reserves, to help ensure continued adherence to the Treasury framework as outlined in BIP-57.

Further questions or discussions are welcome at: https://discord.com/channels/885764705526882335/1236447623829913622/1236447775114395658