BIP-87: Support stS Peg with Beets Treasury

Summary

This proposal intends to make use of the Beets Treasury’s idle S tokens to a) improve the stS peg by buying stS off the open market and redeeming them for the underlying S tokens and b) generate additional revenue by doing so.

Proposal

Whenever the secondary market rate for Beets Staked Sonic (stS) is more than 0.30% lower than the actual stS redemption rate (as determined by the stS smart contract), the Beets DAO may use the treasury’s S tokens to buy stS off the secondary market and redeem them for the underlying S tokens. A suitable aggregator will be used for such transactions to ensure an optimal rate.

Motivation

Support the Peg of Beets Staked Sonic (stS)

A stable peg prevents inefficiencies and improves liquidity by reducing price deviations that could discourage the stS use in secondary markets.

Additional Revenue Stream for the DAO Treasury

As the stS tokens are bought from the open market at a rate that is lower than the actual stS redemption rate, this is a type of arbitrage transaction that will yield at least 0.30% in profits per 14-day withdrawal cycle performed.

Impacts / Risk Assessment

According to the Treasury and Risk Management framework, both S and stS are part of Risk Level 0 and therefore not impacted by the restrictions set by the framework.

With two smart contracts audits from top-tier audit firms, Beets has strived to minimize the smart contract risk connected with using Beets Staked Sonic smart contracts.

Specification / Execution Plan

Upon passing of this proposal, the S in the Beets Treasury may be used as outlined in the above proposal.