[TMP #5] - Community Proposal: Kyberswap stable pools

Scope:

Request DAO approval to deploy funds into Kyberswap stable pools on OP and Arbitrum.

Current Governance Limitations:

As per WIP #27:

Any seemingly valid strategy has to be properly vetted by the Risk Officer, voted by the treasury council and go through the proper governance process when applicable.

While the proposed investment can be voted by the Treasury Council, the above guidelines cannot be followed as expected due to the current lack of Risk Officer, a TMP is being used to assist treasury personnel with decision making by having the DAO review the proposal, assess the risks and make the final decision.

Objective:

• Deploy $2mm into Kyberswap on Optimism
  • $500k USDC paired with $500k DAI in the USDC-DAI LP
  • $500k USDC paired with $500k USDT into the USDC-USDT LP
• Deploy $6mm into Kyberswap on Arbitrum
  • $1mm USDC paired with $1mm DAI in the USDC-DAI LP
  • $2mm USDC paired with $2mm USDT in the USDC-USDT LP

Elastic pools with a 0.008% swap fee schedule will be used. The Treasury Operators will monitor and manage the range accordingly.

Rationale:

The Wonderland Treasury still has a lot of unallocated stables and given the current market conditions there are limited directional opportunities. The Treasury team agrees this proposal is safe and will provide decent returns while waiting for market conditions to improve.

Returns are expected to be around 10-14% annually*.
This could generate from $800,000 to $1.12mm annually or $2,191.78 to $3,068.49 daily*.

The Treasury Operators will monitor the positions to maximize profitability and manage risk.

*This will vary due to the volume on Kyberswap, pool dilution through additional capital deployment, and general crypto interest.

Risks:

All three stablecoins selected are very low risk. There is always a chance of a depeg in one or more of these coins. We are currently holding large positions in all three.

Smart contract risk will always be present. Kyberswap is one of the largest and best known protocols in the space and has been through numerous audits. We use them as our sole liquidity source for wMEMO on Avalanche.