Treasury Management Proposal

Dynamic market-making activities through liquidity providing between LP pools on Frax staking and Convex. Monthly re-weighting and active management to monitor future market conditions should better opportunities arise.

Current Treasury: $5m in stables

Proposed Allocation: 50/50 split between FRAX/USDC and FRAX/DAI Monthly/quarterly portfolio balancing/reallocation Projected APY: 15% - 24% Note: other investments will be considered on an ongoing basis based on the market environment

Where blk_swan fits in: Will work with the NEWO team and the Treasury Sub DAO to monitor and actively manage treasury assets, perform and provide research on market conditions, and advise on tactical and strategic adjustments to the treasury portfolio.

Background: Portfolio management for pensions and foundations in traditional finance for 3 years, degen yield farmer in defi for 3 years.

Considering the implementation of the Sub DAO structure blk_swan would be leading the Treasury Management Sub DAO.

Proposed compensation: 70,000 NEWO tokens/yr. (5,833.33 NEWO tokens paid out per month)

Full deep dive: Market conditions in the digital asset space have been volatile the past few months and are expected to continue based on how many institutional investors view this space. Thus cannot be taken with a passive approach due to underlying risks that are posed in many of these stablecoins. As we have seen with prior algorithmic stablecoins, they can be rather devastating when left tail risks (black swans) arise.

Strategy for the treasury will be based on a tiered system: Risk-managed Assets chosen have risk profiles consistent with maintaining and growing the treasury outside the rate of inflation and costs.

Liquidity focused Assets can be quickly sold when needed.

High-level Risks The current known risks in the space are as follows: -Centralized stables (USDC, USDT) undergoing extreme regulatory changes in US. DefI stables (FRAX, DAI, MIM, UST, LUSD, FEI, UST, USDN) are partially dependent on centralized stables. Thus regulatory effects on centralized stables have ripple effects across the market. Defi Stables fall into collateralized and algorithmically stabilized categories. Algo stables have generally been riskier given their nature to implode due to high levels of volatility in their mint token. -Collateralized stables are less risky, but can be affected by similar market dynamics. -Liquidity timing needs during periods of stables stress. -Contract hacks and exploits -Age of project

Individual token Risks -UST faces potential price discovery as more assets move into the platform, thus pushing downward pressure on yields. Should yields drop below competitive rates, asset flows away from the platform will cause price discovery (de-pegging) for the UST token. https://cryptorisks.substack.com/p/on-abracadabra-degenbox-strategies -DAI and FRAX share similar decentralization risks, heavy supply of centralized tokens exposes them to the same risk faced by USDC and USDT. Assuming centralized tokens were regulated out of existence, their values will to $0.43 and $0.34 -USDT has an unverified balance sheet. Headline risk. -USDC could face regulatory headwinds with US regulatory authorities. -MIM has centralized risk in its founders and project's relative leaves it untested to heavily volatile markets -FEI algo untested during stress markets -LUSD highly centralized stability pool

Allocation The currently proposed allocation into the liquidity pools of Frax/DAI and FRAX/USDC has been proposed due to the following reasons: -DAI and USDC's longevity in the markets -USDC's open disclosure of their balance sheets and the gridlock faced on Capitol Hill -Volume of liquidity -Frax's unique token stabilization method -Rates of return provided by these currently

Below is a link to some data analysis and exploration metrics used to determine the volatility, correlation, and covariance on how these assets react to each other and around their peg. Note: Data will be updated every month, this will include rates, new assets, and historical market performance. Overall recommended portfolio will change overtime with this as well.

Data Analysis (subject to updates) https://docs.google.com/spreadsheets/d/1b0LXpUkU13MRd9P1rRrSOAiwy69rtyJB/edit?usp=sharing&ouid=116158139483596231442&rtpof=true&sd=true

Do you agree to the aforementioned strategies and onboarding blk_swan as the lead for the Treasury Sub DAO?