Proposal: Transforming the Trading Arm into the Strategic Reserve Arm

Summary

This proposal seeks to repurpose the existing Trading Arm into a Strategic Reserve Arm, providing the ecosystem with a long-term backstop while maintaining flexibility for future Treasury allocations. Additionally, this proposal updates the Treasury flush percentages to better reflect risk distribution and capital allocation priorities.

Rationale

The Trading Arm was originally designed to engage in active trading strategies to generate additional returns for the Treasury. However, due to limited participation and execution challenges, these funds have remained largely underutilized. Instead of continuing with an underperforming strategy, this proposal advocates for shifting the Trading Arm into a Strategic Reserve, ensuring that these funds are consistently allocated in a structured yet adaptable manner.

By dollar-cost averaging (DCA) into a predefined set of assets each week, the Strategic Reserve Arm will:

Provide a long-term value accrual mechanism for the ecosystem.

Establish a stable reserve that can be deployed for future initiatives at the community’s discretion.

Eliminate the need for constant micro-management while allowing flexibility for allocation adjustments through future proposals.

Implementation Plan

1. Asset Allocation & Weekly Purchase Strategy

Each week, after the Treasury flush, a set percentage of funds will be used to purchase assets in the Strategic Reserve. The proposed allocation is as follows:

20% PLSX 15% pHEX 10% PLS 10% pDAI 12.5% Most 12.5% Dominance 12.5% Remember 7.5% Missor

This allocation is designed to diversify holdings while maintaining exposure to key assets that align with ecosystem goals.

2. Treasury Flush Percentage Adjustment

To reflect the reduced risk profile of the Strategic Reserve compared to the Trading Arm, we propose the following adjustment to the Treasury flush percentages:

Current Allocation

Liquidity Arm 50% Yield Arm 35% Strategic Reserve Arm (formerly Trading Arm) 15%

Proposed Allocation

Liquidity Arm 40% Yield Arm 35% Strategic Reserve Arm (formerly Trading Arm) 25%

This shift allows for a more substantial reserve build-up while still prioritizing liquidity and yield generation.

3. Governance & Flexibility

The Strategic Reserve allocations will not require frequent proposals for asset selection unless the community wishes to modify them.

The community can propose to deploy a percentage of the reserve for specific uses in the future (e.g., reinvesting in another Treasury Arm, funding new initiatives, or redistributing to token holders).

Adjustments to asset allocations can be proposed and voted on at any time if the community wishes to optimize the holdings.

Conclusion

This proposal ensures that funds continue to work for the ecosystem in a structured and strategic manner while maintaining flexibility for future use. By shifting from active trading to a long-term reserve, the Treasury can accumulate valuable assets while minimizing unnecessary risk and complexity.