Thank you very much for your comment, we really appreciate the detailed attention to strategy and governance. Still, we note there are potential conflicts of interests in section 1 + 2 with regards to directing funds to Aera and we hope you will promote good governance accordingly with regards to this vote. Our answers to the various points can be found below:
- Redemption of ETH for “Working capital”
We appreciate the need to maintain adequate liquidity. There are no restrictions on redemptions from the Enzyme vaults, so the DAO is free to redeem as needed. Working capital limits can be planned for well in advance with some coordination.
Where the community feels strongly about a specific reserve level, we believe this should apply in aggregate across treasury management operations, including those currently being run (such as through Aera). This will help maintain diversification.
- Overlap with existing strategies
The DeFi Yield Vault that we propose to deposit the USDC into is dedicated to Compound only, hence no comingling of assets as you suggest. Will clarify this in the original post, thank you! The primary reason for this exclusivity is the strategy’s inclusion of a buyback component: a dedicated vault helps facilitate efficient buyback execution when needed. Furthermore, the protocol coverage on Enzyme differs from that on Aera and therefore adds some diversity on strategy.
- Projected Returns
The projected returns are calculated based on recent and historical market volatility rates. We have done the work to establish market liquidity and counterparty demand ahead of making this proposal. The exact pricing will be a function of certain variables so we cannot guarantee that up-front. Instead, we propose a minimum annualized return of 15% before entering into a trade.
In terms of the risk profile of this strategy, the worst case scenario is that the DAO is long COMP plus the USDC yields (starting at 15% APY) which is better off than the DAO position today. If the options get exercised, this will result in a realised gain (from starting position). The process plus realised gain will be used to buy back COMP at pre-defined lower levels whilst earning yield in the meantime, possibly also to fund the proposed delegate program should it pass.
- Governance and Oversight
At the strategy level, the roles and permissions embedded within Enzyme are a key feature in protecting against the misappropriation of funds.
At the overall portfolio level, we are happy to work with the DAO to set up operational safeguards to ensure the optimal trade off between security and operational efficiency for Compound, including the use of Zodiac role modifiers where appropriate.