Summary of Actions
This post is intended to provide transparency into the first set of actions across three community-authorized Safes:
These actions are conservative in nature. The goal is simply to put idle capital to work while supporting the Compound protocol by earning yield in low-risk Compound markets. These positions can remain active while the Foundation fleshes out a more detailed treasury management strategy as discussed in the last community call. We have also taken action to replenish COMP in L2 markets to honor existing protocol obligations to users.
V2 Reserves Safe: Convert DAI to USDC & Deposit into cUSDCv3
Background:
In February, governance passed the Authorization of Treasury Management Use of Compound v2 Reserves, which approved the mobilization of ~8.42M DAI from deprecated V2 market reserves for treasury management purposes. Following V2 deprecation, these reserves no longer serve their original risk-management function and have been sitting idle.
Actions:
- Convert 8.42M DAI to USDC at no cost via the Spark PSM (the Peg Stability Module enables 1:1 DAI-USDC swaps with no slippage or fee beyond gas).
- Then deposit the resulting ~8.42M USDC into the Compound cUSDCv3 market, currently earning approximately 2.56% APR.
Motivation:
The conversion from DAI to USDC is a straightforward housekeeping step. USDC is more widely supported across Compound V3 markets. And the Spark PSM makes this conversion costless beyond de minimis gas. Once converted, depositing into cUSDCv3 puts this USDC to work, earning yield in Compound’s own market rather than leaving it idle. These funds will remain in cUSDCv3 while the Foundation and its selected service providers determine appropriate next steps for this allocation.
EPCF Safe: 4.5M USDC Deposit into cUSDCv3
Background:
In February, governance approved the Creation of the Ecosystem Protection and Continuity Fund (EPCF), which capitalized the fund with $5M USDC from the COMP Treasury. The EPCF exists as a pre-authorized, rapid-deployment pool of capital to protect the Compound ecosystem against adverse events such as critical security incidents, governance attacks, regulatory challenges, or other material disruptions.
Action:
Deposit 4.5M USDC into the Compound cUSDCv3 market to earn yield.
Motivation:
The EPCF funds are not expected to be utilized unless a qualifying ecosystem threat materializes. In the meantime, there is no reason to leave $5M sitting idle when it can earn yield in a low-risk market. $500K USDC will remain in the Safe as a liquidity buffer. This provides a cushion in the event of liquidity restrictions pertaining to cUSDCv3 withdrawals. Depositing into cUSDCv3 is consistent with the EPCF’s authorization to “deploy idle EPCF assets in a manner intended to preserve capital and generate modest yield, including through low-risk on-chain or off-chain strategies.”
Chainlink SVR Mainnet Rewards Safe: ETH Deposit into cWETHv3
Background:
The DAO integrated Chainlink’s Smart Value Recapture (SVR) system, which enables the protocol to recapture MEV generated during liquidations on Compound markets. SVR revenue is shared between the Compound DAO and Chainlink. The Chainlink SVR Mainnet Rewards Safe (0xd9496f2a3fd2a97d8a4531d92742f3c8f53183cb) is controlled by the Foundation and held in trust for the DAO. It has received all of Compound’s share of SVR payments to date in ETH. There are currently no explicit governance instructions for how the SVR-derived funds are to be used.
Action:
Deposit the total ~291.6 ETH balance held in the SVR Rewards Safe into the Compound cWETHv3 market, currently earning approximately 2% APR.
Motivation:
Given the absence of explicit governance direction on activation of these funds, depositing the latent ETH into a Compound market to earn modest yield is a conservative and uncontroversial step. No funds are being spent or moved outside the Compound ecosystem. This simply prevents DAO-owned capital from sitting idle while the community determines how it would like SVR revenue to be managed going forward, especially with the introduction of revenue streams from L2 OEV activation.
V2 Reserves Safe: USDC Purchase of 25K COMP to Replenish L2 Rewards
Background:
Gauntlet flagged that COMP rewards on several L2 markets have been depleted, leaving no COMP available to refill them. To address this, the Foundation is working with an OTC desk to convert USDC from the V2 Reserves Safe into COMP. Once the order is filled, the COMP will be returned to the multisig and then distributed to refill the affected L2 markets.
Action:
Send the equivalent of $25,000 USDC from the V2 Reserves Safe to an OTC desk to purchase COMP. Once the trade is settled (expected within one to two days), the resulting COMP will be returned to the multisig and subsequently deployed to fund the Comptroller on the affected L2 markets.
Motivation:
COMP rewards that have already accrued to users on Compound’s L2 markets represent claims owed to those users. With the rewards supply depleted, those claims cannot currently be fulfilled. Replenishing COMP is therefore not discretionary, but necessary to honor obligations already incurred by the protocol. Using V2 Reserves USDC for this purchase is consistent with the treasury management authorization passed in February, and the OTC route ensures the trade is executed without market impact. This is a time-sensitive operational step to make users whole while longer-term reward distribution strategy is defined.
You can expect to see these actions taken at the time of this post or shortly afterwards. As more decisions pertaining to these multisigs are made, this present thread will be updated accordingly.