Orca Treasury Conversion Proposal

What is the Orca operating team proposing?

This is a proposal regarding the Orca Treasury. For more information on the current balance of the Orca Treasury, please refer to the just published Orca Treasury Report #2.

While the Orca Governance Council gets up to speed, and while we formalize the DAO structure with Council governance, the Orca operating team would like to move forward with converting the current fees generated for the Orca Treasury from various LP tokens to a mix of USDC and SOL.

The operating team would like to receive Orca community’s endorsement for the operating team to use their best judgment to convert the treasury, acting on the best interest of the Orca DAO and based on recommendations from the Council. The conversion parameter is proposed below and can be updated based on community feedback.

The terms outlined in this document will be reevaluated with the Orca Governance Council, three months after the potential passing of this proposal. The Orca community will be informed of the outcome of this reevaluation.

Why, and why now?

With the Orca Governance Council formed and its first meetings taking place, we are excited to welcome a new era of the Orca protocol. In this new era, treasury management will become a key topic for both the council and the Orca community. Among others, possible discussion items around treasury management may involve ways to preserve value for the Orca Treasury, or ways to allocate from the Orca treasury to the DAO’s future grants and working groups. In order for these discussions to take place, it’s important for the Orca Treasury to be monitored and managed on a regular basis.

Previously, Orca’s operating team had made conversions for the Orca Climate Fund only, with the intention of proposing the conversion of Orca Treasury (which is accumulated by trade fees incurred when users trade using orca.so) after Orca Governance Council is officially in place. However, in light of recent industry events causing an ecosystem-wide decrease in token values, the Orca Treasury, which is made up of LP tokens composed of assets listed on Orca.so, is also decreasing in overall value. The operating team feels that the discussion of treasury conversion should happen promptly, which is why it has aligned with the Orca Governance Council that this forum post and subsequent on-chain proposal will take place simultaneously with the Orca Governance Council getting onboarded.

What is the community voting on?

The community is voting for the operating team to use their best judgment to convert the Orca Treasury for the next three months. Details proposed in the section below.

This forum post will stay active for seven days (from Dec 6, 2022 to Dec 12, 2022), during which time the community is encouraged to share their input on the specifics of this proposal, and the operating team will read and review. By Dec 14, 2022, the operating team will share an updated version of the section “What happens if the vote passes?” below, incorporating forum feedback (if any). This proposal will then move to an on-chain vote by Dec 16, 2022.

What happens if the vote passes?

If the vote passes, the Orca team will begin converting fees accrued to the protocol into USDC and SOL. The conversion ratio will be 80% USDC + 20% SOL for the Orca Treasury and 100% USDC for the Climate Fund (formerly known as the Impact Fund). These conversions may be initiated manually or on an automated schedule, with the initial conversions expected to be completed by the end of December 2022.

Between the start of the conversion and the end of the three-month period, the operating team may decide, based on market volatility, to change the conversion ratio as indicated in the first paragraph of this section. This should also be conducted after notifying the community and the Orca Governance Council via making a post to this forum proposal. However, in the interest of responding swiftly to market conditions, there will not be a signaling and discussing period.


Disclaimer: The content of this communication is not financial, legal, business, tax, accounting, or other advice and should not be relied on by any persons as such financial advice. This communication has not been provided in consideration of any recipient’s financial needs. We have not conducted any financial assessments in relation to these issues based on the personal circumstances of any recipients. Each person should consult its own advisors as to legal, business, tax, accounting, financial, and other related matters concerning these matters in light of such person’s particular circumstances. Before using the protocol, carefully review all relevant documentation and consider risks including total loss of funds.

6 Likes

80-20 is very reasonable and responsible. But just to keep things interesting on the Forum, what if we approached Marinade and Lido and offered the highest bidder a 1 or 2 year contract to make mSOL/USDC or stSOL/USDC the default ORCA treasury holding (Hubble/Kamino may want to get involved too)? The LDO or MNDE bounty could either be held on the Orca DAO balance sheet or swapped monthly for ORCA as a buyback and burn program.

3 Likes

Agree with Cortina on the 80/20 split, but honestly wouldn’t hate to see a 90/10 split in the short term because you never really know how long the winter will last.

Also as a decentralization maxi, I would implore you to choose Marinade for any Solana native liquid staking.

I can’t speak for everyone, but I know that the team over there truly cares about the health of the network and helping smaller validators weather this storm.

There’s also an incentive program being voted on right now!

Hi guys!

Have reached out to Marinade to better understand the incentive program, and are discussing the new options shared from you guys with the operating team and members of the council.

But it does seem like right now, the ratio between USDC and SOL is something we CAN get the community to share their preferences on.

Experimenting with Discord Forum for more fluid convos on Governance, so I’ve made a poll over here: Discord :smiley:

1 Like

Hey pod, wanna circle back here and share an update.

The purpose of this particular proposal is simply treasury conversion and de-risking, not treasury management. We are appreciative of the suggestions but ultimately the suggestions lead to a larger risk tolerance discussion that would not adhere to the conversion timeline proposed the original forum post.

We would like to move forward with a timely conversion of the existing treasury funds, based on the conversion ratio aligned with the community. At the same time, we have reached out to Marinade, and will reach out to Lido, to gather information for the governance council. So far, based on Marinade’s response, the “Open Doors” TVL program will have a phased rollout, which gives the community some time to discuss and align with the community, if participating in this program (or programs like this) is of interest.

It does seem like the community is interested in exploring various ways of treasury management. However, it has been observed in other longer running DAOs that treasury management is a very complex topic. Perhaps it could be discussed at a later date by the community or the council?

2 Likes

Hey pod,

This forum proposal has been submitted to an on-chain vote, you have 7 days to exercise your right to vote here: Realms

Note that based on feedback in this forum and in Orca’s Discord Forum (Discord), the community supports the 80-20 conversion ratio as well as the initial conversion moving forward. Therefore there’s been no changes to the initial forum proposal.

1 Like