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 * RFC: STRATEGIC TREASURY ALIGNMENT FOR JUSDC

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 * 1 of 17 posts
   Original Post
   1 of 17 postsFebruary 2023
   
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 * SHREDDY

 * 13 Feb
   Post #1 Monday, February 13, 2023 9:38 PM


SUMMARY

Jones DAO is proposing a mutually beneficial strategic partnership with Klima
DAO. Jones has developed their jUSDC and jGLP advanced strategy vaults which
provide depositors with superior and transparent amplified yields on both USDC
and GLP.

We are confident that a deposit from the Klima Treasury into the jUSDC Vault
will significantly enhance both the productiveness of the Klima Treasury and the
growth of Jones DAO, leading to continued growth of the Arbitrum Ecosystem.


MOTIVATION

The team at Jones has known about Klima’s mission since its inception and were
always keen to take Carbon Offsets seriously. Also, both teams emerged from the
Olympus community and have been looking for the right opportunity to strike a
partnership.

Jones DAO has recently completed a Carbon offset with Klima, which you can see
here: https://www.klimadao.finance/retirements/jonesdaogov.eth/1

We are hopeful that this Carbon offset will be seen by our peers in the Arbitrum
ecosystem, motivating them to follow in our footsteps and using Klima to do so.
We’re committed to helping the Klima team make these connections.

When seeking partners for our jUSDC Vaults, we have remained focused on
onboarding high-quality, DeFi-native teams from the beginning. To perpetuate
Klima’s treasury and allow them to continue on their mission, we think jUSDC is
a uniquely compatible, audited, low-risk, high-return strategy which we will
outline in detail below.

Klima, and the vibrant underlying community, include all of the characteristics
of an ideal, high-quality partner. A strong and growing Klima Treasury is in the
interest of anyone building at the cutting edge of ReFi - it will benefit all
builders and communities.


JUSDC ARCHITECTURE & YIELD

jUSDC and jGLP deliver superior transparent yields with liquidation proof smart
leverage in the background. Additional details on this mechanic:

Functionality

GLP is currently the most lucrative and scalable yield in DeFi, with over $400m
in TVL earning consistent yield from trading fees on GMX. Built on GLP, jGLP and
jUSDC are two distinct and efficient products for both risk-on and risk-off
users respectively.

The jGLP Jones Vault borrows from the jUSDC Jones Vault to leverage GLP,
enhancing its yield and delta, bringing the price behavior very close to the
broader crypto market. jUSDC earns lending yield from the leveraged GLP, staying
delta and gamma neutral.

It’s important to note - the leveraging & deleveraging of jGLP is what will keep
collateral ratios and the principal jUSDC stable. This unique architecture
results in yield, efficiency, and safety far greater than other GLP-based
products.

jUSDC: Gamma Neutral Stablecoin Vault

 * Pristine stablecoin yield: ideal for risk-off users. Transparent and
   on-chain, with enforced lending parameters to ensure delta and gamma price
   neutrality. The APR is expected to beat yields offered on crypto blue chip
   money market and lending platforms.
 * Superior architecture to GLP hedging models: no short gamma risk, no basis
   risk, zero delta and zero gamma exposure, no constant hedging costs. Since
   jGLP leverages GLP’s already high yields, Jones is able to create a much
   higher base from which to reward jUSDC depositors than our competition. This
   means: even during periods of yield compression, jUSDC depositors will be
   rewarded through our vault incentives - including non-GLP related products.
 * As a USDC Stablecoin Vault, jUSDC accrues all of its yield in USDC.

If you want to learn more about jGLP Vaults, you can head to our docs or read
our whitepaper.

jUSDC typically yields 6-8%.

Check out the DeFiLlama data here:
https://defillama.com/yields/pool/dde58f35-2d08-4789-a641-1225b72c3147


PROPOSAL

If this proposal is well received, we would like it to become a KIP. If that KIP
passes, we propose that the Klima Treasury would be whitelisted for the jUSDC
vault, granting it the ability to deposit tokens.

Discussion around the amount of tokens is to be left to the discretion of Klima
DAO.

 * Reply

 * MarcusAurelius, Dionysus, rittaaka, and 2 others like this.




 * NACH211

 * 13 Feb
   Post #2 Monday, February 13, 2023 9:42 PM

We are excited to hear the community response to this!

 * Reply

 * ZK23 and Shreddy like this.




 * JOJO

 * 13 Feb
   Post #3 Monday, February 13, 2023 9:57 PM

Looking forward to know what the community think about this

 * Reply

 * ZK23 and Shreddy like this.




 * WAGMICAPITAL

 * 14 Feb
   Post #4 Tuesday, February 14, 2023 3:25 AM

Thanks for the proposal guys and congratulations on the offset.

I think pursuing a whitelisting is worthwhile and I believe the vault is a good
product for housing some of the excess USDC.

I will defer to the Klima team on the quantity of that idle USDC and an
appropriate allocation. I’m also interested as to how this would work
cross-chain given Klima’s base on Polygon.

 * Reply

 * nach211 replied to this.
 * rittaaka, ZK23, Shreddy, and nach211 like this.




 * VVIDANG

 * 14 Feb
   Post #5 Tuesday, February 14, 2023 4:19 AM

I love this proposal, this will help KlimaDAO expand into multichain and
identified as a Multichain refi solution.

 * Reply

 * nach211 replied to this.
 * bRawlaphant, ZK23, Shreddy, and nach211 like this.




 * ZZRUSH

 * a month ago
   Post #6 Tuesday, February 14, 2023 9:27 AM

Having vested interests in both protocols, I think this is a great idea.
More liquidity for jUSD and more yield for KLIMA.
I would love to hear counter arguments though as well as a list of the potential
risks.

 * Reply

 * nach211 replied to this.
 * Shreddy, nach211, and Senad like this.




 * NACH211

 * a month ago
   Post #7 Tuesday, February 14, 2023 12:48 PM

WAGMIcapital Thanks for the kind words!

 * Reply





 * NACH211

 * a month ago
   Post #8 Tuesday, February 14, 2023 12:48 PM

Vidang Thanks for the positive words!

 * Reply





 * NACH211

 * a month ago
   Post #9 Tuesday, February 14, 2023 12:48 PM

ZZRush Thanks for the confidence ZZ! We think a revest is a long road and that
mission requires a long runway!

Hope we can help!

 * Reply





 * JOEL_

 * a month ago
   Post #10 Tuesday, February 14, 2023 9:46 PM

As a member of both DAO's (Jones and Klima) I am in support of this proposal as
I believe it to be beneficial for both protocols.

Benefit for Klima: Earning yield on stablecoins is a foundational aspect to any
treasury in an effort to offset operational expenses at the most basic level.
jUSDC is an ideal option to fulfil this need in my opinion.

I also defer to the Klima team to determine a suitable amount to deposit should
Jones be whitelisted.

 * Reply

 * nach211 replied to this.
 * ZZRush and nach211 like this.




 * RITTAAKA

 * a month ago
   Post #11 Wednesday, February 15, 2023 5:54 AM

Welcome to the Jones DAO community, great to see your proactivity and engagement
with the KlimaDAO governance process.

I’d be keen to see more information from Jones DAO regarding the risks and
benefits. I would also be keen to see a cost / benefit assessment from KlimaDAO
policy & operations.

 * Reply

 * nach211 replied to this.
 * ZZRush and nach211 like this.




 * HUGH
   
    * 
    * 

 * a month ago
   Post #12 Wednesday, February 15, 2023 3:40 PM

@Shreddy thanks for bringing this to the Forum mate. As you would know, KlimaDAO
has historically maintained a highly conservative treasury management operation,
limited mostly to market making decisions on its protocol-owned liquidity pools.
However, we are actively reviewing several different options to better utilize
our idle assets - many of these involve tapping into off-chain sources of yield,
such as tokenized US government bonds.

In terms of the amount, the current thinking is that we would propose to the
community that the DAO take a staged approach - depositing a smaller amount
(e.g. $100K) at first, and then slowly scaling up to perhaps one-third of our
available USDC of 8.3M. We might propose using multiple vendors to diversify
risk.

As we go through this process though, it would be great if you could provide
further information for us and the community to understand the following:

 * How would you propose bringing our USDC from Polygon into these vaults on
   Arbitrum?
 * Beyond smart contract risks, what other sources of risk should be considered?
   Could you explain those?
 * Are there any reference customers like KlimaDAO who have already deployed
   treasury assets into jUSDC/jGLP?
 * Are there any access requirements to the vaults (e.g. max or min deposit
   amounts, vault removal times etc.)?

Cheers

 * Reply

 * nach211 replied to this.
 * MarcusAurelius, rittaaka, and nach211 like this.




 * NACH211

 * a month ago
   Post #13 Wednesday, February 15, 2023 6:01 PM

rittaaka Hey Rittaaka! Thanks for the comments, have you peeked at our
documentation yet? We would love to answer any specific questions you might
have!

 * Reply





 * NACH211

 * a month ago
   Post #14 Wednesday, February 15, 2023 6:05 PM

Joel_ What a king.

 * Reply

 * Joel_ likes this.




 * NACH211

 * a month ago
   Post #15 Wednesday, February 15, 2023 6:13 PM

Hugh

Hey Hugh, thanks for the comments!

The Arbitrum official bridge is the best way to bridge from any chain - would be
happy to introduce you to that team as well. They could use some carbon offsets!

WRT non-SC risks, jUSDC is a pristine asset in that the way jGLP is built and
even with max leverage, all potential losses are directed at the jGLP side of
the equation which is why jUSDC should (aside from SC risks) remain accruing
interest (Currently jUSDC yields over 20%!).

We have had two proposals pass, one for Sperax and one for Redacted. We have
also worked privately with other DAOs but are not able to disclose amounts or
whom as requested. I will say that we have sourced 5 deposits from projects so
far.

As far as access, jUSDC has a unique feature in that unlike AAVE utilization
will not freeze withdrawal functions. We do this by enforcing a GMX retention
which de-levers the jGLP vault based on your withdrawal. As you may know, GMX
has a minting retention in order to mint GLP and as such, we pass that to the
jUSDC withdrawer. We also outline this in greater detail in the whitepaper which
I can unpack also for the treasury team! There is also a 24 hour lockup on
withdrawals from jUSDC side which helps lower any potential attack surface.

Hope that helps, happy to discuss more!

 * Reply

 * MarcusAurelius replied to this.




 * MARCUSAURELIUS
   
    * 
    * 
    * 

 * a month ago
   Post #16 Thursday, February 16, 2023 3:31 AM

nach211 thanks for addressing Hugh's questions, look forward to digging into the
details of this proposed strategy for maintaining the treasury's purchasing
power on idle USDC.

I reviewed the docs on the jGLP/jUSDC, just want to make sure I'm understanding
correctly: the returns on the jUSDC side of the system are "coupled" to the
underlying GLP/GMX trading fee accrual, right? So they fluctuate with GMX
volume?

 * Reply

 * nach211 replied to this.
 * ZZRush, nach211, and Senad like this.




 * NACH211

 * a month ago
   Post #17 Friday, February 17, 2023 12:08 PM

MarcusAurelius Exactly, and because jGLP introduces leverage it supercharges
yield for jUSDC holders.

 * Reply

 * ZZRush and Senad like this.


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RFC: STRATEGIC TREASURY ALIGNMENT FOR JUSDC


SHREDDY


SUMMARY

Jones DAO is proposing a mutually beneficial strategic partnership with Klima
DAO. Jones has developed their jUSDC and jGLP advanced strategy vaults which
provide depositors with superior and transparent amplified yields on both USDC
and GLP.

We are confident that a deposit from the Klima Treasury into the jUSDC Vault
will significantly enhance both the productiveness of the Klima Treasury and the
growth of Jones DAO, leading to continued growth of the Arbitrum Ecosystem.


MOTIVATION

The team at Jones has known about Klima’s mission since its inception and were
always keen to take Carbon Offsets seriously. Also, both teams emerged from the
Olympus community and have been looking for the right opportunity to strike a
partnership.

Jones DAO has recently completed a Carbon offset with Klima, which you can see
here: https://www.klimadao.finance/retirements/jonesdaogov.eth/1

We are hopeful that this Carbon offset will be seen by our peers in the Arbitrum
ecosystem, motivating them to follow in our footsteps and using Klima to do so.
We’re committed to helping the Klima team make these connections.

When seeking partners for our jUSDC Vaults, we have remained focused on
onboarding high-quality, DeFi-native teams from the beginning. To perpetuate
Klima’s treasury and allow them to continue on their mission, we think jUSDC is
a uniquely compatible, audited, low-risk, high-return strategy which we will
outline in detail below.

Klima, and the vibrant underlying community, include all of the characteristics
of an ideal, high-quality partner. A strong and growing Klima Treasury is in the
interest of anyone building at the cutting edge of ReFi - it will benefit all
builders and communities.


JUSDC ARCHITECTURE & YIELD

jUSDC and jGLP deliver superior transparent yields with liquidation proof smart
leverage in the background. Additional details on this mechanic:

Functionality

GLP is currently the most lucrative and scalable yield in DeFi, with over $400m
in TVL earning consistent yield from trading fees on GMX. Built on GLP, jGLP and
jUSDC are two distinct and efficient products for both risk-on and risk-off
users respectively.

The jGLP Jones Vault borrows from the jUSDC Jones Vault to leverage GLP,
enhancing its yield and delta, bringing the price behavior very close to the
broader crypto market. jUSDC earns lending yield from the leveraged GLP, staying
delta and gamma neutral.

It’s important to note - the leveraging & deleveraging of jGLP is what will keep
collateral ratios and the principal jUSDC stable. This unique architecture
results in yield, efficiency, and safety far greater than other GLP-based
products.

jUSDC: Gamma Neutral Stablecoin Vault

 * Pristine stablecoin yield: ideal for risk-off users. Transparent and
   on-chain, with enforced lending parameters to ensure delta and gamma price
   neutrality. The APR is expected to beat yields offered on crypto blue chip
   money market and lending platforms.
 * Superior architecture to GLP hedging models: no short gamma risk, no basis
   risk, zero delta and zero gamma exposure, no constant hedging costs. Since
   jGLP leverages GLP’s already high yields, Jones is able to create a much
   higher base from which to reward jUSDC depositors than our competition. This
   means: even during periods of yield compression, jUSDC depositors will be
   rewarded through our vault incentives - including non-GLP related products.
 * As a USDC Stablecoin Vault, jUSDC accrues all of its yield in USDC.

If you want to learn more about jGLP Vaults, you can head to our docs or read
our whitepaper.

jUSDC typically yields 6-8%.

Check out the DeFiLlama data here:
https://defillama.com/yields/pool/dde58f35-2d08-4789-a641-1225b72c3147


PROPOSAL

If this proposal is well received, we would like it to become a KIP. If that KIP
passes, we propose that the Klima Treasury would be whitelisted for the jUSDC
vault, granting it the ability to deposit tokens.

Discussion around the amount of tokens is to be left to the discretion of Klima
DAO.

--------------------------------------------------------------------------------


NACH211

We are excited to hear the community response to this!

--------------------------------------------------------------------------------


JOJO

Looking forward to know what the community think about this 🙂

--------------------------------------------------------------------------------


WAGMICAPITAL

Thanks for the proposal guys and congratulations on the offset.

I think pursuing a whitelisting is worthwhile and I believe the vault is a good
product for housing some of the excess USDC.

I will defer to the Klima team on the quantity of that idle USDC and an
appropriate allocation. I’m also interested as to how this would work
cross-chain given Klima’s base on Polygon.

--------------------------------------------------------------------------------


NACH211

WAGMIcapital Thanks for the kind words!

--------------------------------------------------------------------------------


VIDANG

I love this proposal, this will help KlimaDAO expand into multichain and
identified as a Multichain refi solution.

--------------------------------------------------------------------------------


NACH211

Vidang Thanks for the positive words!

--------------------------------------------------------------------------------


ZZRUSH

Having vested interests in both protocols, I think this is a great idea.
More liquidity for jUSD and more yield for KLIMA.
I would love to hear counter arguments though as well as a list of the potential
risks.

--------------------------------------------------------------------------------


NACH211

ZZRush Thanks for the confidence ZZ! We think a revest is a long road and that
mission requires a long runway!

Hope we can help!

--------------------------------------------------------------------------------


JOEL_

As a member of both DAO's (Jones and Klima) I am in support of this proposal as
I believe it to be beneficial for both protocols.

Benefit for Klima: Earning yield on stablecoins is a foundational aspect to any
treasury in an effort to offset operational expenses at the most basic level.
jUSDC is an ideal option to fulfil this need in my opinion.

I also defer to the Klima team to determine a suitable amount to deposit should
Jones be whitelisted.

--------------------------------------------------------------------------------


NACH211

Joel_ What a king.

--------------------------------------------------------------------------------


RITTAAKA

Welcome to the Jones DAO community, great to see your proactivity and engagement
with the KlimaDAO governance process.

I’d be keen to see more information from Jones DAO regarding the risks and
benefits. I would also be keen to see a cost / benefit assessment from KlimaDAO
policy & operations.

--------------------------------------------------------------------------------


NACH211

rittaaka Hey Rittaaka! Thanks for the comments, have you peeked at our
documentation yet? We would love to answer any specific questions you might
have!

--------------------------------------------------------------------------------


HUGH

@Shreddy thanks for bringing this to the Forum mate. As you would know, KlimaDAO
has historically maintained a highly conservative treasury management operation,
limited mostly to market making decisions on its protocol-owned liquidity pools.
However, we are actively reviewing several different options to better utilize
our idle assets - many of these involve tapping into off-chain sources of yield,
such as tokenized US government bonds.

In terms of the amount, the current thinking is that we would propose to the
community that the DAO take a staged approach - depositing a smaller amount
(e.g. $100K) at first, and then slowly scaling up to perhaps one-third of our
available USDC of 8.3M. We might propose using multiple vendors to diversify
risk.

As we go through this process though, it would be great if you could provide
further information for us and the community to understand the following:

 * How would you propose bringing our USDC from Polygon into these vaults on
   Arbitrum?
 * Beyond smart contract risks, what other sources of risk should be considered?
   Could you explain those?
 * Are there any reference customers like KlimaDAO who have already deployed
   treasury assets into jUSDC/jGLP?
 * Are there any access requirements to the vaults (e.g. max or min deposit
   amounts, vault removal times etc.)?

Cheers

--------------------------------------------------------------------------------


NACH211

Hugh

Hey Hugh, thanks for the comments!

The Arbitrum official bridge is the best way to bridge from any chain - would be
happy to introduce you to that team as well. They could use some carbon offsets!

WRT non-SC risks, jUSDC is a pristine asset in that the way jGLP is built and
even with max leverage, all potential losses are directed at the jGLP side of
the equation which is why jUSDC should (aside from SC risks) remain accruing
interest (Currently jUSDC yields over 20%!).

We have had two proposals pass, one for Sperax and one for Redacted. We have
also worked privately with other DAOs but are not able to disclose amounts or
whom as requested. I will say that we have sourced 5 deposits from projects so
far.

As far as access, jUSDC has a unique feature in that unlike AAVE utilization
will not freeze withdrawal functions. We do this by enforcing a GMX retention
which de-levers the jGLP vault based on your withdrawal. As you may know, GMX
has a minting retention in order to mint GLP and as such, we pass that to the
jUSDC withdrawer. We also outline this in greater detail in the whitepaper which
I can unpack also for the treasury team! There is also a 24 hour lockup on
withdrawals from jUSDC side which helps lower any potential attack surface.

Hope that helps, happy to discuss more!

--------------------------------------------------------------------------------


MARCUSAURELIUS

nach211 thanks for addressing Hugh's questions, look forward to digging into the
details of this proposed strategy for maintaining the treasury's purchasing
power on idle USDC.

I reviewed the docs on the jGLP/jUSDC, just want to make sure I'm understanding
correctly: the returns on the jUSDC side of the system are "coupled" to the
underlying GLP/GMX trading fee accrual, right? So they fluctuate with GMX
volume?

--------------------------------------------------------------------------------


NACH211

MarcusAurelius Exactly, and because jGLP introduces leverage it supercharges
yield for jUSDC holders.

--------------------------------------------------------------------------------

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