TMC-2: Research and implement permissionless Stonks execution

[steakhouse]

TMC-2: Research and implement permissionless Stonks execution
Strategy	Research and develop a permissionless Stonks trigger
Objective	Accelerate a transition of TMC ownership over a key financial operations tool to the community
Intended on-chain action	1. Research and develop the most secure mechanisms that will allow LDO token holders to select a threshold and trigger Stonks permissionlessly; 2. Develop on-chain tooling with a grief-proof mechanism
Impact on treasury liquidity	No relative change to treasury liquidity
Execution complexity	The Stonks tool allows non-custodial treasury swaps already, and represents the overwhelming majority of the execution complexity. A permissionless trigger is comparatively much simpler
Maintenance complexity and overhead	Minor, may require maintenance and updates of the limits from time to time
Summary of possible risks	- Tail event execution modes may trigger more or less swaps than desired → we recommend DAO contributors to actively research and publish pros and cons of various modes of permissionless triggers for community feedback ahead of execution
Summary of potential benefits	- Ability to hand over ownership of a key financial operations tool to the community - Fulfill the mandate of the Treasury Management Committee to automate itself
Compliance with Treasury Management Principles	Yes
Proposer	Steakhouse
Agreement	Pending from TMC poll
Perform	Steakhouse
Input	Pending from community
On-chain execution stage	Proposal
Other notes	- Query to see the months of runway based on stablecoins only - Query to see the months of runway based on stablecoins and stETH in the surplus

@steakhouse

The modular approach of this design makes it possible to iterate very quickly on a next step of this function. Today, the TMC will be in charge of the trigger and selecting thresholds, but there is no reason why this level-setting and execution couldn’t be done permissionlessly also. One way in which this could be done is by allowing an Aragon vote to set a maximum ceiling of swaps permitted in a rolling 12mo period (~2.6m blocks):

Poll for Treasury Management Committee Members

End date 21-Mar-2024

TMC-2: Research and implement permissionless Stonks execution

• Approve
• Reject

[Izzy]

Why are permissionless swaps good? e.g. what if it’s a bad time to make the swap or unnecessary to (there’s enough of the quote currency for any possible use)?

[steakhouse]

Any reduction in trusted assumptions is a net improvement - as to whether it is a bad time or not, is up to the prerogative of the token holders and the parameters they set to allow it.

[Izzy]

@steakhouse

Any reduction in trusted assumptions is a net improvement

Well, not if there aren’t sufficient safeguards to prevent someone form doing something that’s unwanted (or if those safeguards don’t end up creating more trust assumptions, or are more complex, etc). If the DAO has to set like an “allow trade window” every time it wants allow anyone to permissionlessly make a trade how is this materially different from just the DAO making the trade?

[kadmil]

Stonks at the first iteration are under TMC purview (and not permissionless by current design); happened to be so exactly for the reasons you’re outlining. DAO Ops team targets to enable TMC to rebalance tokens proportions in the DAO Treasury, but not allowing for any “significant” (up to some technical gap) difference between the “market” (in this case, Chainlink’s) and “execution” prices. A lot of detail is covered in the Stonks design post. If anything, it turned out to be more permissioned than I initially envisioned due to multiple ops safety considerations brought up in the review & audit processes

[steakhouse]

These are all really good questions and conditions that need to be properly researched. This TMC motion signals the desire to do in-depth research and design to make sure a permissionless module can be executed safely.

[Izzy]

@kadmil

but not allowing for any “significant” (up to some technical gap) difference between the “market” (in this case, Chainlink’s) and “execution” prices

Things like price impact / slippage safety aren’t really what I’m getting at here, but more about “timing and necessity of execution” (which you can’t control if it’s fully permissionless). You can control the “context” around which permissionless execution can happen, sure, what I’m trying to understand is what are the considerations here and how do we anticipate to end up with something that’s actually simpler vs more complex (there’s a lot of parameters to account for).

[kadmil]

I read Steakhouse’s comment as “now we seem to have an engine, next step would be to 1) research usage; 2) discuss results and plans”; that’s not specific execution plan as-is. Would say as a part of TMC I’d call for more exact plan being researched and published before doing any swaps higher that “test amounts” (~ tens of StETH worth ones)

[Izzy]

Thanks, that’s clearer; “Research and implement” definitely gave the the feeling that this is something with a near horizon rather than far, and that implementation approval was tied to this proposal (i.e. whatever designs came out are what would be implemented).

[steakhouse]

Yes correct! Thank you @kadmil for helping clarifying

[marcbcs]

Thanks for the clarifying questions @Izzy, I had similar thoughts.

@steakhouse can you clarify:

1. what is the TMC agreeing to (see image below) exactly with this vote?
2. how will the LDO community provide input? Responding to this (TMC-2) post?

[steakhouse]

@marcbcs

1. what is the TMC agreeing to (see image below) exactly with this vote?
2. how will the LDO community provide input? Responding to this (TMC-2) post?

TMC-1, was more prescriptive about the ‘how’ because it was a bit clearer.

TMC-2 is about signaling a desire to work on researching methods for achieving the objective.

Plainly, the objective is to improve the trustlessness of the Stonks process and remove the multisig from the equation. This would be in line with As @kadmil suggests, the next steps in our view are to:

1. research usage
2. discuss results and plans

TMC-2 is likely some time away from being anywhere near on-chain implementation stage. There is also a chance this level of trustlessness may well not be worth its corresponding tradeoffs. The interim period is a ripe opportunity for soliciting LDO token holder feedback, with continuous engagement around design proposals and research outcomes instigated by a positive signal from TMC-2.

We look forward to feedback from the community here and on any other ideas, designs or proposals that emerge as a result.

[marcbcs]

Thanks for clarifying @steakhouse, I’m supportive of this proposal

[Alex_L]

Hey hey, Easy Track motions #675 and #676 are live!
These stETH will be swapped into DAI, USDC and USDT as a part of the first treasury diversification using STONKS factories.
Next updates will be provided in the current thread, stay tuned!

[ujenjt]

Hooorayyyy
Fully autonomous stonks!