Summary

The Treasury working group proposes diversifying an additional $150,000 USDC to ETH. This follows on the diversification round from 3 months ago (see Treasury Diversification Proposal 2022-1).

Motivation

Converting USDC to ETH

Diversifying Forefront’s treasury remains a top priority in 2022. The first conservative step in this direction was to convert $150,000 (at the time, 8.7% of the USDC in Treasury) into ETH. That proposal was passed approximately 3 months ago on February 11, 2022.

The Treasury Working Group is now proposing converting an additional $150,000 USDC into ETH.

Forefront measures its operating budget “runway” in terms of Treasury USDC and ETH. This conversion would maintain an 18-month runway (at current expenditure levels) with a runway composition of approximately 5/6th USDC and 1/6th ETH.

Treasury ownership of ETH provides multiple benefits including:

• upside exposure to the larger value creation of Web3.
• the ability to stake ETH and earn yield.
• the ability to borrow against ETH.

In terms of market dynamics, the Treasury working group remains agnostic about future market conditions. We make no effort to predict the future, but rather to strategically diversify our treasury and position the DAO for long-term success.

Risks

The price of ETH is volatile. This adds risk, both upside and downside, to our runway. For example, if ETH were to fall by 50% and stay there, it would decrease our operating runway by 1 month.

Success Conditions

Successfully swapping $150,000 of USDC to ETH.

Specification

Treasury Multi-Sig will execute both the swap and investment.

Costs

Gas associated with trades. Costs are minimal.

Vote

Yes - Vote Yes to approve Treasury Diversification Proposal 2022-2 No - Vote No to not approve Treasury Diversification Proposal 2022-1