We are supportive of this proposal.
While EtherFi continues to grow its TVL across a suite of different products, it’s also important to build a robust, diversified treasury to further strengthen the protocol.
As for ensuring a robust, diversified treasury, its important to point out that ETHFI and ETH are more correlated than ETHFI and BTC. This makes sense as the core business lines are mostly denominated in ETH.
For this reason, we suggest the foundation implements a heavier weighted allocation to BTC over ETH. To strengthen an existing partnership, EtherFi should explore holding a portion of their BTC in Lombard’s LBTC / eBTC.
To maximize utility of EtherFi’s treasury exposure, we suggest exploring an allocation to owns own flagship product, weETH. With this, there is also consideration of what to do with the LRT^2 it receives.
Lastly, when allocating to tokenized treasury notes, its important to be cognizant of opportunity cost. For example, in the current environment where rate cuts are expected to continue through 2025, with a median expectation of -50bps, this should theoretically lead to a decline in shorter term treasury note yields. In turn, there should also be an uptick in alternative yields, “further along the risk curve”.
This could mean that stablecoin supply rates on Aave could out pace tokenized treasury yields. However, we assume the foundation will implement best practices when allocating across RWAs.
We look forward to working alongside the DAO, the foundation, and other community members to ensure best practices for EtherFi’s treasury management strategies.