SingularityDAO Governance Proposal: DynaSet Stablecoins

Proposal: SIR #01: Allow DynaSets to hold additional stablecoins

Add the ability for Dynasets to hold USDT, USDC, DAI, BUSD, TUSD, USDP, FRAX, EURT. The acceptance of this proposal would allow the relevant DynaSets (dynBTC, dynETH, dynETHc, dynL1BNB) to diversify stablecoin holdings in order to mitigate stablecoin-related risks such as de-peg or lack of liquidity. The proposal would also allow DynaSets to be ready in general for any token de-pegs including wrapped assets. This will provide access to a more diversified portfolio of stablecoins, which will help to reduce the impact of any one stablecoin de-pegging.

Proposal rationale:

Stablecoins have shown to be vulnerable to idiosyncratic events that could lead to a de-peg.

To be able to manage the risk of concentrating holdings in a single stablecoin, it is recommended to add additional alternative stable assets to DynaSets. This is the first step to better manage the risk of such an event by having multiple exposures within the DynaSets, further governance events may follow if necessary.

Background:

As a decentralized autonomous organization (DAO) that operates in the cryptocurrency space. This risk has been highlighted in recent events where certain stablecoins, including USDC, BUSD, DAI and others lost their peg or trust for some time. Currently, DynaSets are using USDC & BUSD and in order to mitigate this risk, it is important to have a diversified portfolio of stablecoins. At this time, each DynaSet only has one stablecoin per set, USDC and BUSD both of which have shown some instability or trust issues in recent times.

Summary:

Add USDT, USDC, DAI, BUSD, TUSD, USDP, FRAX, EURT to dynBTC, dynETH, dynETHc, dynL1BNB in order to mitigate the risk of stablecoins de-peg.

Technical implementation:

The addition of new stablecoins to all vaults will be implemented by the DAO’s assigned technical team. The team will use the smart contract’s addToken function to add other stablecoins to DynaSets.

Then, the DAM may proceed to swap a total or a portion of the existing stablecoins in each DynaSet if needed, using the same smart contract. The whole process has been validated on a forked network from A to Z.

Risk assessment:

• Collateralisation risk
• Counterparty and protocol risk
• Liquidity risk

The combined risk assessment aims to identify the risk of a stablecoin or wrapped asset losing the peg to its reference asset.

Voting options:

• Yes
• No
• Abstain

Vote Details:

Proposal: SIR #01: Allow DynaSets to hold additional stablecoins.

Location: https://snapshot.org/#/sdao.eth

Proposal Released: 27/03/2023 16:00UTC
Snapshot Vote Start: 27/03/2023 16:00UTC

Snapshot Vote End: 31/03/2023

Implementation: Immediate

Eligible Tokens: ALL ERC20/BEP20 SDAO

Proposal By: SingularityDAO Labs Team