Strategic Treasury Deployment to Seed USDaf Ecosystem Liquidity

Ampleforth Governance
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1. Abstract

This proposal outlines a strategic initiative to deploy 1,000,000 USDC from the DAO treasury into the USDaf/USDC/USDT Curve Finance pool. This action has two primary objectives:

  1. Activate Idle Assets: Generate a competitive yield on treasury assets that are currently underutilized, helping to bolster the DAO’s coffers.
  2. Strategic Ecosystem Support: Deepen the liquidity for USDaf, a key decentralized stablecoin from our ecosystem partner, Asymmetry Finance. This serves as critical groundwork for the anticipated launch of the sister project, ampUSD.

This proposal is a direct response to community feedback from the previous signal vote, which favored a more conservative, liquidity-focused approach first.

2. Strategic Rationale

This deployment is more than a simple yield strategy; it is a calculated investment in the Ampleforth ecosystem’s future.

  • Productive Treasury Management: The DAO treasury holds a significant balance of USDC that is not generating returns. Deploying a portion of these assets into a trusted platform like Curve allows us to convert idle capital into a productive, revenue-generating position.
  • Foundational Support for the ampUSD Launch: The primary strategic driver is to prepare for a successful ampUSD launch. A liquid and stable USDaf is an essential trading pair and partner for ampUSD. By helping to deepen the USDaf pool now, we support our partner and reduce future risks and costs for our own ecosystem’s expansion.
  • Alignment with Community Consensus: This proposal directly reflects the sentiment from the last signal vote, which showed a clear preference for LP-focused strategies. By focusing on a 1M USDC deployment into a stablecoin pool, we are taking a measured and community-aligned first step in activating our treasury.

3. Asset Selection: Why USDC?

The decision to use USDC for this initial deployment is based on a pragmatic assessment of risk and strategic goals:

  • Community Preference: The community has signaled a preference for a conservative, straightforward approach. USDC is a well-understood asset with a familiar risk profile, making it an ideal choice for this first major treasury activation.
  • Immediate Strategic Impact: The goal is to support the ampUSD launch by strengthening its key partner, USDaf. Deploying USDC into the USDaf pool is the most direct and efficient way to achieve this.
  • A Measured First Step: This allows the DAO to gain operational experience in liquidity provision and yield management on Curve. The lessons learned here will inform future, potentially more complex, strategies that could involve AMPL and ampUSD. This does not diminish the long-term importance of AMPL in liquidity strategies but represents a prudent, tactical choice for our immediate objectives.

4. Implementation Details

  • Action: Deploy 1,000,000 USDC as single-sided liquidity.
  • Destination: The Curve Finance factory-stable-ng-463 pool, which contains USDaf, USDC, and USDT. The pool currently has a TVL of over ~$2 million.
  • Funding: The treasury currently holds approximately 2.5M USDC. This proposal seeks authorization for the deployment of 1,000,000 USDC from these existing holdings. The full amount can be deployed immediately upon approval.
  • Reward Management:
    • Phase 1 (First 3 Months): CRV rewards will be accumulated while a thorough analysis of a veCRV boosting strategy is conducted.
    • Phase 2 (Months 4+): Based on the analysis, a boosting strategy will be implemented only if it is deemed economically viable and approved by the DAO. A target of ~70% of rewards will be compounded or returned to the treasury.

5. Risk Assessment

While this is a relatively conservative strategy, risks are inherent.

  • Stablecoin Depeg Risk: The primary risk is a significant de-pegging of USDaf, USDC, or USDT.
    • Mitigation: The pool’s three-asset structure provides some diversification. We will establish automated monitoring for peg deviations, with a clear trigger (>5% deviation for 48 hours) for a DAO review and potential withdrawal.
  • Smart Contract Risk: We are exposed to the risk of vulnerabilities in Curve’s smart contracts.
    • Mitigation: We are relying on Curve’s reputation as a highly audited and battle-tested protocol. This is a foundational risk in any DeFi interaction.

6. The Path Forward

On-Chain Vote: Following the community discussions and signal sentiment, a formal, binding proposal will be sponsored and submitted on Tally for a vote.

Successful execution of this proposal will provide tangible returns to the DAO, strengthen a key ecosystem partner, and provide valuable operational experience for future strategic initiatives.

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Binding vote: