Guiding Principle

The DAO's number 1 priority is to maintain the health of the protocol, while implementing community-voted and approved changes in a timely manner. Any opportunities present on ETH forks or other blockchains come secondary to the proper functioning of the protocol on the Ethereum blockchain.

Motivation

The upcoming ETHPOW fork presents a small opportunity for the protocol to potentially capture some value on that fork and bring it to the ETHPOS mainnet Treasury. The ETHPOW "airdropped" to the Treasury address could be traded for ETHPOS (likely for cents on the dollar, exact amount won't be known until post-Merge) on an exchange and sent to the Treasury. The Treasury currently holds about $23mm worth of WETH in reserve and in LP pools; assuming ETHPOW is worth 1% of ETHPOS, the Treasury could acquire an additional 230k worth of WETH from that fork.

Summary of Actions

  • Pre-Merge: make no changes to the current Treasury (Sushi -> Balancer migration continues as planned)
  • Post-Merge ETHPOW chain: remove all ETHPOW liquidity, send ETHPOW to an exchange (how to do is TBD), trade all for ETHPOS, send to ETHPOS mainnet Treasury
  • Post-Merge ETHPOS chain: receive additional ETHPOS from exchange, hold in reserve

Open Topics & Implementation Details

If this exchange is possible to do with the current limitations of the multisigs and trust assumptions with sending ETHPOW to a centralized exchange for the swap, the Treasury could acquire six figures worth of ETHPOS for extremely low cost (gas costs + CEX fees + potentially some dev work).

This may require a small amount of dev work in order to understand and execute on the forked chain (addresses should be the same but execution with Gnosis and on DEXes may be a challenge).

Specific topics to understand better is how to make the CEX swap / who could do it on behalf of the Treasury, and how the Treasury MS can queue up the transactions needed on the forked chain.

Please post high level thoughts and implementation concerns / questions!

I am completely disinterested in the activity on ETHPOW.

I think the work needed is not negligible. Getting the infra up, and all ms signers etc in place will be a important and potentially advanced coordination exercise.

Whatever action done on the new ETHPOW chain must also be done with extreme care, as the same transactions can theoretically be replayed on mainnet.

All in all there is a risk/reward analysis to be done, and I suggest to actually do this after the merge and then evaluate the potential reward. No point in increasing risk by trying to be on the trigger when the merge happens.

I'm honestly not convinced this is worth the effort. So far it seems that almost nobody will support the ETHPOW chain (protocols / oracles) and likely all the arbs will be done and/or botted in the first blocks. The only opportunity we will likely have is to sell treasury ETH because I can't imagine that we will be quick enough to pull liquidity on the ETHPOW chain and so all the ETH will already have left the pool. (And I dont think it would make sense to pull liquidity on mainnet per-emptively before the merge.)

On top, there are additional risks with replay attacks and it also requires a person to dox on behalf of the treasury to a CEX for doing this trade, which also strikes me as a potential legal risk/attack vector.

So all in all the risk/reward is not worth it IMO.

    0xFelix I agree with this sentiment. If there's any benefit to be had, it can be evaluated later. a few hundred Ks is nice, but may not be worth taking the added risks.

      Attempting to arb the merge seems too degen/greedy of an activity for the protocol to be partaking in, especially with the amount of uncertainties that exist. Focus should remain on developing the protocol. Things hardly ever end up well for the greedy.

      I think the focus here is that we will continue business as usual through the merge. I also have doubts that the Treasury would have the ability and responsiveness to make any money out of the ETHPOW chain.

      Is this truly worth it? I understand we may be able to capture some additional value from this, however, replay attacks could possibly be disastrous if anything goes wrong. Wouldn't want to risk the entire treasury for minimal extra compensation.

      Gotta be careful not to stretch ourselves too thin .. but Im coming from a perspective that isn't super-techy and "in-the-know", yknow? lol

      I agree with most commentatooors here. I guess it will be a MEV-dumpfest in the early blocks. So it will be hard to reap top dollars in the early fight. I would lay low for a while, treat ETHPOW's like an insurance in case black swans or loss of confidence in ETHPOS.

      If anything, the mid IQ's will play it like this:
      A1. On block 1 @ ETHPOW: Sell ETH for USD
      A2. On block 1+n @ ETHPOS: Buy ETH for USD

      The high-IQ will play it like this:
      B1. On block 1-n @ current chain: Sell stables for ETH with limit order
      => benefit from the A2 price pump, maximize ETHPOW airdrop allocation
      B2. On block 1 or late @ ETHPOS: Buy back stables for ETHPOS with limit order
      => return portfolio to previous ETH-stables allocation levels

      The "already own a yacht" will play it like this:
      C1: On block 1-n @ current chain: Exit ETH L1
      => not justifiable to hold through the increased risk period during the merge
      C2: On block 1+n @ ETHxxx: Re-enter dominating ETH L1 chain
      => because long-term.

      The "mischiefs" will be play it like this:
      D1. Do mischief.

      BTW… The action proposed above:

      Post-Merge ETHPOW chain: remove all ETHPOW liquidity, send ETHPOW to an exchange (how to do is TBD), trade all for ETHPOS, send to ETHPOS mainnet Treasury

      You would need to remove any ETH-OHM pair liquidity on block 1-n, because OHM's relative value on ETHPOW should drop towards 0 on ETHPOW already on block 1. This means an OHM-ETH pool will be left with only OHM's and no ETH's already on block 1 or 2.

      Per many of the above, unlikely to be worth it from a pure ROI perspective and I assume that there are many other things that the DAO can spend its time on that are likely to be higher value. While it is always good to identify potential opportunities like this and to consider them on their merits, in this case I can't see it being worthwhile

      11 days later

      Thanks all for the comments! I think we'll lay low for a while on ETHPOW as the Treasury LP will likely be frozen anyways.

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