Great post. This is the type of work a protocol like Reserve needs consistently.
Some questions as a relatively new gov forum participant.
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First a general question.
In parallel, frxETH concentration risk has continued to increase, with ETHplus now holding 9.19% of total frxETH TVL, approaching the 10% single-asset cap defined by the methodology.
For future posts, would like to request if you could link the methodology. Also tried finding it on the 1. website page but couldn’t. Where can I find methodology of each DTF? Or is 1. this forum post you share towards the end the official methodology? If so, probably would be helpful if these mandates/methodologies would be shown somewhere on the website in a more ‘formal’ way as well.
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But on topic of this section, although likely better to be discussed elsewhere… Why is this part of the methodology? Let’s say a DTF becomes hugely successful, wouldn’t it be a sign of success and PMF if it absorbs a certain underlying token completely? Like Convex at some point did to Curve. My guess is that it is part of the methodology due to the Governance mandate saying the following
1: Maintain an Ethereum-aligned Liquid Staking Token basket. 2: Positively impact the Ethereum staking distribution.
and absorbing a certain ETH staking token could be seen as negative due to smart contract risk?
Think this is missing the actual link to the discussion?
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Do I understand correctly that the rebalance will happen in 2 swaps instead of 1?
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Although I am very much in favor of diversification and managing liquidity, I think it is fair to ask how much reduction of yield is expected?
Thank you for writing this forum post and the time it took!