Agree, I communicated the timeline poorly here, so apologies for that. I followed my usual governance process by moving the proposal onchain over the weekend so voting could conclude during the working week and, if successful, execution could then be queued before close of play on Friday and executed the following Monday.
With regards to the April liquidity analysis, that work was completed prior to a significant contraction in ETHplus supply. Since then supply has fallen from approximately 32,500 ETH to 9,000 ETH, a reduction of more than 70%. As a result, many of the liquidity constraints identified in that analysis have been substantially reduced.
In your comments below, you compare slippage between OETH and the incumbent collateral assets at a size of 12,000 ETH, equivalent to roughly 133% of ETHplus’ current supply. OETH performs well under that scenario and I agree it remains a collateral asset worthy of continued consideration. However, at ETHplus’ current size, I do not believe it is appropriate to optimise the basket for redemption scenarios larger than the entire circulating supply when there is an opportunity to safely improve yield instead.
I appreciate the request for a modelled OETH-inclusive basket and unfortunately was not able to complete that work before moving the proposal onchain. Given the proposal has already been affected by long delays as we waited for ETHplus supply to reduce and the strong support expressed by delegates for the proposed two-step rebalance process, I did not believe delaying the proposal further was justified.
Thank you also for highlighting that increasing frxETH results in a small increase in indirect stETH exposure. This is not something I had previously made governors aware of. frxETH currently has a supply of approximately 66,500 ETH and holds around 2,500 stETH as backing. This equates to roughly 3.75% indirect stETH exposure within frxETH itself. At a proposed portfolio weight of 20%, this would contribute approximately 0.75% additional indirect stETH exposure to the basket, bringing total stETH exposure to approximately 50.75% (50% direct and 0.75% indirect).
While this does take the basket marginally above the 50% threshold, I believe the improvement to ETHplus’ yield profile outweighs the risks associated with this additional exposure. Nevertheless, governors should remain aware of this indirect stETH exposure and continue to monitor it in future rebalances.