Thank you Ham for taking the time and lead on this rebalance proposal.
This could be contentious rebalance, as it kicks out one of our hedging ETH LSTs completely and dismisses another potential one. While also overstepping the mandate of concentration by having too much of frxETH. And based on an assumption that is yet to play out. Difficult to vote on.
How about vibe checks on each topic individually?
- We have enough information, keep Ham’s poll.
- There are too many moving parts, let’s wait and see.
Which then would further give us the questions on whether to;
- Exit out of rETH completely
- Lower the rETH exposure
- No strong opinion
- Exclude OETH
- Include OETH
- No strong opinion
Ham, you say you expect further 40-50% reduction in ETHplus supply. As the market is highly volatile, waiting a couple of weeks probably would mean reassessing all the above numbers.
Personally I appreciate and respect both RocketPool and Origin (not saying you don’t Ham, just keeping the message personal), and therefore do not want to vote on excluding them already now, while we are likely going to wait another couple weeks, which could, even if it is a small chance, change the situation again.
I also therefore will tag both @signal and @pete here, just to inform them of the RFC.
All that being said, going through first principles, both rETH and OETH are not contributing positively to the ETHplus yield profile. This clearly works against inclusion. Reading through the rETH thread there is yet to be more clarity on if this will improve. The OETH thread when talking about yield has also been confirmed to be lower, with no reason given to believe it would change.
Then another angle we as ETHplus governors should care for is decentralization and diversification. We will lose diversification due to this proposal, but going through both threads, rETH and OETH both have their own inner constraints that make their liquidity arguably centralized.
This second one is more complicated and that we have to wait and see regarding the contraction of ETHplus supply and what it changes, I also refrain from having an outspoken stance here.