[RRC‑XX] Exchange Rari Chain Treasury ETH for RARI

#1

Authors: StableLab / Kaf
Reviewers: Anna Riabokon (RARI Foundation)

  1. Abstract

This proposal seeks authorisation to exchange the ETH currently held in the Rari Chain DAO treasury (~24 ETH) for an equivalent USD value of $RARI tokens. The RARI Foundation will receive the ETH and, in return, deposit the corresponding amount of $RARI into the DAO treasury. The swap converts an idle asset into governance tokens that can fund DAO initiatives while enabling the Foundation to manage the ETH more effectively.

  1. Background & Motivation
  • Idle ETH on Rari Chain: The DAO still maintains assets on Rari Chain (~24 ETH). Due to limited tooling and integration, the DAO cannot efficiently deploy these funds.
  • DAO needs liquid $RARI: The DAO finances many programmes (delegate incentives, grants, creator fund contributions, etc.) in $RARI. Converting the ETH to $RARI increases the DAO’s usable treasury without diluting existing token supply.
  • Foundation’s operational agility: The Foundation can hold or sell the acquired ETH when market conditions improve. This approach aligns with the broader Treasury Management Empowerment initiative, which aims to optimise capital allocation for the benefit of the ecosystem.

  1. Proposed Mechanics

  2. Determine swap value:

  • Snapshot the ETH price at a mutually agreed time (e.g., a 7‑day TWAP prior to the transaction).
    Use the same methodology to price $RARI.
  • Calculate the USD value of the ~24 ETH at that snapshot price.
  1. Execute transfer:
  • The DAO bridges the ETH from the Rari Chain treasury to the Foundation’s designated wallet.
  • Once the ETH transfer is confirmed, the Foundation transfers an equivalent USD value of $RARI (from its treasury or the open market) to the DAO treasury.
    Both transfers should occur in a single transaction batch (or back‑to‑back transactions) to minimise price risk.
  1. Governance execution:
  • Post this proposal on Tally with the relevant contract calls: one call to bridge the ETH out of the DAO’s wallet and one call to deposit the appropriate amount of $RARI into the DAO’s treasury.
  • Standard voting period (≈5 days), followed by the veto period (≈2 days).
  • If approved, execute the transaction through Tally’s on‑chain process.
  1. Considerations
  • Size of the swap: At the time of drafting, 24 ETH is worth roughly USD 60 000 (assuming ETH ≈ $3 000).
  • Price volatility: Using a time‑weighted average price reduces slippage risk. Should prices move unexpectedly during execution, the swap ratio may be adjusted within a pre‑defined tolerance (e.g., ±2%).
  • Post‑swap obligations: The RARI tokens received by the DAO will be subject to the same governance processes as existing RARI treasury funds. The Foundation commits to reporting the status of the ETH (whether held or sold) in its transparency reports.
  1. Next Steps & Timeline
  • Forum discussion (7‑10 days): Gather community feedback on the swap mechanics and timing.
  • On‑chain submission (mid–early 202X): If consensus is reached, submit the proposal to Tally for an on‑chain vote.
  • Execution: Upon successful vote and cooldown, bridge the ETH and transfer the equivalent $RARI.
  1. Summary

Exchanging the DAO’s idle ~24 ETH on Rari Chain for $RARI tokens enables the DAO to deploy those funds more effectively, while giving the Foundation flexibility to manage the ETH as market conditions permit. This small, transparent swap is an incremental but pragmatic step towards better treasury utilisation.

Links

Rari DAO Treasury Wallet

RRC-XX Treasury Management Empowerment Proposal

4 Likes
#2

I believe this is a great proposal that boost the $RARI price and will bring back the tokens in our hands for future DAO initiatives. The timing couldn’t be better also.

You have my blessings!

4 Likes
#4

I’m not fully against the idea, but I’d be cautious doing a full swap right now.

ETH still has strong upside, and it’s barely correlated with $RARI. Also, liquidity for $RARI on Rari Chain is almost null at the moment.

Perhaps we could discuss this based on some numbers?

  • a quarterly forecast of RARI expenses (fixed & variable)
  • define a % allocation per quarter specifically for programs, and keep the rest in ETH as a buffer.

In general, I’d go for a quarterly phased approach instead of converting it all at once.

2 Likes
#5

I’m fully on board with this proposal for it goes to finances for our treasury DAO. And the ETH is on idle. We could use it for e.g. creator fund and etc. And the price is above $3000. Currently at $3133.10

2 Likes
#6

Thanks, Jaf, appreciate the caution. The reason this proposal suggests a full swap is mainly operational rather than market-driven: the ETH sitting on Rari Chain simply isn’t usable for the DAO right now, while most of our programmes are funded in RARI. The ~24 ETH lines up with what the DAO typically spends, so converting it in one step keeps things simple and actually unlocks the capital. A phased approach makes sense in theory, but it would introduce more governance cycles without really changing the core constraint: the DAO can’t do anything productive with this ETH until it’s moved. Meanwhile, the Foundation can still keep ETH exposure if they believe the timing is favourable. Happy to keep the discussion open.

2 Likes
#7

I do not support this proposal at all, and I will be voting against it - it’s highly risky with a one level treasury strategy that doesn’t make sense.

I need to echo @Jaf’s hesitation here. While I understand the operational friction of holding ETH on RARI Chain, I strongly disagree that swapping it for RARI is the right financial move for the DAO.

1. Treasury Management Principles : We should look at best practices across the space. You mentioned the RRC-51: Treasury Management Empowerment program proposal, but if we look at mature DAOs like Arbitrum (specifically their STEP program), ENS, Uniswap, and Aave, all are actively diversifying out of their native token and into stable assets (RWAs, ETH, Stables).

This proposal does the inverse. It increases our concentration risk by swapping a hard asset (ETH) for our own native token. In a downside market, this significantly hurts the DAO’s purchasing power. We are effectively “selling the family silver” to buy our own inventory. Since RARI has been very volatile - especially since early October, (and trading around ~$0.36 currently) if it continues to dip further, the DAO’s purchasing power vanishes. ETH, even if volatile, has vastly deeper liquidity and has monetary premium value.

2. The “Usability” Issue : If the Foundation has the capability to bridge this ETH and “manage it effectively” (i.e., sell or hold it), the DAO technically has that capacity too, it just requires a governance vote to bridge it to Mainnet. We shouldn’t make a permanent asset allocation decision based on temporary bridging friction.

3. Pricing Mechanism : If the DAO does decide to proceed despite the risks, a 7-day TWAP is too short a window given the current liquidity profile. We should strictly use a 30-day Volume-Weighted Average Price (VWAP) to ensure the DAO isn’t realizing a loss on short-term volatility.

Alternative Proposal: Instead of a swap, can we amend this proposal to simply authorize the bridging of the 24 ETH to the DAO’s Mainnet treasury? From there, we can stake it (Lido/Rocketpool) or hold it as a reserve buffer, as Jaf suggested.

This solves the “idle asset” problem without forcing the DAO into a risky trade.

5 Likes
#8

Thanks for sharing this. I went through the proposal and the idea itself is quite straightforward. The DAO is sitting on ETH that it cannot really use on Rari Chain, and most of the spending we do happens in RARI. So moving the ETH into RARI feels like a practical fix rather than a big structural shift.

The biggest advantage here is the simplicity. Instead of leaving the ETH stuck with no real purpose, the DAO gets RARI that can immediately support grants, incentives and the usual programs we already run. It also avoids the need to mint anything new which protects the existing supply. On the Foundation’s side, holding the ETH gives them room to decide the right moment to use or sell it, which can be helpful when the market moves in their favour.

That said, there are a few things worth keeping in mind. Swapping everything into RARI means the treasury becomes more concentrated in one asset. A bit of diversification usually gives treasuries some cushion when prices swing, so it is fair to ask if we are comfortable leaning even more into RARI. Another point is timing. Even with a time-weighted price, crypto markets sometimes move faster than whatever snapshot we pick. If the market shifts just before execution, one side might end up taking a slightly worse deal unless there is a clear tolerance everyone agrees on.

There is also the trust element. The Foundation says it will report what it does with the ETH, and that transparency matters because the DAO is handing over an asset and receiving another in return. Clear reporting will help the community feel steady about how things are being managed after the swap.

Overall, the proposal feels reasonable. It takes an idle asset and puts it to work in a way that matches how the DAO already operates. The tradeoff is accepting a more RARI-heavy treasury and trusting that the pricing and execution will be handled cleanly. With careful timing and clear follow-up from the Foundation, this can be a tidy improvement to how the DAO manages its funds.

2 Likes
#9

This is great idea and will give a boost to RARI

1 Like
#10

I appreciate the initiative to optimize the treasury, but as a significant stakeholder, I cannot support this move in its current form.

Having idle ETH isn’t ideal, but ETH is the DAO’s most liquid asset. Swapping it for RARI just for the sake of ‘cleaning up’ the treasury feels premature. I am currently working on a high-volume partnership initiative that will require the DAO to be very strategic with its capital.

Before we move our most valuable assets, I want to see a clear plan for how this liquidity will be used to drive network metrics and user acquisition. We need to be using our treasury to ‘buy’ growth, not just doing accounting swaps.

Until there is a commitment to using these funds for active growth, I’m not comfortable seeing our ETH moved.

5 Likes
#11

Thanks for the thoughtful feedback here, especially from @coffee-crusher and @RariGuardian around treasury concentration risk and the difference between operational constraints and asset-allocation decisions.

Based on this discussion and follow-up conversations, I’ll be updating the proposal to narrow its scope and better reflect the intended execution. The revised version will focus on activating the ETH held on Rari Chain via staking, with clear disclosure and reporting, rather than an ETH → RARI swap or broader treasury reallocation.

The aim is to address the “idle ETH” issue in a conservative way, without pre-empting longer-term treasury strategy decisions, which should be handled through a separate governance process.

2 Likes
#12

I agree with Coffee on this one, considering the DAOs assets are currently concentrated in our native token, it doesn’t make sense to swap what is a more liquid and less volatile asset into an asset our treasury primarily consists of. If anything, we need to prioritize diversification into stable USD-pegged assets to ensure that the DAO has sufficient liquidity, especially given current market conditions. I will be voting against unless there is some provision for diversification into stablecoins.

2 Likes