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Ondo Finance has submitted a grant application to the Arbitrum community for 1,500,000 ARB to incentivize DEX LPs containing USDY, a tokenized note secured by US Treasuries and bank deposits, aiming to attract new users and capital. However, concerns have been raised about potential legal risks and SEC regulation violations, with calls for further clarification from Ondo.
The discussion revolves around a grant application submitted by Ondo Finance to the Arbitrum community. The grant, amounting to 1,500,000 ARB, is intended to incentivize DEX LPs containing USDY, a tokenized note secured by US Treasuries and bank deposits1. The proposal, put forth by Nathan.allman, aims to attract new users and capital to Arbitrum and prevent outflows by providing a yield-bearing substitute to conventional stablecoins1. The grant will also enable users on Arbitrum to buy and sell USDY with minimal price impact1.
The community's reaction to the proposal is not explicitly mentioned in the summaries. However, the proposal includes a plan to deploy USDY natively on Arbitrum, integrating it into their native asset bridge powered by Axelar1. This suggests that the community may be supportive of the initiative. However, Joli has raised concerns about the legal risks associated with Arbitrum issuing a grant to Ondo, due to potential violations of SEC regulations4. They have requested a detailed legal and risk analysis from Ondo, specifically asking how the team expects new USDY liquidity to be introduced to Arbitrum4.
The grant proposal is positive as it aims to attract new users and capital to Arbitrum, which could lead to increased liquidity and stability for the platform1. The proposal also includes a plan to deploy USDY natively on Arbitrum, which could further enhance the platform's functionality and appeal to users1. Furthermore, Ondo Finance has a strong performance record and is well-positioned to capture a significant portion of the estimated $16 trillion in tokenized assets by 20301.
The potential negatives are not explicitly mentioned in the summaries. However, it's worth noting that the grant request is for a substantial amount of 1,500,000 ARB, and the funding and contract addresses are yet to be determined1. This could potentially lead to uncertainties and risks associated with the grant proposal. Additionally, Nathan.allman confirmed that the team is aware that non-compliance with certain requests can lead to the cessation of the program's funding1, indicating potential risks if the team fails to meet certain requirements.
Joli raised concerns about the legal risks associated with Arbitrum issuing a grant to Ondo, due to potential violations of SEC regulations4. Ondo's USDY is issued under Reg S, which requires a 40-day holding period for assets, a restriction that poses challenges for immediate token transfers and market making4. They concluded that without engaging in potentially problematic behaviors, market making of USDY would not be feasible due to the 40-day purchase period and redemption costs4. They called for further legal clarification from Ondo4.
Posted 2 months ago
Last reply 18 days ago
Summary updated 17 days ago
Last updated 04/12 00:18