Find Answers to Your Questions
Governance encompasses the processes and interactions of administering control of a system. This includes the careful balancing of leadership, diversity, and democratization. The digital asset ecosystem’s primary intention is to provide alternative governance solutions that enable greater autonomy over monetary transactions and decision-making. To learn more, read our white paper, ESG – Why Not GSE?
Arca has identified three main digital asset types: cryptocurrency, pass-through, and asset-backed tokens. Governance tokens are a kind of pass-through token, whereby governance rights are granted to the token holders in addition to other benefits such as cash flow/dividends and reduced trading fees. To learn more about the broader digital asset landscape, view our Digital Asset Classification.
The Bitcoin blockchain was created as an alternative to centralized authorities within the financial system. Blockchain technology has the potential to challenge corruption, distribution of power, and centuries-old governance methods, enhancing them with transformative and collaborative frameworks. For more information, read DeFi Governance in Action.
A decentralized autonomous organization, or DAO, is a blockchain-based, self-governing organization that enables participants to work toward a common goal on a trustless network. DAOs start with an idea, assemble participants based on a defined goal, and stimulate action by granting access, voting rights, and ownership to contributors in exchange for tokens of the underlying project. To learn more, read DAOs: An Institutional Guide to Decentralized Governance.
The central purpose of decentralized governance is to provide users with greater financial freedom and impact. Decentralized governance facilitates a communal organizational framework rather than a top-down hierarchical structure, enabling equitable stakeholder inclusion and democratized decision-making. To learn more, read Decentralized Governance of Digital Platforms.
DAO members can pursue their goals of pooling capital, recruiting contributors, and compensating users/contributors with remarkable swiftness. Because blockchain technology is rooted in the internet, it eliminates accessibility restraints and geographic barriers, and encourages freely flowing ideas. To learn more about the potential advantages of DAOs, read Re-Envisioning Corporations: How DAOs and Blockchain Can Improve the Way We Organize.
Good governance refers to the accessibility, management, and economics of a digital asset—fair token distribution, stable voting structures, transparency, and voter efficacy. These token elements help ensure stakeholder roles are appropriately balanced, protocol and constituent objectives are aligned, and decisions are executed objectively. Find out more about good governance in the article, How to Think About Good Governance.
Certain voting structures within DAOs, such as token-weighted or quadratic voting, may favor the inputs of initial and large token holders, making it difficult for new and small token holders to implement their ideas. Additionally, decentralization is challenging in its application; successful coordination and efficient governance depend on considered, methodical implementation. For more information, read The Merits and Pitfalls of Decentralized Autonomous Organizations.
At the beginning of 2022, Anchor stakeholders Arca and Polychain proposed token yield cuts to improve the protocol’s sustainability. Although Anchor ultimately declined the proposal, it showcased the power of collaborative ownership with a record-breaking voter turnout of more than 70%. This community engagement helped increase price performance and later inspired Anchor’s implementation of a similar proposal.
Currently, there is little legal framework regarding DAOs and their classification. As DAOs gain prominence, regulators are likely to consider factors such as legal and financial compliance. Although DAOs represent groups working toward common goals, this does not relieve members of individual responsibilities. For more information, read Legal Issues Confronting Formation and Operation of a Decentralized Autonomous Organization (DAO).
Governance tokens are typically granted to users upon joining a blockchain project, such as a decentralized autonomous organization (DAO). These tokens provide voting rights, which users may implement to present or influence proposals for product roadmap, hiring, and business decisions. To learn more about governance as it pertains to DAOs, read Decentralized Autonomous Organizations (DAOs) Explained.
Constructivist investing allows investors to directly influence a company by collaborating with management to offer improvement suggestions for greater profit generation. Within the digital asset ecosystem, structures such as DAOs provide a channel for opinion to all project stakeholders—founders, developers, token holders, and institutions. These members can directly influence a DAO’s trajectory. For more information, read Five Things: Constructivist Funds.
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This fund is an interval closed-end fund.
An investor should carefully consider the investment objectives, risks, charges, and expenses of the Arca U.S. Treasury Fund before investing. This and other information is available in the Fund’s prospectus, which should be reviewed carefully prior to investing. To obtain a prospectus, please call 1-888-526-1997.
Fund Risks
You may not have access to the money you invest for an extended period of time. • You may not be able to sell your shares at the time or in the quantity of your choosing regardless of how the Fund performs. • Investors should understand that the Fund's shares are not currently listed on or available for trading through a national securities exchange or any other exchange, and a market for trading on an exchange may never be available to investors. Except for individually negotiated peer-to-peer transactions, there is currently no secondary market for ArCoins, and no such market is expected to develop. • Because you may not be able to sell your shares at the time or in the quantity of your choosing, you may not be able to reduce your exposure to the Fund in a market downturn. • An investment in the Fund may not be suitable for investors who may need the money they invested in a specified timeframe. • The amount of any distributions the Fund may pay is uncertain. There is no assurance that the Fund will maintain a particular level of distributions, nor is there any guarantee that the Fund will make distributions at any particular time. • Due to the emerging nature of blockchain use in securities transactions, the Fund anticipates that (other than monthly repurchase offers as described below) there will initially be limited to no liquidity in ArCoins due to low or no volume in peer-to-peer transactions. Investors should therefore initially expect greater price volatility in the secondary market than would be the case if the shares had greater liquidity. • The Fund will not invest, directly or indirectly, in digital assets, including digital securities. • Although shareholders can engage in peer-to-peer transactions using blockchain technology, the Transfer Agent will maintain the official record of the Fund's shareholders.
Arca Capital Management, LLC dba “Arca Labs” serves as adviser to the Arca U.S. Treasury Fund, distributed by UMB Distribution Services, Member FINRA/SIPC. Arca and UMB are not affiliated.
