- As the process went through, it became apparent that US domiciled parties are a no-go neither have the framework to get involved, nor would some DAO members feel safe taking on personal risks. As such, A Capital and Galaxy Digital were not able to complete the procedure. See the message below here for more info.
- Part 1 snapshot: Snapshot
- Part 2 of the proposal: [GIP-18] DAO Round PART 2. Community Proposal
Hi everyone, we have quite a topic for this week! While working on v2 & integrations, core contributors have been chatting to teams, whales, farmers, buildooors - many of whom got excited about the idea of composable leverage in DeFi & NFTs. So as we head further into V2 release & Gearbox DAO growth, it’s natural to have the questions of funding for compensations, audits, hackathons, bounties, and so on. We have a journey ahead of us with product iterations, protocol design improvements, and other tasks as the DAO scales up. So, I would like to propose this Strategic DAO Funding sized at approx. $5.5M.
Rationale and some narrative sprinkles
Gearbox is a new design primitive for on-chain leverage.
Many might be asking, “Why would we need a mechanism for more leverage in DeFi? Hasn’t leverage been the problem over the past weeks?” Despite it all, core DeFi protocols like Maker, Aave, Curve, Compound, and others have functioned without hitch - the core tenets of transparency, instant settlement, and programmatic rulesets are, over time, prevailing in public.
But access to leverage even or greater than your collateral level has not been available as a primitive so far. This makes sense: allowing someone to deposit $1 and take out $4 in a permissionless context will lead to -$3 more often than it’s worth. That’s what we have observed over the past days. Gearbox changes how leverage is perceived, and turns it from an “all-in gamble, bro, liquidate me Sam” concept → into capital efficiency for sustainable long-term positions. Gearbox saw this issue in the EthGlobal MarketMake Hackathon in 2021 and realized that - as long as you programmatically ensure a borrower cannot walk away with the $4 - it can work. Credit Accounts were born, like little money sandboxes.
Imagine the concept of a permissionless leverage layer that can be integrated into any protocol! That’s right: leveraged LPing into Curve and Convex, leveraged structured finance and DOVs, leveraging into NFTs and UNI V3 positions, and more… Gearbox can potentially do it all!
Opportunity and objectives
The goal of this round is not to do DAO diversification in large quantities, but to secure financial resources to work on iterating on the product suite and achieving a strong PMF. V2 is coming and lifted capacity constraints on Credit Accounts will be an inflection point for the product.
Proceeds would go to the DAO’s financial multisig for the governance to decide on the spending. In turn, the tokens for this round would also come from the DAO allocation. Core contributors have been openly working with the community since the DAO-First launch back in December 2021, committing to monthly-quarterly updates on the progress and spending.
Given the objectives described above and the size of the round, I believe Gearbox DAO could benefit from partnering with key industry participants, who bring to the table - cumulatively across the group - proven track record, domain expertise, and more. The objective is to help Gearbox Protocol grow, especially with the upcoming release of v2 & Leverage Ninja mode!
Core contributors have made it a priority to honor commitments from the community round’s Credit Account Mining average gas price spent back then, which was 7,306,296/5,000 = 146M FDV.
As a result, I would like to propose:
- $150M FDV
- 1 year cliff lockup from the day of the token receipt, and 1 year linear vesting after that
Despite the market having gone down by more than 2 times since the Credit Account mining, I want to point out how chad and committed the participants have been, taking a long-term vision and honoring the community valuation. Respect to them!
- Placeholder - $3,000,000
- A.Capital Ventures (Kartik from ETH Global) - $1,000,000
- Galaxy Digital - $500,000
- Zee Prime Capital - $500,000
- Polymorphic Capital - $375,000
- LedgerPrime - $200,000
- Global Coin Research (GCR) - $75,000
TOTAL currently: $5,650,000
GEAR total: 376,666,666 GEAR representing 3.766% of total supply. Even after this round, DAO reserves would still remain at above 47% of total supply.
PS: this was done by Lido and other protocols in the past, seemed like good practice.
Next practical steps
- Hear the token holders’ and other contributors’ opinions
- Give a few days (up until the end of this week) for other potential angels and parties that are willing to get involved in this round, to suggest their candidacy
- After some deliberation, in case there is evident interest from Gearbox DAO community - a delegate with enough minimum required proposal-making quorum could initiate a formal snapshot vote with the details
- Should the vote end up as a YES, the next steps would be for the dev team to prepare vesting contracts similar to how that was done in the contributor round - and initiate DAO multisig transfers as per the protocol policies: accepting USDC (or another stable, as the DAO can always swap it to their preferred asset) and giving GEAR tokens into the vesting contracts
FYI: Funding history so far
The protocol has been bootstrapped by the ex-team’s personal funds prior to autumn 2021, as evident from the docs on the stages of development. Closer to the DAO launch in December 2021 and the subsequent protocol launch, core team fundraised a 2.3M contributor round majorly consisting of angels-founders. More context can be found on Discord and on Medium here.
Some of the participants and to-date active contributors have been: Konstantin Lomashuk with the Lido team, 1inch founders Anton Bukov and Sergej Kunz, Darren Lau and Daryl Lau, Dean Eigenmann with the Dialectic team, Fiskantes with ZeePrime, FocusLabs angel fund, Stani from Aave, Nik and Charles from Maker Mafia, Cobie, Elias Simos from BisonTrails, EncodeClub, as well as eGirl angels. From the institutional side, there has been great support by 1kx and Variant Fund <3 especially!
Those $2.3< have been used for audits and advancing some of the DAO compensations and hiring so far. Those resources are naturally depleting and sunsetting (have been already) as the life of Gearbox has moved away from the “company that started it all” notion to “decentralized organization that is not owned by anyone, advancing the protocol forward in new ways”.
Going forward, the DAO with its own treasury & multisig will have the main say in the next stages of protocol development and growth. Meaning that the compensations, salaries, and expenses will be coming from there pending whatever budgets the DAO approves. The resources proposed in this topic are to sustain DAO operations, product pivots if needed, and growth - for the next stages.
As a note to that, Gearbox Protocol & DAO already have protocol revenue sourced turned on, with the emphasis on the fee structure of Credit Accounts. All those fees have been and are streaming into the DAO’s financial multisig. The “company” (which, again, has been sunsetting) has no relation to them.
PS: also thx to Will Nuelle from Galaxy Digital for helping with the texts.
Learn more about Gearbox and V2
- What can you do with V1 protocol now & some GEAR hints
- Latest DAO report for spring and some of the work done
- Leverage Ninja discussion on Discord, pending full info about V2
- V2 launch in July, pending last security checks
- Useful links to find all the other info
Disclaimer: idk if this post prompts a disclaimer, but just for those not aware - I am one of the early (core, I suppose) contributors of Gearbox. My main and only interest in this is to have the protocol and GEAR value grow (hopefully, as a result). But neither I nor anyone can actually control it. Moreover, as a result of being a bagholder, please keep in mind that I might be overly-optimistic on the entire DeFi space or Gearbox Protocol in particular. All of the mentions of “future products, this and that v3” and other things - come from Discord open discussions and contributor calls, where each DAO contributor eventually individually decides what & how to work on. There is no roadmap, promise to deliver, or any control vector any of the members can execute. The protocol was launched by a DAO and is operated by a DAO, so there is that. Contributors might get bored, leave, retire, or just not deliver the exciting things I or you want to see, and so on. Yes, we are all optimistic about DeFi and Gearbox, but keep in mind that it’s a very risky organism which I don’t even fully understand (as a non-dev). Anyway, let’s build!
As I own a chunk of GEAR tokens, please treat all of my messages with a high degree of scrutiny. None of my messages are financial advice. I am a paid contributor to Gearbox Protocol on behalf of my company Rising Vista FZE LLC, and thus cannot be seen as impartial, as I act on behalf of the contractee.