[GIP-10] Strategic DAO Funding Proposal. PART 1

I still don’t see why these VC’s should receive a similar deal to CA miners who have been locked up from the get go.

I agree and disagree at the same time.

  • Credit Account mining was done during a reasonably positive market trend / hype period. Now is potentially a more “cash is king” period so I’d say a 5M deal in current context is more valuable than a 5M deal 1 year ago.
  • Also the account credit mining funded account creation, not DAO treasury (as far as I understood). How much is there in the DAO treasury currently ?
  • Having backers also means having entities with which our interests are aligned - advises, communications and maybe be users of the product (providing more capital on the “supply” side)

One thing that doesn’t seem to be justified in the proposal is the 50k minimum ticket price for volunteering participants.

  1. There is no technical reason for this minimum threshold, unlike in traditional finance.
  2. Users might want to volunteer for the gas costs if this is the main argument against it: The best example are Credit Account miners that know enough about gas and tx costs :stuck_out_tongue: Some of those original miners might be in acquiring more GEAR tokens at the same conditions as VCs. That would sound fair to me.
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CAM bought with ETH when ETh was much higher. It’s ridiculous to think that despite an 80% market drawdown with DeFi facing even bigger drawdowns that we should expect our FDV to somehow go up. CAMers will also have their tokens unlocked far sooner than these investors. So we are offering:

  1. Longer lockup that CAMers
  2. The same FDV despite a massive crypto drawdown
  3. They are also locked out of selling when the token releases, where all CAMers, discordooors, and testooors can dump if they wish.

vesting schedule should be 2-4 years imo. 1 year is way too short.

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As a participant in the contributor round, Credit Account miner, member of the technical multisig, and Gearbox user I’m happy to add additional support in this round if the DAO approves.

Regardless of my participation, I support the proposal for the purposes of diversifying the Gearbox DAO treasury with stables.

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GN, was eating and reading all of the comments. First of all, wanna point out how productively active Gearheads are - across the forum and Discord, you properly laid out some of the arguments. Admiration, sers!

Now onto the topic of subjective numbers… I guess I will split the message into a subjective personal first, and then into a more call-to-action objective one. But before I begin, please keep in mind (1) I am just one of the contributors (2) I am not even a dev or a tech person, my opinion is not as valuable - truly, honestly (3) I am not a director of any company that can have conflict of interest here, and (4) I hate the word equity and non-token accrual mechanisms. SoI guess I can see the picture from both sides.

Subjective perception of any FDV and its formation

Having been on the project side and angel side quite a few times, it’s always a drag-and-pull scenario even if parties try to avoid these measly materialistic things. Let’s say a founder you like raises a seed round in a bull market. Is giving at 60M FDV retarded? Yes, most likely. But you kinda believe in them, so you give anyway… and then they release while bull is still there, and you make 10x! But you could have said FDV is too high, right, and pass? Well, the same goes for inverse conditions, where investing at 10M FDV seed is actually inverse result just due to market conditions. So what am I trying to say? It’s hella subjective. I personally look at Solana’s old projects raising at 500M+ and cry. I find it truly retarded. But there were willing buyers at a fair market price. And you know what? Buying SPY or MATIC 2 years ago seemed retarded just before Covid hit… but oh well, they turned out to be right.

Everybody has their own tolerance, their own risk management system in plans, their own understanding of the market cycle, their own horizon. You will never be right or wrong here, because that is only determined by time and by subjective things like DAO willingness and ability to be agile with products, security breaches being avoided and so on. Basically, this conversation doesn’t have any meaning.

But okay back to data: look at Yearn, Curve, Aave, and other FDVs and CMCs… If you want some “but ser, we gonna be 1B protocol”. Do I subjectively believe in it and want to see it? Hell ye! But it’s a dumb argument to make when trying to secure resources for growth, because by that logic you should never give any equity away, never do an airdrop, and so on. You see how it makes no sense? Then maybe Credit Account Mining should have never happened, and GEAR token should have never launched? This is silly!

Keep in mind that the terms are:

  • The same FDV as an average of Credit Account mining (see the dune dashboard in the OP post) from December 2021 in USD terms - despite ETH having gone down 3 times since then. I am personally badmouthing large capital players often, but here I admire them for sticking to this benchmark and respecting the community! Wanna keep same ETH terms… oef, well let’s not count, you’d “lose”.
  • The lockup is 1 year from basically July 1 or whenever the DAO approves this proposal (if at all) + 1 year linear vesting after that. While all community stages are fully unlocked. Yes I know the token is not transferable yet, but imagine the level of risk one is taking in case the transferability i allowed like Q3-4 2022? Right, that’s not a small amount of risk. Or however you call that. What if it dips below then, and you could have bought in secondary? This is not the speculation I wanna be doing, but it is what goes through the mind of anyone taking any position be it monetary or not. Opportunity costs.

What have the parties done so far? Well, just check what the contributor round of over a year ago has done already back then - and they continue with it now! Here is the old medium post.

The above is arguing as a devil’s advocate, literally making the case “weaker”. But the parties willing to dive in the Strategic Funding Round are chads so far. So keep that in mind. Don’t be one-sided.

Actually practical things a DAO member can do

Disagreeing is fine, asking questions is encouraged. But a talk doesn’t get one far. So what we have on the table is the need for the DAO to have more finance before a few PMF approaches (V2 being the first one) are tested & revenue flows in. So, to fill that gap, this proposal was created.

If you do not like it and do not buy into the arguments / storyline - you must (yes, must) talk to other parties who would be willing to get involved at higher terms and propose them to the DAO as counter-proposal. Yes, that means selecting your own group of potential participants who have connections in the space and have done something before + making sure the aggregate size is worthy of DAO’s attention. Meaning that one single 500K cheque at 300M FDV doesn’t actually mean anything. It has to be meaningful to support the DAO for the next few months of building and iterating!

IDEA TIME

As per Sha’s message, and Juan’s on Discord - I believe it is not cool to fully silo this "great deal " (for those who think that) and that is exactly why the total participation list in my proposal framework is not finalized. I also believe that members who want to dive into this DAO Strategic Round should have the opportunity to. I don’t think it’s fair to ask to lay all your cards on the table, but a few suggestions on what you can be doing - are welcome. As for the sizes, I am sure a few angel cheques would be totally in order here.


IMHO (in my honest opinion)

I love transparency and going back and forth. Helps see the picture from different sides. But disagreeing must come from a stance of concrete alternative solutions. Bring them up then!

Now onto a bit of fun:

If the goal is to get funding from those long-term key-industry participants, their values should be aligned enough for a 3-4 year vesting schedule.

Well, @grin, lock your tokens and others’ for 2 years and let’s see how things align? Don’t think so. And maybe if you yourself want to do it, I am not sure others would want to per se. And you can’t un-coordinate these things, in my opinion. So this suggestion is not practical.

I’m willing to provide $50k-$100k even with a longer vesting schedule if needed. I’m sure if information that Gearbox is willing to accept other participants with a $50k minimum, a lot of other DeFi users will also be interested with 1 year cliff + 2-4 vesting schedule.

Respectable move, love seeing action. @Sha256 please feel free to check the above section “what a DAO member can do” and maybe you can change course with regard to this? I have to be honest, I don’t think you will magically get 5M out of good parties at like 2x of the current terms, so keep that in mind. But I am being subjective again, and can be totally wrong. This is why we are discussing now!

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100% agreed!

Happy to provide $100k like @Sha256 with a longer term vesting, I’d put my money where my mouth is :grin: I share @Sha256 's conviction that other DeFi power-users would likely be interested, and I’m open to DMs about coordinating with other like-minded users of the protocol at those terms

I’m definitely not questioning the contributions of the potential participants of this proposal! I’d actually vote in favor of those being the participants, yet I’d also vote for a longer vesting (not higher FDV) to be proposed to them as I subjectively find those terms still very appealing

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great posts with a lot of information. After thinking about it more and reading others replies, the FDV of $150m seems perfectly fine. I redact my previous comments about having a higher FDV for this funding proposal. :+1:

still in favor of a slightly higher vesting schedule (2years maybe?) but I’ll leave it up to the DAO to decide. 1 year cliff with 1 year vest isnt bad honestly.

Either way, funding for the DAO will be good

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First of all, great work for organizing this! I agree on many pros and cons as well.

How about creating on-chain-auction?

DAO needs X $ for the next Y months. Anyone can place their price and desired amount to buy. Highest bids get served until the funding target is reached. Anyone can place bids and always see if they would be eligible. One bid per day to throttle bots/sniping? Auction ends after fixed time or if the would-be-allocation doesn’t change anymore for a certain time. Smart contract could lock and release all funds to reliably execute this auction.

This should be:

  1. very fair and permissionless
  2. find the market price for that point in time
  3. enable to frequently distribute just as much GEAR that is necessary to operate the next months (like quaterly) which in theory should lead to the least (or most appropriate) amount of GEAR spent: true market pricing + cost averaging = most capital efficient financing, right?

Imho an intesting question: Is a VC a more valuable investor than anyone? They are known to dump as soon as possible right? But they don’t just bring in capital if they are angels (how about the proposed candidates?). On the other hand if retailers are bidding agressively for a relatively small amount of GEAR, is that fair? And will they HODL more likely then?

Hi!

First of all; congratulations on the funding proposal. I think a $150M FDV in todays current market (which equates Gearbox to Yearn) is a great achievement. Bravo. This is especially important considering Yearn is revenue generating, battle-tested and very prominent within the industry. I don’t think terms such as these would be easy to find elsewhere.

Considering my aspirations for the protocol, I’m willing to put my money where my mouth is, so if there’s space to join the round (under same conditions) as those listed above I’d be very much interested.

Credentials: https://degenscore.com/profile/0xBeckoningCat
Top 10% DeFI user, Credit Account Genesis miner and current user of Gearbox. Hoping to get early access to V2 Leverage Ninja.

What can I bring to the table?
Primarily: Size and heavy use of V2 yield farming capabilities and resultant feedback on the platform. Have recently gone FT Crypto and looking to get more involved in the protocols I am interested in.

Thanks.

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sounds great, but the I think the vesting is not ideal

Fully support. This is a great new and absolutely agree with this proposal

On the issue of the weight of the institution getting the DAO, the proposal and Ivan did not state and did not consider.
I think the issue of the proportion of voting weight for institutions is quite important.
Institutions have the strength to get more token, and these institutional participants have an incentive to use DAO to do evil if there is a possibility that the gearbox will grow into a protocol of the volume of uni crv. We should prevent the treasury of gearbox from being emptied at a later stage, and prevent DAO from being controlled by large institutions. And at the same time maintain relative fairness, will not appear similar to juno , solend this strange phenomenon of killing giant whales.

To set a parameter in the voting weight of the DAO for institutional participants

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Good point! I personally don’t know what’s best. Basically:

  • The total % of this DAO round is up to 4$ most likely, and the community stages already had > 8% being claimed. So in that regard, there is no attack vector in the distribution.
  • But anyway, vesting contracts can have like x0.5 reduction just in case? Depends. Here is more info.

Need to see if anybody has a strong opinion!

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Absolute chad! Love to see this <3

I would personally be in favour of this approach. Changing FDV and locks might be a bit too stringent (let’s not forget the terms are in a good middle ground, subjectively) - but letting more chads and community members in should be encouraged, if they have the size and want to get in. Your post is great so is @Sha256, Juan on Discord, @grin and others. I believe @lewi & @amplice also were considering.

So on that note, it would be great to discuss the following… If those few chads are to get in, I would think the terms should be the same. After all, strategic = strategic be it institutional or not. But the question is where that $$ will go. Based on @ilgiz & @jared_gb projections, these 5-6M are enough of a runway (even with a slightly scaled contributor team) for about 2 years. And as the OP post shows, that is WITHOUT taking protocol revenue into account. In essence, this $$ is to iterate on the product suite and try to find PMF so that earnings kick in harder.

Beyond 6M, more audits and bug bounties can be done - which is great. But probably with a marginal decline in necessity and quality. There are simply no 10 best auditors, only like 5. And we already have covered a half of them? So basically, too much money is not needed either.

As such, WHAT IF the extra demand goes into an LBP or other style program? Perhaps into @banteg’s “liquidity seeding” contract of last year (or was it 2 years ago?) where this extra $$ can actually already be used for POL of the GEAR-USDC(ETH) liquidity pool. Because we will get into this question weeks or months down the line, so maybe it’s good to start stacking up demand for that now?

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Hi! I want to participate in this round too.

I have been supporting Ivan in crypto since day 1 :grinning:

I believe in his success and in the success of Gearbox

Want to invest 130k$

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Firstly,I’m favorable with this proposal which could help long-term positive development for community.I read Sushi Phantom Troupe despite it failed,I think several points are worth discussing.

1.Added value from strategic investors.Gearbox is at a different protocol stage with sushi in term of the financing timing,I would put VCs or individuals who can help gearbox transit to the next stage in the first place.I wish VCs or any other individuals who’d like to participant in this round should tell us in public what’s added value they can bring to Gearbox community.Quality is prior to quantity.

2.UMA success token.It incentives strategic investors to make postive contribution to protocol before unlocking(tbh,verbal promises are not very reliable,there is no offense to genuine VCs and individuls).Considering $GEAR doesn’t come into circulation,we need modify the design of success token if we all agree with it.

Besides,it’s hard to measure how much the strategic investors contribute,I’m not sure wheter it’s feasible to introduce tiered success token to incentive them maximize their contribution,coz it will result in more complexities

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I support this proposal and fundraise. The vesting terms are a bit short but securing the DAO and operations going forward makes total sense. The FDV is a bit of a steal but maybe thats because I am so bullish on the project!

It goes without saying that I would like to participate in the round. I have been a believer in Gearbox and have been supplying coins to Gearbox Earn for while and my funds account for a couple of percent of total liquidity provided to Gearbox Earn. (Hopefully other investors have put their money where their mouth is and have done similar prior to this investment round!)

What I can offer is my extensive experience in defi. This includes insight into things such as credit account parameters (i.e. leverage terms), future Gearbox partners, new product offerings and token economics ($GEAR implementing a safety module similar to $AAVE and offering tokenholders portion of profits). And I am just a good guy to bounce ideas off of. I support different and radical thinking and the current state of the market and defi provides Gearbox (and other projects) this opportunity.

This is just a long way of me saying Gearbox is sitting on a revolutionary product and itd be a privilege to be along for the ride as an investor/angel in this round!

Either way congrats on the potential raise Gearbox team, well deserved.

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Hello DAO! I would like to participate in the private sell. I got some tokens airdropped, participated in credit account mining and supplied a big amount of liquidity via app! I found myself with too little GEAR tokens and either I dump them or build a more strategic position with the private sell and hold. I trust IVANGBI.
Ready to invest 20-30k$

Thx for the pointers, yup!

  1. I am personally against of the mob mentality. meaning “go look into what this contributor is doing at 8 AM or we don’t pay”. What happened with merit circle seemed unacceptable to me - you can’t just take someone’s money. I know there was more nuance to it, I am just referencing - no disrepect to that dedicated community. I am just very against it, and if I were personally asked too much of my “value add” I would just leave, truly. Now, that doesn’t mean there is no accountability. I would just propose to look at it from the different perspective: not that “only these parties can be in” (that is when mob starts being angry, and often for no reason) - but that “these parties + other members who can prove at least some good presence in the space”. Then it becomes inclusive and nobody minds to mob each other, focusing on growth instead! So if you wanna be in, please write a few words, that’s it.

HOW to do it? Here wrote down what can be done. And my message previous to that one.

PS: I am not calling you or me - mobs, just bad lingo that I think a few can see references in. Accountability is important as long as it doesn’t make all the processes fully inefficient.

  1. This can come as a design later, like for LM - but the issue is that this cannot be used for risking DAO’s future when funds are needed. Replacing current proposal with “maybe we get same attention for this” is not a good idea. That I am certain of. Now whether this can work for LM or something else - remains to be seen. Would defer to @ov3rkoalafied on this topic. Overall, I think it’s too complex for farmers and gives marginal benefits only.

@FranktheTank would you please reference your twitter/telegram/other “public” activity? And the size!

Looks good. WOuld be nice if 50k limit was lowered.