This post in made after discussion and guidance from external DAOs, @mugglesect’s motion for retaining current contributors, and the desire to make the system more resilient & secure.
Motivation & Summary
With the DAO growing and more initiatives popping up, it’s becoming increasingly important to decentralize and un-synchronize processes. That is not done out of legal reasons (not a lawyer here, just voicing concerns and also seeing how to do things more openly) - but more so to make timelines quicker and welcome new parties to the ecosystem. No one beneficiary or CEO. That in turn is much better for security, because others devs / users / and everyone will know & see that there is no one man (group) in power to change the protocol or user assets, no custody occurs.
With that in mind, OBRA structure (as coined in a Gnosis Safe proposal a few months ago) - has been proposed to Gearbox DAO. Its main point (although this is subjective interpretation) is to let the social structure of a DAO grow yet not burden contributors, new and old, with too much reporting. It basically elevates trust given by the DAO to the different groups applying, and does so without any synchronicity.
That means: many different processes at once, easier onboarding and off-boarding, easier test-iteration product cycle, and again - no control in one pair of hands or in one group. The downside of splashing funds around becomes more of a topic in this structure, so governance participants must be extra careful with checking deliverables as per the periods voted on, and stop leakages if those appear.
Check the earlier thoughts on the governance framework here:
One thing to keep in mind is that this suggested framework change doesn’t magically create many different dev teams right away, but it creates the level playing field for those many teams to come sooner or later. The change proposed is about making rules fairer and clearer, to speed things up, as well as allow anyone (whether they have been around for a year or 1 week) to have equal chances - as long as their proposals sound solid, and as long as the DAO votes for them.
1. OBRA Model & Adjustments
Based on the interpretation of the OBRA model, the flow is as follows:
- Discussion phase: goals and metrics (figuring out and chatting)
- Strategy choosing phase: based on the above, allocating budgets
- Under each strategy, initiatives: receiving budgets per each strategy
- Then, those initiatives need to report every X months to keep getting budgets
As such, the model looks closer to a grant-based one. But with two important parts: grants are not chaotic but instead are attributed to some strategy (so not just random stuff). Although random things can be a separate strategy with a lower budget too. And the second part is that everything now becomes a grant, without an oversight committee. It means that, instead of a review committee composed of core members (that still keeps things very centralized and onboarding-offboarding harder) - even previously core members become initiatives by themselves. Checks and balances!
The model also creates a competition between previously core-members to an extent, and between different initiatives. And as we know, markets are cool and help competition increase quality (sometimes). But… it only makes sense if there is a “market”. Before the market (aka initiatives and different teams) spawns out - it only would create a burden.
The suggested change to the OBRA model is to eliminate step 2 from the list above. Or rather, bake it into point 3. That means: the DAO discusses the big goals and then tries to fit different initiatives into the budget right away, to make it more simple. Because what is the point of having strategies<>budgets if it’s 1 or 2 only? That only creates unnecessary burgers, which can be left for later.
As such, the process suggested can look like:
- Discussion phase: goals and strategies (figuring out and chatting)
- Under each strategy, initiatives: receiving budgets per group / initiative
- Then, those initiatives need to report every X months to keep getting budgets
It stays as the same idea of OBRA, makes the processes not synchronous - but simply doesn’t introduce too many burdens & changes just yet. It’s hard to make budgets because there is currently not much competition yet. After the first iteration, means closer to June, the actual marketplaces of initiatives could maybe spawn up. If this interpretation is wrong, yet you still like the framework - please just suggest the step-by-step process you see most applicable to this.
2. How can things look like / what will change
“How will current contributors go about it then?” - Great question!
A new governance model doesn’t mean groups and contributors start doing different stuff. It’s about streamlining processes. If we look back, we can already see that most of the processes were not controlled and were not synchronized: devs build stuff marketing doesn’t know about, risk assessment happens regardless of new stuff comes in, etc. Now it will be even more asynchronous and non-controlled.
Here is how, based on what is available today (initiatives + contributors), it can look like:
To be more precise, if put in a table, looks like this (more to be added/changed as 2023 goes by):
No disruption. No burden to “what” contributors do. Easy & smooth!
You can see that some of the initiatives are in the grant-based Compensation and some are Multiplier Systems. So the Multiplier System is the same approach that was used before, and it makes sense for it to remain before everyone really becomes their standalone teams and budgets become more clear. For now, to not cause disruption, the same system can stay.
3. Multiplier System & Grant-Based
These members report in the same way as before, as can be seen in Notion. No changes to that system per se, just adding more asynchronicity (is that even a word?). Onboarding a new contributor to the Multiplier System within an initiative can be voted on out of schedule any time, the same goes for off-boarding.
As for the Grant-based system, this is something where it’s closer to the OBRA model. Here, different initiatives essentially “compete” for executing the same or different strategies. They either compete for budgets, or even between one another when the budget is very tight. These grants are somewhat entrusted to the given applicants for the period, whereas reporting happens closer to the end of the cycle.
3.1 Multiplier System
The brackets for the Multiplier System are suggested to have a two-way system (USD stays the same, with slight increase in some cases for lead roles). Those who wish to just contribute here and there and leave - are likely better off with the regular USD:GEAR 1:1, and those willing to contribute for a long time… can opt in for a larger package which is vested for longer. First, the USD part:
As you can see, compensations are totally normal in their sizes. Even with potentially 1-2 new members (btw, check 2 new members already in here above woohoo) - the budget would be just sub $1M per year in USDC while the DAO currently has 5M+. In fact, welcome Dima to SC contributors and Ilya to UI design! If this is accepted, this is to be taken into account since February.
Budgeting note: jumping ahead, roughly $1M can be expected to be spent on grantee compensations if the current structure persists as is ±2 contributors. That leaves a bit over $1M for security (audits, bug bounties, etc.) for 2023, which is sufficient. Marketing budget or unexpected USDC expenses can fit under the other $500K. Why these numbers? If the treasury value is taken at $5M flat USDC as it is now, that is a 24 months comfy runway. That assumed no protocol fees in, which exist!
Coming back to the two-way GEAR bonus system: a contributor can choose what they prefer.
- Option 1: same as before, get tokens per month based on 1:1 with USD contribution. 150M FDV benchmark to remain for the entire 2023 for the members above. And 3 months locked + 9 months linear vesting after. Again, same as now.
- Option 2: have 1:2 USD:GEAR at 150M FDV (so, x2 as many tokens) but not have any liquidity until February 2024, upon which an 18 months linear vesting will commence. So you will need to contribute (well!) for the entire year, upon which you start vesting with a larger portion. You take the risk of not having liquidity sooner + commit to more contributions → you get more, that’s the idea. And if you chicken out sooner than the end of the yearly period (or you slack and get voted on out) you get slashed out of the bonus, so not a total 0x but about 0.5x pro-rata then. After all, there must be risk involved with deciding to get a larger portion. Then, for 2024: you can either opt in for the same boosted package again (unless it gets cancelled next period) - or go back to option 1 but with a 1.25x token bonus multiplier (not USD) for your loyalty as a reward!
This lets every contributor choose by themselves, and gives the option to those committed to the DAO & the protocol for long - to have a larger GEAR portion as a result. The choice on 1x or 2x must be done by contributors around the time of this proposal going live, in advance. Update: see below, all have chosen.
3.2 Multisigs as “Guards”
Since the inception of Gearbox DAO, all first signers and all changes to the list of them - have gone through rigorous voting. Quorums are far from easy to get in Gearbox DAO voting procedures, which makes the system so far pretty resilient. In the updated framework, multisigs can be seen as guards (not to confuse with gatekeepers) as they truly word-to-word must execute the proposals voted on. The information on signers can be found in docs: https://docs.gearbox.finance/governance/setup/multisigs. As you can see, they are all public (devs) with reputation, and majorly with no affiliation with the contributors directly.
Why is this important: because there are very concrete rules and boundaries for signers to act within. They must execute exactly as worded and not deviate in their subjective interests or opinions. For their work, they get compensation in tokens so far as can be seen in the Q2 and the upcoming Q1 reports (covering Q3 and Q4). A separate important role, the signers.
The budget for them has been approved in GIP-11 and the distribution has been done for 2022 (bi-quarterly) already. Since then, however, both guards grew and became much more active. Properly big responsibilities, stellar execution - should be rewarded. While tech guard requires stronger edge knowledge, financial guard has many more cases of signing. Hereby, suggesting to increase the reward for both guards to 1M GEAR per quarter. It’s not even a large increase: that is about 100K GEAR per signer per quarter, which is currently $1,500 if split equally. Given the risk and the duties taken, depending on the capacity and workload in Q1-Q2, the number could even potentially be increased, but that’s up to further votes.
4. Three Month Cycles and Initiative Grants
When it comes to the two above, any changes are warranted to happen frequently. As for the initiatives, it’s desired to run them in the 3-month period. Of course, there could be exceptions, but overall it’s better to try to stcik to a timeline, because then all participants will know when to review & vote every period.
Here is how the cycle could look like, starting in February:
Initiative Cycle Lifecycle
- Closer to the beginning (or prior to) the beginning of the new cycle, everyone can post different initiatives and ask for funding. That prompts governance discussions on budgets and priorities.
- With that in mind, according to different strategies (as discussed and voted on by the DAO in this topic for the first cycle), initiatives are then voted on and the budgets requested are given to them for the next 3 months. They don’t have to report intra-cycle, they just do what they must.
- Closer so the end of each cycle, they report back. As a way to show what they have done, and also as a way to ask for new funding if they require such. If they do something on a more continuous basis (maybe a devshop), later maybe a model of MakerDAO units can be adopted whereas units have the budgets but are not required to use it all, and report at the end.
The reporting and achievements will all be stored on forum and in Notion:
This is why at the beginning of this post, a point was made about a higher level of trust and being careful about splashing funds around. Naturally, unknown parties without reputation will struggle to get large funding and will have to start at smaller numbers - to show their worth first.
See an example of an initiative proposals going live for voting soon:
- [GIP-44] Business Development Proposal (initiative)
- [GIP-45] Support/Maintenance of the Risk reports (initiative)
- Later on Risk DAO new period as well, and also VIBES, and so on;
The 1-week discrepancies (attributed to voting and new initiatives discussions) every 3 months are logical, since you need to get back the info - and then re-dice. But rolling initiatives are not supposed to just go on a break (LOL) they can treat this time to re-evaluate and continue work.
5. Future: Governor Bravo / Council Mode
This proposal is a much needed change for the next few months until Governor Bravo (framework example used by DAOs these days) can replace multisig+snapshot setup currently used, and maybe even go govern-less one day completely. Anyway, before jumping too far ahead - it must be noted that with the coming of a proper on-chain governance system, this framework can potentially change. That is because in code things need to be much more strict. As such, this framework is taken as a test approach to help modify and change processes if needed for the next stage of governance in 2023/2024.
Disclaimer: written with the help and support of external and Gearbox contributors as well as the initiators of the respective initiatives, expressing the views of many ant now just my own. I act on behalf of the company I consult with and have indirect interest in seeing Gearbox DAO succeed, of course! Ah sers.
