CP107: Updated Treasury Spending Agreement

Uses component: CP4
Author(s): @cassidy
Contributor(s): @Kate_Bee @ImdioR @Rhano
Technical/non-technical proposal: Non Technical
Impacts/modifies: CP2, Previous Agreement CP58
Date proposed: 2024-03-20

Short Summary

This proposal aims to reconfirm the previous treasury spending agreement to both:

  • continue to be cautious and conservative in spending, and;
  • to agree that DAO no longer needs to completely avoid treasury spending and instead should seek to establish a clear process and objectives for treasury spending proposals.

Background

The previous agreement on treasury spending, CP58, established that the Centrifuge DAO would conserve onchain treasury funds as much as possible and be cautious and conservative in spending to allow the Treasury to grow in size. This original agreement was passed on August 21, 2023 (~7 months prior to this updated proposal) and specified that it should be revisited.

The Centrifuge onchain Treasury originated with no funding. After the implementation of CP6, block rewards began to accumulate CFG to the onchain Treasury and today the onchain treasury holds roughly 9,931,100 CFG.

As a DAO we still do not yet have clear objectives for how to spend onchain treasury funds, and continue to seek a specific mandated group to support the DAO in decision making on the allocation of the Treasury, similar to how the GCG supports the DAO on governance or the Credit Group on onboarding pools. Now that the onchain treasury is growing in size, we should continue to be cautious and conservative with treasury spending and we should establish a clear process and clear objectives for spending.

High level objective

The objective of this proposal is to continue to commit to the following agreements as a DAO:

  • We agree to be diligent and conservative in spending of CFG from the on-chain Treasury.
  • We agree to try to learn from the mistakes of other DAOs before us so that Centrifuge may spend its Treasury funds more wisely, and thereby give it a greater chance at succeeding in its mission.
  • We agree to maintain the minimum quorum requirement to 66% of the council voting yes in order for treasury spending proposals to pass. This will need to be reassessed upon a possible move to Open Gov.
  • We agree to establish a clear process and clear objectives for treasury spending by establishing a Resource and Treasury Management Group or similar where experts advise on such processes and objectives

These agreements apply to all Centrifuge community members and those making proposals to the DAO treasury.

Spending wisely here means acknowledging the market conditions and agreeing to caution, both in making proposals and submitting them, and in governing such proposals.

Description of Activity

The previous agreement committed to the below. This updated agreement continues this commitment:

When submitting a proposal for Treasury funding from the DAO, proposers should:

  • Show your consideration of the balance of the Treasury
  • Illustrate how your proposal is the best possible use of funds
  • Demonstrate how your proposal follows this Treasury Spending Agreement

To potential treasury funding proposals this means that unfortunately many topics will be out of focus and treasury funding will have a higher hurdle at this time.

Centrifuge councilors that vote on Treasury funding requests should also take each of the above into account. In the future with a possible move to Open Gov or an update to this agreement, CFG holders that vote on treasury funding requests should continue to take the above into account when evaluating proposals.

This updated agreement additionally seeks a mandated group to be formed in the DAO to help Centrifuge set clear objectives and a clear process for treasury spending proposals.

Responsible

  • Anyone making a proposal for on-chain Treasury funding
  • Centrifuge councilors and any CFG holders that vote on Treasury funding requests
  • In the future, a specific mandated group to help the DAO set clear objectives

Alignment to the mission of Centrifuge DAO

The Centrifuge DAO needs access to adequate funding to have the greatest chance of succeeding in its mission. This proposal aims to reach an agreement as a DAO to be conservative in spending of the onchain Treasury and to set clear objectives for its use so that it may have the greatest impact.


UPDATE

2024-05-06:

2024-05-13

  • OpenSquare snapshot passed
8 Likes

I agree with these points in this RFC. Either way, you can count on me to be very critical of most treasury spending proposals, having seen some crazy stuff in the past 5 or so years of my full-time crypto experience!

Re:

We agree to maintain the minimum quorum requirement to 66% of the council voting yes in order for treasury spending proposals to pass.

We’ll want to revisit this when we migrate to OpenGov.

6 Likes

Yes good point, I’ll add that edit to the RFC

Good day there!
In previous CP58 was indicated that the agreement should be re-visited after 6 months.

This agreement should be re-visited at the latest six months from now, or as soon as an appropriate group could be formed in the DAO and we have the necessary skills in place, or upon a possible move to Open Gov.

In this updated Treasury Spending Agreement, I don’t see any timeline for revisiting the agreement.
@cassidy can you please specify:

  • The conditions that should happen for revisiting The Agreement
  • The timeline for re-visiting the Treasury Spending Agreement.
3 Likes

Hi, I agree with the Treasury Spending Agreement.

Although it is important to let the treasury grow in size, as part of the processes and objectives that the Group of experts in resource and treasury management will carry out, I would like to see a stablecoin DCA allocation as part of the plans in order to protect the treasury from the volatility of the crypto market, something similar to the HydraDX DCA Tool.

4 Likes

I think no team or DAO can go wrong by being diligent with spending, lot of projects in my experience make extravagance where it’s not really required or over pay for a service that might not bring value to the project.

I fully support the points in the proposal

3 Likes

As someone who has been involved in many DAOs before and witnessed their collapse, I definitely think that budgets should be especially careful with their spending.

The budget sections in the proposals should not be superficial and every item should be included.

If necessary, users can be rewarded for contributing to the improvement of the budget.

On the other hand, I support this proposal.

2 Likes

One of topic that remained untoched here is Retroactive funding\payments that i think should be discussed and included in Updated Treasury Spending Agreement.

The latest results shows that more and more projects shit from pre-funding model to retroactive payments.

The core principle behind the concept of retroactive public goods funding is simple: it’s easier to agree on what was useful than what will be useful. (c) Vitalik Buterin

Retroactive payments

Due to concerns around spending the culture in Kusama has shifted through both off-chain social convention and on-chain voting towards teams submitting requests for retroactive payments.
Unlike funding for work yet to exist, retroactive payments relate to work already completed or nearing completion.
As a result, retroactive payments don’t rely on a convincing pitch, nor on discussion, since the value delivered can be objectively assessed on its own merits.
People either appreciate the work, or they don’t, a distinction that aligns with the binary outcomes of referendums which require a simple majority to pass.
A further benefit of retroactive payments is they can be more easily standardised into fully on-chain forms.

With all the benefits that retroactive funding can bring up, retroactive funding could be very tricky for a Protocol and for the builders:

Case 1: A small team will build something for the protocol that will not add any benefit or improvment to the Protocol. As a result the Team will not be funded for the product that they have build.
Case 2: unknow team (or startup) can`t afford to work on something big without the funding (lack of money and time for startup).
etc.

It’s clear that retrospective funding can`t be applied to everyone and all wokrs. And should be clearly defined at the begining.

I think that retroactive funding could be requested only if the token holders can see your past work, check your deliverablity that what you’ve done historically, reputation (accontability etc).

1 Like

CP107 has now merged into the proposal repository on GitHub and is now final.

The OpenSquare snapshot has been published and will go live 6th May 15:00 CET and will be open until 13th May 15:00 CET (exactly 7 days).

:ballot_box: Please vote here: CP107: Updated Treasury Spending Agreement

The OpenSquare snapshot for CP107 has passed.

The above agreements have now come into effect.

Thank you for voting everyone!

2 Likes