CP117: Give a mandate to form the Treasury Advisory Group

cp: 117
Title: Give a mandate to form the Treasury Advisory Group
author: @Kate_Bee
Contributors: @imdior @sezer @theoyster 
Uses-component: CP1, CP2
technical-proposal: no
requires-onchain: yes
impacts/modifies: CP107
status: rfc
date-proposed: 2024-06-21
date-ended:

Short Summary

This proposal requests a mandate from the Centrifuge DAO to set up and legitimize a core group called ‘The Treasury Advisory Group’ (TAG) to facilitate, coordinate, formalize and advise on treasury activity and resource processes.

High-level objective

We are proposing to form the Treasury Advisory Group (TAG) with the mandate to advise on all Treasury related activities in the Centrifuge Protocol. This includes but is not limited to:

  • Spending advice
  • Treasury financial overview and proposal advisory
  • Treasury related governance processes
  • Accountability measures for funded proposals

Background

We have witnessed many promising DAOs fail due to mismanaged treasuries. For the ecosystem to develop and for DAOs to sustain themselves, the necessity of bringing together effective and efficient treasury management systems and contributors cannot be overlooked.

This applies to the Centrifuge DAO as well and we have already taken several steps in this direction. Since May 2023, there has been significant discussion about how best to ensure the funds in Centrifuge DAO Treasury support the growth of the protocol.

This mandate draws on the past year of discussion (found here, and here) suggesting a Group form on treasury advisory and resource allocation. It also takes precedence from the Founding Documents of the Centrifuge DAO which promote small groups of expertise as a core pillar of good governance and lessons from the establishment of the Governance & Coordination Group (GCG), Credit Group (GC) and Protocol & Engineering Group (PEG).

The intention and main purpose of this group is to provide the Centrifuge Community and Centrifuge DAO with the critical knowledge and guidance they need to make decisions about the Centrifuge Treasury Spending.

Description of Activity

We seek the mandate to help the Centrifuge DAO achieve its goal of wise treasury management by applying our skills and experience in participatory budgeting, stakeholder engagement, DeFi and DAO treasury management, process design, governance and finance.

Spending advisory

One of our first activities will be to propose objectives and goals to indicate priorities for Treasury spending. In the future we plan to use these objectives to produce non-binding objective assessments (essentially ‘opinions’) of every Treasury proposal submitted via governance. The intention is that CFG holders can utilise these assessments as they vote but these assessment are non-binding - i.e. CFG holders can ignore their findings.

  • Propose spending goals and priorities via RFC
  • Produce non-binding assessments on treasury proposals that:
    • Explain the potential implications of proposals
    • Check adherence to objectives and goals
    • Check adherence to governance processes and previous treasury related proposals CP107:Updated Spending Agreement.

Accountability process

After we establish best practice and process on proposal assessment, we aim to institute accountability and reporting processes for monitoring and evaluating funded proposals. Tasks include:

  • Set up a clear accountability and reporting process (for successful proposers) to ensure funds are spent according to expectations and milestones.
  • Propose amendments to the governance process to mandate that successful proposers follow agreed accountability processes.
    • Be in regular contact with the funded teams & projects to assist them in their reporting.

CFG support

We seek to make CFG holdings clear and the information about them accessible by:

  • Graphics and easy to read graphs showing the balance
  • Modelling Treasury funds over time
  • Modelling of CFG rewards
  • Providing info and advice about the assets held in the CFG Treasury
  • Collaborating with a third-party service provider to visualize treasury data in the dashboard

Education

Another key activity will be to improve the engagement of the community in discussions about spending and building a sustainable Treasury. Education will be one of our key work areas:

  • Communicate how objectives and priorities are aligned with the goals of Centrifuge via information sessions, written and graphic content
  • Enhance transparency and accountability through regular reporting on treasury activities and the overall financial health of the DAO.

The above activities outline the current mandate that is sought. In the future there is scope for the DAO to widen the mandate to include activities which would grow the treasury, provision for liquidity and further aspects relating to utility. However this is not in scope at this time.

Deliverables

  • Bi-monthly treasury report: A comprehensive report detailing the current state of the Centrifuge Treasury, including holdings, inflows, outflows, and overall financial performance
  • Assessments of all CP-2s - Requests for Funding
  • Active spending proposals report: A summary of both active spending proposals, an assessment of each proposal’s alignment with spending objectives and potential impact and of passed proposals with information on their status and achievement of deliverables
  • Process/governance improvement proposals: Proposals aimed at enhancing the treasury management process, improving transparency, or strengthening accountability measures
  • Comparative analysis: A twice-yearly report analyzing the treasury management practices of other prominent DAOs, highlighting potential areas for improvement or best practices to be adopted.

Outcomes and Objectives of the TAF:

  • DAO members have easily accessible information on the state of the Treasury
  • DAO members have easily accessible information on implications of funding proposals
  • Wise spending is achieved: aligned, rigorous, quality proposals pass and unaligned, unqualified proposals fail
  • Malicious proposals are identified and prevented

Proposed TAG Members, Accountability, and Membership Process

I, Kate, propose myself as the first ‘Lead’ of this Group, with the intent of facilitating the group to make it transparent and non-hierarchical. The three members I nominate based on their skills, background, availability and commitment are Sezer (forum profile), ImdioR (forum profile), and Andrew Liffey/OnlyDefiGuy (forum profile).

We plan to start with these four members, and will request applications from the community if there is a need for another member. We propose that TAG members work for a minimum term of six months.

Membership positions can be renewed, subject to approval via majority voting within the group and\or via the Centrifuge Governance Process. Every six months the TAG will publish a form seeking an assessment of its performance from the DAO, and based on this input, change personal and/or approach.

If a Centrifuge community member finds an issue with the TAG and it’s members or leader relating to the work and objectives set out in this proposal, or as pertaining to the code of conduct, they can raise it on the forum or privately to governance facilitator Orhan and it will be treated with seriousness.

Recusal / Disclosure

Centrifuge Network Foundation (CNF) contractors Kate Beecroft and ImdioR must recuse themselves from assessing any proposals proposed by other members of CNF. All TAG members must recuse themselves if they submit a Treasury proposal. Disclosures of conflict of interest from any TAG member must be published before an assessment is made.

Principles of the TAG

Community members can hold the group accountable both to the description of activity and deliverables but also to the Principles listed below:

  • Objectivity
  • Transparency
  • Long term thinking

Proposed Group Members

The Treasury Advisory Group (TAG) will consist of experts with diverse knowledge across various domains including; finance, decentralized finance, marketing, DAOs, DeFi, community building and collaborative budgeting.

Kate @Kate_Bee

Kate is the Governance and DAO lead for Centrifuge. She has worked with organisations doing collaborative resource allocation and alternative finance for over 10 years. She was a Founding Partner of the distributed network Greaterthan, member of distributed builder network Enspiral and business developer of the software tool Cobudget and has facilitated numerous groups through participating budgeting processes. She has been a process designer in 3 DAOs, and was the community builder and governance designer for the Genesis DAO - one of the first DAOs to allocate its treasury. She specialises in stakeholder engagement to achieve robust governance decisions.

ImdioR @ImdioR

Imdior has been involved as an author or contributor in several important proposals in Centrifuge DAO, such as Block Rewards, Protocol Fees, Transaction Fees for Pools, adjustment of CFG Rewards on Tinlake and decrease of Centrifuge inflation rate over time.

He curated and traced all minting processes in Centrifuge DAO in the last 2 years and understands the inflation mechanism and Centrifuge Treasury funding very well.

Sezer @0xjulcaesar

Sezer has been involved in the web3 ecosystem for about four years. He organized some of the first crypto events in his country and established a few of the earliest crypto communities. Sezer has participated in numerous Web3 projects, including DAOs such as CryptoQuant, PrimeDAO, Inverter, and Bankless. He actively provides blockchain educational sessions on behalf of UNICEF and offers marketing and DAO services to various web3 projects.

Andrew/OnlyDeFiGuy @theoyster

Andrew has a background in traditional capital markets, with experience in the Central bank of Ireland and Interactive Brokers. Now working in Singapore for a hedge fund focused on high frequency trading on-chain across multiple blockchains. A lover of all things polkadot he has experience working with Acala, Moonbeam and Hydration. Highly active Polkadot market participant, enthusiastic coder and happy Irishman.

Additional Expert Advice:

Ongoing input will be sought from Centrifuge Active Contributors and other DAO members as the TAG gives advice on proposals and expenditure of Treasury funds. We will also seek advice from experts if we do not have requisite knowledge to assess a proposal.

Funding Request

This proposal requests funding from the DAO treasury to implement this Group and has the following initial funding request to be paid every six months. The figures below are in USD equivalent and the total CFG amount sought will vary.

In order to minimize bureaucracy and performative governance we request to be paid in bi-annual (twice yearly) installments, the total amount being $22,800 equivalent, by submitting an onchain proposal for CFG token holders to vote on.

Name Description Six months Budget
Payment of Members Compensate work of 2 members (based on $70 p/h at 5 hours per week = $350 p/w or $1400 p/m) *note the time of 2 proposed TAG members is already covered in their compensation as contractors to CNF $16800
Input from non Group Member experts Where the TAG does not have the requisite knowledge we would pay for expert input $6000
Total $22800 equivalent per 6 months (annual $45600)

With the actual CFG price 0.42$, the request for this proposal from the treasury is roughly 54,300 CFG.

Group members will account for their hours spent every 6 months, and if under the total amount, the balance will be sent back to the Treasury. Similarly, the payment of experts will be tracked and if funds remain unspent they will be sent back. All Group expenditures will be documented in the bi-monthly report.

This RFC will be followed by an onchain proposal, requesting the indicated funds. If that proposal is passed by the DAO, the TAG will receive the first funding and the mandate. The proposal requests these funds (54,300 CFG) to be transferred to this wallet (to be added if there is support for this proposal).

Change or improvement

Centrifuge DAO has direction and clarity on best practices for Treasury management and is well set up to avoid wasteful spending. This group could further enhance the decentralization of the Centrifuge Protocol by enabling participation in governance by making it easier for DAO members to understand proposals and their implications, and therefore vote.

9 Likes

A very thoughtful and purposeful proposal. We at Good KarMa Capital like it. Hear hear!

5 Likes

This is an incredibly well delineated proposal for TAG, how it will work, and who will be at the helm.

Full support when this comes up for a vote!

3 Likes

I really like this proposal and think it is necessary for the DAO. I have several questions to help better evaluate this proposal in its current form.

  1. Is there data on the historical number of the type of proposals this group would review per week and month that have come to the community?
  2. What types of proposals would be included/excluded?
  3. Who replaces members if they need to recuse themselves to ensure there are enough people to evaluate?
  4. Is there a minimum number of members that must vote? I ask because if 2 or 3 recuse themselves it is not decentralized enough.
  5. Regarding the funding request, it discusses payments based on weekly pricing. What if there are no proposals to review for 6 weeks?
4 Likes

Hey @sirj, thanks for the meaningful questions :dizzy:

Before I answer, I want to emphasize that we are not just going to review proposals. Here are some additional actions we will take:

  • Propose spending goals and priorities via RFC
  • Set up a clear accountability and reporting process (for successful proposers) to ensure funds are spent according to expectations and milestones
  • Propose amendments to the governance process to mandate that successful proposers follow agreed-upon accountability processes
  • Model Treasury funds over time
  • Model CFG rewards
  • Provide information and advice about the assets held in the CFG Treasury
    • Maintain regular contact with the funded teams and projects to assist them in their reporting
  • Enhance transparency and accountability through regular reporting on treasury activities and the overall financial health of the DAO
  • Bi-monthly treasury report: A comprehensive report detailing the current state of the Centrifuge Treasury, including holdings, inflows, outflows, and overall financial performance

Therefore, even if there are no proposals, we will still have a lot of work to do.

As for your questions :arrow_heading_down:

  1. Currently, there isn’t, but we can work on that if you want or if there is any demand for it.
  2. Treasury-related proposals would be our concern.
  3. We asked ourselves this question and had a few ideas: “Determining a lead within our group” or “Existing members could ask the community.”
  4. Vote for what? We will be creating reports and assessments together. If we can’t agree on something, we decided to make decisions by consensus. 3/4 majority.
  5. As I explained at the beginning, we will still have a lot to work on.

Tagging my friends here in case If i miss something or misunderstanding @Kate_Bee @ImdioR @theoyster :eyes:

2 Likes

Hello, my comment is not a question as such, rather it is a perspective after witnessing the last year of evolution of Centrifuge DAO.

I am excited to see this proposal, I believe that the people who make up this group will do an excellent job, just as they have already been doing.

I think that the formation of Treasury Advisory Group within Centrifuge DAO will be key for the development and execution of the treasury, even more so if we consider that we are in the prelude to implementing OpenGov.

As you know a decentralized autonomous organization (DAO) is an emerging form of organizational structure with no central governing body and whose members share a common goal of acting in the best interest of the entity, in this context and considering that the key to a DAO is the lack of central authority, mandate groups seem like the best way forward for Centrifuge DAO.

On the path to decentralization, DAOs have a fundamental role; In several protocols, a large part of the activities and development of a project are in the hands of the DAO, such as marketing, protocol development, event organization, content creation, business development and treasury spending in general.

Some observations and comments about it from my humble opinion:

  • There is a philosophy of “Doing something is better than doing nothing, someone must propose initiatives and a path to follow within the DAO” as there is no central entity that can direct the path of the DAO as a CEO would do it in a traditional company. Regarding the above some protocols have chosen the strategy of implementing bounties with budgets assigned according to the objective to be achieved.

  • In my opinion, waiting for the people/companies make proposals on the DAO/Treasury is not enough, I consider that it is important to act with intentionality, that is, that the mandate groups that are created can intentionally go in search of the right people and businesses to each objective that is intended to be achieved, In summary this is “go for what you want instead of waiting for them to come for you”.

  • From my point of view, if it is necessary to hire more professionals through the DAO to help the protocol to succeed, then this can be done via the DAO, and these people or companies to be hired do not necessarily have to be within the blockchain industry, even the DAO could hire traditional companies, such as, a company dedicated to human resources will be in charge of the hiring process for the DAO.

  • One thought I have is the fact that a DAO is decentralized does not prevent it from collaborating or even contracting with traditional centralized companies. Why not take the best of both worlds?

  • Bounties created by the community can be excellent options, but if they are not executed by the right people/professionals this can mean their failure, hence the importance of the previous points.

Finally, the general idea I share here is to intentionally create mandate groups that take the best of traditional business structures.

Example:

Intentionally organize the DAO taking the best of known business structures. This is my perspective from where I am as a community member of the DAO.

Greetings!

4 Likes

I completely agree. I’ve always been a fan of bounty work within DAOs. Bounties are a key aspect of decentralization throughout the DAO journey.

Previous DAOs have failed by overpaying bounties with offers like “tweet us and get 50 USDC” and similar approaches.

It would be great to see a bounty board like:

  • “Solve the issue in development via GitHub” = X CFG
  • “Craft a meme that gets over 50 likes + retweets” = X CFG
  • “Refer us a partner/client/fund” = X CFG (after successful collaboration)
  • “Make Vitalik follow us” = X CFG
  • "Don’t see anything that fits for you? Submit a contribution plan with your ideas. Then we can open a bounty for you.

This also could create an opportunity for our community members to invest in Centrifuge by their efforts.

3 Likes

:hammer_and_wrench:Could not agree more with @LuisG in his comments. Excellent contribution to the effort🚀

1 Like