Uses component: CP4 Author(s): @cassidy Contributor(s): @Kate_Bee Technical/non-technical proposal: Non Technical Impacts/modifies: CP2: https://github.com/centrifuge/cps/blob/main/cps/CP2/CP2.md Date proposed: 2023-07-18
As block rewards begin to accumulate CFG into the on-chain Treasury for the first time, this proposal aims to establish a shared understanding and agreement of the Centrifuge DAO to conserve those funds as much as possible and to be cautious and conservative in spending given the current conditions of the Treasury and the market - that we should allow the Treasury to grow in size.
The Centrifuge on-chain Treasury originated with no funding. After the implementation of CP6, block rewards will begin to accumulate CFG to the on-chain Treasury. Historically, DAOs have been too unorganized, unfocused, and unplanned in their Treasury spending.
There are many examples of poor DAO Treasury expenditure that we can learn from. Key patterns that can be observed are:
- A rush on creating proposals that do not further the mission and goals of respective protocols
- Misguided “resolve to spend” (just because CFG is accruing does not mean it should be spent).
Good governance means careful stewarding of collaborative funds. As a DAO we do not yet have the necessary expertise and contributors to actively manage the treasury well, we will need to have objectives for how to spend funds, active management and reviews. LIkely a specific mandated group like the GCG or the Credit Group is needed. We should avoid treasury spending until we have such a process in place.
The objective of this proposal is to make 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 not start a broader grants program at the current time.
- We agree to raise the minimum quorum requirement to 66% of the council voting yes in order for treasury spending proposals to be passed.
- This is an increase from the currently implemented 55% minimum quorum and should be added to the language in CP2.
- This will need to be reassessed upon a possible move to Open Gov.
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.
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 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.
- Anyone making a proposal for on-chain Treasury funding
- Centrifuge councilors and any CFG holders that vote on Treasury funding requests
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 particularly conservative in the infancy of the on-chain Treasury to give it time to grow so that it may have the greatest impact.
UPDATE 14th August 20:21 CET
This proposal has been submitted to the proposal repository on GitHub as CP58 so it is now final and the OpenSquare snapshot has been created.
The OpenSquare snapshot will be open from 14th August 20:30 CET - 21st August 20:30 CET (7 days)
Link to proposal on GitHub: https://github.com/centrifuge/cps/blob/main/cps/CP58.md
Vote here: CP58: Treasury Spending Agreement