Proposal Summary
Since launching to mainnet, the protocol has seen remarkable success, growing to a TVL of 1.5M+ ETH (or $3B+) in less than one year. To sustain this momentum and enable the further development and operation of the project, the ssv.network DAO (hereinafter: “DAO”) would like to present the following proposal to secure a budget for the next 4 years and diversify the DAO Treasury. This plan can be summarized as follows:
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Support an estimated DAO operational budget to maximize network growth and advancement over the next 4 years.
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Introduce higher levels of predictability and temporary token inflation to conservatively finance that 4-year budget.
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Partly counter the impact of minting by burning Network Fees collected during a set period as outlined below (i.e., permanently removing them from circulation). This can be seen as “borrowing” against future Network Fees since those fees will be used to “pay back” (by burning) the tokens created via inflation. This fee-based token burn mechanism ensures a controlled token supply, with the possibility of a net token supply decrease over the 4 years due to collected fees being projected to exceed expenses.
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Promptly build an additional funding reserve of USDC for the DAO on top of the operational budget to secure the project’s longevity and protect its stakeholders.
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Disabling the CDT token upgrade contract and the Incentivized Testnet contract and withdrawing the unclaimed tokens for the DAO.
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The SSV Foundation (hereinafter: “Foundation”) will negotiate with service providers the sale of such tokens over time to diversify the DAO treasury and have the least possible impact on the market.
Therefore, this proposed plan gives security to the DAO’s future until the project achieves its goal of sustainability, and it does not constrain our future strategy, spending, or operations.
Note that the plan and budget are estimated projections meant to financially prepare the DAO rather than dictate precisely how and when to spend the funds. Also, parts of the budget will require a dedicated proposal to become effective once actual costs are certain, giving the DAO another opportunity to adjust its spending. Furthermore, the DAO is not prevented from proposing additional expenses, including important initiatives outside the budget (e.g., a potential continuation of the incentivized mainnet program and other similar programs) if the need arises. This budget includes the recently approved $7M for DIP-23 and DIP-24.
For background purposes, a full breakdown of the considerable and detailed analysis used as a basis for the projected expense, market conditions, and simulations that the DAO has taken into consideration can be found here.
Motivation
SSV has had a great and exciting past year, and the future looks very bright. Since the Mainnet launch in December 2023, over 1.6 Million ETH has been staked on SSV. That’s over 4% of all ETH staked, making SSV the 5th largest staking platform on Ethereum, recently surpassing Rocket Pool and Kraken!
The network continues to grow at a staggering rate, as some of the largest staking providers (Lido, Ether.fi, Puffer, P2P, Renzo, Eigenpie, Luganodes, Pier Two, Origin, Primestake, and many more) are just beginning to migrate their validators to SSV. 250,000 validators (8 million ETH) seem to be in reach by the end of 2025, and if we continue to work hard and push SSV forward, it can keep growing far beyond that.
However, the development and operations of the SSV protocol are not free, nor cheap, and we must continue to fund the DAO to keep the network running and do the work required to progress.
The protocol’s income from its Network Fee is steadily growing, especially since the fee has been temporarily set to discounted introductory rates, currently at 0.75% of staking rewards, and scheduled to increase to 1.00% in 2025. In this early phase, this income is just the beginning, and after further growth, it is expected to sustainably finance the network’s expenses.
However, for this 4-year plan, minting will be used as the DAO’s primary income source, as it is immediately available and is more dependable in this early stage. The Network Fee will be burned as outlined below, serving as a growing counterbalance to the minting impact until its use is reevaluated.
Looking to the future, the DAO will hopefully accomplish the following high-level objectives in 2025: Scaling and growing the network, completing the theory and implementation of Mega Clusters, continuing consensus research, and much more.
Proposal Particulars
- The DAO’s Treasury
- Methodology for Developing a Funding and Treasury Management
- Overall Quantity of Minted and Sold SSV
- Schedule of Mints
- Token Minting Mitigations
- Estimated Budget and its securing and execution
- Reserve Track
- Operational Budget Track
- Reserve and Operational Budget Tracks Common Provisions
- CDT to SSV Conversion Contract and SSV Testnet Contract Withdrawal and Deactivation
The DAO’s Treasury
At the time of writing, the DAO treasury holdings and positions are worth approximately $8 million and are comprised of the following:
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1,385,976 USDC
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80,280 SSV (~$1.6 million)
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116 ETH (~$370,000)
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106,666 ETHFI (~$170,000)
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10,637 SAFE Tokens (~$12,000)
With the additional positions, funds, and loans:
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Uniswap SSV/ETH pair LP position (~$1.1 million)
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Market-maker loans, 100k SSV (~$2 million)
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Bug Bounty Program fund, 60.8k SSV (~1.2 million)
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Unclaimed network fee revenue 7,351 SSV (~$150,000)
Methodology for Developing a Funding and Treasury Management Strategy
🔍 Click to explore the detailed strategy and explore its reasoning.
Before jumping into the proposed plan’s details in the section following this one, let’s first discuss the high-level rationale here. Based on the information above, the realities of the DAO’s situation and the space of feasible options are:
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The DAO must use SSV token minting to fund its near-term expenses and build a funding reserve. The DAO should not yet rely on the Network Fee as our primary income source, as it is less dependable (for now).
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Some portion of the minted SSV must be sold for USDC, which has the dual purpose of diversifying the treasury and facilitating payments that can’t be made in SSV.
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Funds can be minted and sold slowly over time, but the risk and impact of possible unfavorable market conditions must be considered. Additionally, we can increase efficiency by aiming to opportunistically sell SSV at the right moment in time.
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We should expect total collected Network Fees to surpass total projected expenses during this 4-year period.
Additionally, we have the following elements that can be leveraged to mitigate the effects of the above:
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Network fees to be collected over this period can be burned (i.e., permanently removed from circulation) to offset the impact of token inflation.
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The CDT => SSV upgrade contract should be deactivated (with adequate warning to holders), and the remaining CDT can be kept by the DAO. Almost 500k SSV worth of CDT (~$10 million) has yet to be upgraded.
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The SSV Testnet contract should also be deactivated, and the remaining SSV can be kept by the DAO.
Overall Quantity of Minted and Sold SSV
Although we want to minimize token minting, it is critical that we mint and sell enough to always reliably pay the DAO’s expenses without significant risk, as running out of capital would be catastrophic. At a minimum, mitigating this risk requires minting extra funds as a buffer on top of the predicted expenses, where this buffer has been added to the expected budget, and any funds remaining after paying expenses will be kept by the DAO as savings.
As we feel that it is wise to err on the side of caution, we suggest going beyond this to also accumulate a USDC funding reserve as quickly as possible when the market conditions are favorable for doing so. The secondary benefit of a reserve is that it can increase overall financial efficiency by giving flexibility to treasury composition. The strategy for building the reserve is detailed in the next section, where the size of the reserve and the speed at which it is accrued are dependent on SSV.
Schedule of Mints
Mints can be done on any schedule, but minting more frequently will help to reduce the impact of market volatility and give more ability to adapt. We propose gradual monthly mints here because this schedule can be handled logistically without issue. We also permit the DAO to make intra-month mints in the event that a rapidly rising token price creates an opportunity for efficient token sales that must be acted on quickly.
Additionally, when we mint SSV, we will usually need to sell some for USDC, either to cover the budgeted USDC expenses or to accumulate a funding reserve. Since we wish to raise the funds as efficiently and as soon as possible, we suggest attempting to sell additional SSV opportunistically (early) at higher prices instead of dumping it blindly without concern for the market. Therefore, a strategy is detailed in the next section for determining when and how much SSV should be sold each month.
Token Minting Mitigations
As mentioned above, the DAO has multiple elements that we can leverage to mitigate the effects of inflation: Network Fees, the CDT upgrade contract, and the SSV Testnet contract.
The Network Fees are a massive potential source of funds for the network, but the DAO should not depend on these for its operational runway (yet). Rather, for this 4-year period, we should think of its network fees as its “bonus”, not what the DAO relies on. Minting, as a more dependable income source in the near term, has instead been chosen to cover the DAO’s funding needs during this period.
Therefore, to best leverage the Network Fee, it is proposed to burn the fees collected (i.e., permanently removing them from circulation) to provide an important counterbalance to minting. Note that SSV does not yet have a native tokenomic mechanism that applies significant positive market pressure.
A secondary benefit of burning the fees is that it grants the DAO flexibility to adapt if its priorities change. By reducing the token supply, the DAO also gains space to mint the tokens in the future if needed.
The CDT upgrade contract, whose purpose was to upgrade the obsolete CDT token to SSV, has been operational for more than 3 years and should be disabled. This should be done with a leniently long warning to CDT holders, but at this point, holders have ignored the instructions to upgrade for far too long. Once disabled, the SSV not claimed could be kept by the DAO, significantly reducing the amount of SSV that must be minted. Almost 500k SSV worth of CDT (~$10 million) has yet to be upgraded.
The SSV Testnet contract was created in April 2022 to reward users who participated in SSV’s early incentivized testnet. This program paid users SSV for running testnet validators and required that users claim these tokens. Like the CDT upgrade contract, many users have not yet claimed their SSV rewards after multiple years (~12k SSV remains). This contract should be deactivated, and the unclaimed SSV can be kept by the DAO.
Estimated Budget and its securing and execution
The estimated budget for the next four years is outlined below, aimed at supporting project growth.
Projected Annual Expenses:
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2025: $12,760,000
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2026: $14,088,539
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2027: $14,180,349
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2028: $14,277,838 (hereinafter: “Four Year Budget”)
Projected Monthly Expenses:
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2025: $1,063,333
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2026: $1,174,045
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2027: $1,181,696
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2028: $1,189,819 (hereinafter: “Monthly Budget”)
These numbers include the total projected expenses for 4 years aggregated to the best of the DAO’s ability.
The Four Year Budget consists of two tracks: the Reserve Track and the Operational Budget Track. Both will be managed by the ssv.network DAO Multi-Sig Committee (hereinafter: “MC”), the Foundation, and service providers. In managing both tracks, the MC will batch a mint transaction every month in the first, and from time to time, the second scheduled batch as outlined in DAO Contributor: Proposal for Engagement as the DAO’s Master of Coin (hereinafter: “First Scheduled Batch” and “Second Scheduled Batch”, respectively, and together “Scheduled Batches”). The number of SSV tokens this transaction will include will be described for each track separately below.
Similarly, every transaction of Scheduled Batches will include a transaction to burn SSV tokens in the Network Fee contract accrued up until the First Scheduled Batch or the Second Scheduled Batch. The burning of SSV tokens in the Network Fee contract will stop effective July 1st, 2025. After that, the DAO will reassess the network and incoming fees, possibly proposing a new plan for fee utilization or continuing to burn the network fee.
Reserve Track
This track outlines a sale schedule to quickly secure reserve funds.
Key Terms:
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SSV Price: Is the closing price of the SSV token on the last day before any of the Scheduled Batches.
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Reserve Track Maximum: Is the upper limit of total USDC tokens to be gained under the Reserve Track, determined by the SSV Price.
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Monthly Maximum: Is the maximum US $ value of the SSV tokens to be minted, based on the SSV Price and subject to the Reserve Track Maximum.
| SSV Price | Reserve Track Maximum | Monthly Maximum |
|---|---|---|
| <$20 | $0 | - |
| $20-30 | USDC 15 million | $1.0 million |
| $30-40 | USDC 15 million | $1.5 million |
| $40-50 | USDC 20 million | $5.0 million |
| $50-60 | USDC 25 million | $25 million |
| $60-70 | USDC 30 million | $30 million |
| $70-80 | USDC 35 million | $35 million |
| $80-90 | USDC 40 million | $40 million |
| $90-100 | USDC 45 million | $45 million |
| $100-110 | USDC 50 million | $50 million |
| $110-120 | USDC 55 million | $55 million |
| $120-130 | USDC 60 million | $60 million |
| $130-140 | USDC 65 million | $65 million |
| $140-150 | USDC 70 million | $70 million |
| $150-160 | USDC 75 million | $75 million |
| $160-170 | USDC 80 million | $80 million |
| $170-180 | USDC 85 million | $85 million |
| $180-190 | USDC 90 million | $90 million |
| $190-200+ | USDC 95 million | $95 million |
The MC will check the SSV Price and the Reserve Track Maximum before the Scheduled Batches and mint the amount of SSV as outlined in the table above and subject to its terms.
The Second Scheduled Batch will include a mint transaction, subject to and in accordance with the table above, only if, at the relevant time, the SSV Price has moved to a higher SSV price range according to the table above and is higher than the price range set during the previous minting - the First Scheduled Batch of the same calendar month.
The MC will transfer any minted SSV tokens under this Reserve Track to the Foundation to be sold through the service provider chosen by the Foundation. The Foundation will ensure that the SSV tokens it receives from the MC will be sold by the services provider of the Foundation’s choosing in accordance with the SSV Price in the table above. If the SSV Price is below 20 USD per SSV, no SSV tokens will be sold by the services provider chosen by the Foundation. If, as a consequence of this, certain tokens are not sold during any given month, the MC, as part of any Scheduled Batch, will deduct the Scheduled Batch mint from the already minted and transferred amount. Therefore, the service provider chosen by the Foundation will always have the amount of SSV tokens to be sold in accordance with the table outlined in the table above.
Operational Budget Track
As of January 2025 and until December 2028, the MC will mint in every First Scheduled Batch the Monthly Budget of the relevant year in SSV tokens based on the SSV Price. Half of the minted SSV will be stored in the Treasury, and the other half will be transferred to the Foundation to be sold by the service provider chosen by the Foundation. Minting and selling of the monthly operational budget can happen at any price level and isn’t subject to the terms applied to the reserve track.
Reserve and Operational Budget Tracks Common Provisions
The Foundation will guarantee, assure, and adhere to the following terms when executing its role described in this proposal:
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The daily sale of SSV tokens will be limited to 1.5% of the aggregate market daily Volume (24h) as indicated on CMC’s page dedicated to the SSV token.
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Get the best reasonably achievable market price for the sold SSV tokens.
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If possible, facilitate the transfer of the entirety of the proceeds received from the service provider directly to a designated MC wallet. If not feasible, transfer any such proceeds from the Foundation to a designated MC wallet as quickly as possible.
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The Foundation will take every compliance and legal precaution necessary to ensure, first and foremost the compliance of the DAO and the compliance of the Foundation in this endeavor. This may include but not be limited to obtaining legal memos, advice, or opinions from relevant legal professionals prior to and during the execution of this proposal.
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Approving and facilitating the necessary legal or corporate structures i.e., the implementation of a DAO proposal. For the avoidance of doubt, this shall include the formation of a subsidiary or subsidiaries in the British Virgin Islands as may be required for the purposes of a sale or for the distribution of tokens released to the SSV Network.
Additionally, for the purposes of effectively securing the budget, the Foundation will have a budget of 250.000 USD to pursue its efforts listed under Article 8 Section A subsection (vi) of the By-laws of the SSV Foundation.
As part of this proposal the SSV Foundation will receive an increase to its annual budget as defined in [DIP-13] ssv.network DAO Foundation incorporation.
The new annual budget will be:
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2025: $400.000 and 10,000 SSV;
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2026: $472.966,65 and 4.000 SSV
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2027: $501.114,98 and 4.000 SSV
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2028: $531.570,73 and 4.000 SSV
Any leftover budget from the previous year will be deducted from the budget in the new year.
The SSV Foundation will have at its disposal an additional $900.000 for the indemnity agreements of the MC.
CDT to SSV Conversion Contract and SSV Testnet Contract Withdrawal and Deactivation
Following the expiry of December 31st, 2024, the MC will execute the relevant transactions in the First Scheduled Batch, to transfer the SSV currently in the relevant contracts to the MC Treasury Wallet, and to render inoperable (to the extent possible) the CDT to SSV Conversion Contract and the Incentivized Testnet Distribution Contract.
This will be done since more than three years have passed by the time of execution as of the time the Token Upgrade CDT → SSV proposal passed in September 2021. This is a considerable amount of time allotted for all CDT holders to convert their holdings.
With respect to the Incentivized Testnet, after the introduction of the SSV testnets, the DAO passed the Incentivized Testnet proposal to reward users who participated in testing the network. In this proposal, it was outlined that the MC would be required to mint a total of 64k SSV, from which users would claim their earned rewards. Some unclaimed SSV remains, which will now be transferred as detailed above.
To guarantee all users have enough time to claim any tokens they are entitled to, the Foundation is hereby instructed to publish a prominent message on all channels and DAO-managed assets (such as discord, X, forum, etc.) relevant to disseminating information regarding the burning of the SSV tokens in the CDT to SSV Conversion Contract and the Incentivized Testnet Distribution Contract. This message will be posted each month at least 3 times in reasonable time frames until December 31st and must include the exact following text:
After the expiry of December 31st, 2024, the ssv.network DAO will withdraw SSV stationary in the CDT to SSV conversion contract and the Incentivized Testnet contract. After December 31st, 2024, claims from these contracts will not be possible. Please withdraw your tokens on time.
Once the transaction to withdraw from both the CDT to SSV Conversion Contract and the SSV Testnet Distribution Contract has been executed successfully and the tokens are in the DAO Treasury, the MC will observe the amount that has been withdrawn and burn 50% of it. From the tokens, while transferring the remaining 50% withdrawn amount:
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150.000 SSV will be transferred to a dedicated wallet, which cannot be used for operational or budgetary expenses. It will be used for the incentivization of new growth of the ssv.network, which will await a new DAO proposal for its approval and use.
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200.000 SSV tokens will be transferred to a dedicated wallet, which will be used exclusively for [DIP-25] Enhancing ssv.network DAO voting engagement.
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Any remaining withdrawn tokens will be burnt.
If it so happens that the SSV withdrawn from the CDT to SSV Conversion Contract and the SSV Testnet Distribution Contract is insufficient to cover the transfer of 150.000 SSV to a dedicated wallet for growth of the network and the 200.000 SSV allocated in [DIP-25] Enhancing ssv.network DAO voting engagement, both, as indicated above, the DAO will be required to mint the shortfall as indicated in [DIP-2] Multi-Sig Committee.
Voting is now live.