SSV DAO Budget - Initial discussion

[alonmuroch]

Summary

We propose to create a DAO budget for the next 3 years where each year will need to be re-voted as slight changes might be needed.

The budget framework tries to take into consideration several DAO needs like hiring, incentivization programs, ad-hoc func allocation and more.

The goal of the budget framework is to create clarity and certainty for the community and its most prominent members (ambassadors, DAO employees, projects and more), create long term goals and align the DAO’s resources with the overall objectives of and goals of the protocol.

Mechanics

As of today (April 28th, 2022) the DAO has the following treasury:

• 494,291 SSV
• 5,541,259 USDC
• 66 ETH
• 16,640 LDO

The DAO has also provided liquidity on uniswap (worth $1M at the time of execution).

Link to excel sheet

The above spreadsheet encompasses several proposals that are already in motion, new hires by the DAO and a general miscellaneous budget which is controlled by the ambassadors committee (multi-sig gnosis safe).

All budget items (except miscellaneous) are and should be approved in separate proposals.

Miscellaneous Budget

Items in the miscellaneous budget are approved by a quorum, as defined in the ambassadors multi sig wallet. All paid for items will be communicated by the ambassadors in a transparent way to the community.

The rationale behind this budget item is to enable dynamic and fast resource allocation without the need to re-open the budget time and time again as a budget proposal can’t possibly encompass all future payments.

Payroll

Payroll is a big budgetary item which aims to expand the amount of people directly compensated by the DAO for part/ full time positions.

A dedicated acceptance framework should be adopted which details which positions the DAO looks to fulfill, how people are compensated, how termination works and how they apply and get into the DAO for part/ full time positions.

This budget proposal doesn’t discuss the above, it simply puts a budget item for it.

DAO Budget Mint

Starting from the second budget year (2023) the DAO will mint 3% of supply to itself.
Minting will occur at the beginning of the year

Accounting and Transparency

The final DAO budget proposal should name a budget leader that will keep track and communicate budget vs actual movements from the DAO wallet, future/ non-executed obligations and so on.
The budget leader role will require strict enforcement of the budget and monthly reports to the community where the DAO stands in terms of budget vs actual.

As a potential help to the budget leader, a CPA community member might help out to create consistent reporting for the budget and movements

Token Diversification

During the year and as the need arises, the DAO can convert one treasury token to another via a dedicated proposal to rebalance and diversify its treasury.

Poll

• I support
• I’m against

[satbalwyn]

@alonmuroch

Starting from the second budget year (2023) the DAO will mint 3% of supply to itself.
Minting will occur at the beginning of the year

The mainnet is not released and we do not have data about ssv network future revenue. I am not sure whether it is a good way to mint new tokens for the incoming year’s budget?

satbalwyn

[Adamefr]

Thoughts:
Y1 Grants should be 2 mil USDC, Misc. 250K
Y 2 Grants and misc. should be: Grants 1.5 mil USDC, Misc. 250K
Y 3 Grants 1 mil USDC, misc. 250K

We should have a rebasing mechanism for SSV according to price fluctuation
Min minted amount 6.5 USD per SSV x amount of SSV
Max minted amount x SSV
This way we have some flexibility when the market shifts

I suggest Misc. item to become ‘Misc.+growth’ so we will have a line item for marketing activities (offline events, FES, KOL cooperation etc.)

[yunpeng]

I am against the DAO to increase the treasury funds by issuing additional tokens, the DAO needs to balance the budget through the profit of the protocol

[Antoha]

I support this proposal

[hzariki]

As the mainnet is planned to launch this year then some expenses could be paid from protocol revenue. So the budget should be revised after the mainnet rather than just mint 3% of the circulating supply every year.

[alonmuroch]

The goal is not to blindly mint but rather mint enough for the DAO to have the resources to function and grow the network.
If protocol revenue are such that they can cover some/ all of the costs then there is no need to mint anything

That’s why this is voted on each year.

[skyold]

Talking about how we spend money on bear market may not be a good idea. Suggest that we discuss the DAO Budget several months later. With more communication with community.

[hzariki]

I suggested we should create the budget plan this year first, the second year should be discussed by the end of this year. At that point, the compensation of DAO workers, protocol revenue, and marketing expenses can be more easily estimated.

[cryptomanba]

reduce your excessive overheads and ride out the bear market or pump the ssv to finance the dao;
stop the idea to Inflation;
If protocol revenue cannot cover some/ all of the costs,that means fail to ssv

[fod]

I also would like to keep inflation to a minimum. For each minting decision, we should ask ourselves: “Is this expected to grow SSV more than the amount we’re inflating the token?” In other words, if we’re minting 3%, those minted funds need to be used to add value to SSV that is greater than the 3% we’re losing from inflation.

However, with that said, I think some minting at this early stage will be very favorable for SSV, and our plans for this year easily justify the proposed 3% minting (testnet, grants, needed hires, bug bounties, etc.). For example, giving a grant to a new staking pool will very likely grow SSV many times more than the cost of the grant. And hiring Shad has been hugely valuable compared to his salary. There are many opportunities like this that we would be smart to take advantage of, and without minting, we unfortunately won’t be able to in the same way.

As Alon said though, this will be voted on again next year. And by then, I think we’ll probably find that we can reduce or eliminate minting. So I don’t think we should see this as a long-term policy of minting several % per year.

[kepm]

I recommend spending less during this period…

[fod]

@cryptomanba @kepm Do you have suggestions to reduce spending? It’s a tricky subject because, in my opinion, everything we’re allocating for seems very important. The biggest spending is grants and bug bounties, which I don’t think we should touch. For payroll, we really need to hire dedicated roles so that the DAO actually has people responsible for the required tasks… we’ve been depending mostly on volunteers and Blox, which is not sustainable. Miscellaneous will likely include some essential tasks, such as paying for a market maker when we finally get a Coinbase listing, so in my opinion, we shouldn’t reduce that either (yet).

And it would be nice if we could raise the price of the token, but no one has any control over that. If we did, we would have made the price go up a long time ago. Also the network will have revenue after it launches, but until we get there, we are unfortunately dependent on what we raised through the partnership program and what we decide to mint.

[tai5555]

I agree with the proposal and the 3% inflation. This is because it will be voted on every year the DAO will be adequately funded for 2023 and depending on future performance of the token and needs of the DAO further inflation is by no means guaranteed. Adequately funding the DAO is necessary for helping to properly grow the SSV ecosystem.

[contextual]

The proposal actually looks viable and and considers all pros and cons! Just as much bear market may be a pain it could serve as time of making turning decisions!

As a matter of interest may SSV DAO consider issuing grants to composable leverage protocols such as Gearbox (the one and only!) ?

Gearbox offers outstanding capabilities of under-collateralized loans though ensuring the money may not be actually drained from the protocol but can be rotated among several staking protocols for yield, apy farming etc. It gives you more capital to work with, which then YOU DECIDE where to deploy into.

You take leverage with Gearbox and then use it on other protocols you already love.** For example, you can leverage trade on Uniswap, leverage farm on Yearn, make complex delta-neutral strategies, get Leverage-as-a-Service for your structured product, and more

[goldstream]

Do not agree. We’ve seen enough “leverages” already. Terra, 3AC, Cellsius…the list can be easily continued. At this market stage we must think about how to save capital and do not lost what we’ve already got rather than try to multiply it taking unnecessary risk.

[kl0ndike]

I support this proposal

It’s very hard to budget in a bear market right now, and it’s important to encourage grants for development, marketing, and finding bugs. After the launch of the mainnet and the rise in the price of the token, we will see a more complete picture. I think minting new 3% tokens for the budget is a good idea - it’s a kind of risk diversification if we spend a lot of money on the testnet, grants, marketing and finding bugs. It is very important to get the highest quality product, especially in a bear market.
If all goes well, then minting new tokens can be abandoned next year, because. it definitely brings negativity from the community.