[Ideation SCP170 v2] Treasury Management and Diversification Committee (TMDC) Mandate Update & Rename into DAO Finance Committee (DFC)

Summary:
This proposal seeks to reform the existing Treasury Management and Diversification Committee (TMDC) by expanding its mandate and renaming it to DAO Finance Committee (DFC). This proposal also updates the procedures & policies of the DFC.

The new mandate includes explicit management of discounts/fees/promotion details from previous and future governance proposals, management of all grants & non-FOX token revenue to any of the DAO’s wallets on any chain, and increases the oversight of token allocation from 180M FOX to encompass all grants & non-FOX token revenue.

Abstract:
As discussed in [SCP-148] and [SCP-77], the TMDC has been pivotal in “advising on the allocation over certain limited assets within the ShapeShift treasury” and "managing the treasury to meet payroll and operating expenses with stable coins each month"​​. Building upon this solid foundation, the proposed DFC aims to integrate a more holistic approach by including fee management and all grants & non-FOX token revenue, ensuring a comprehensive treasury, revenue, and financial health approach.

Proposal Details:

  • Mandate Expansion and Renaming: The TMDC will be rebranded as the DAO Finance Committee (DFC), with an extended mandate to oversee a broader array of financial responsibilities. This includes:
    • Management of discount fee parameters from governance proposals.
    • Oversight of all grants and non-FOX token revenues across all DAO wallets and chains.
    • Enhanced reporting on DAO’s financial health and strategic recommendations for financial sustainability.
  • Policies & Procedures Update:
    • Agenda Procedure: Agenda items for DFC meetings must be submitted with detailed rationales focusing on revenue growth, user expansion, position management, and cost analysis. This structured approach ensures thorough preparation and strategic alignment with the DAO’s objectives.
    • Policy Adjustments: Introducing policies for proposing votes of no confidence within the DFC to maintain accountability and integrity among members. Removal of a DFC member requires unanimous consent from all other members, ensuring fairness and collective agreement.

Rationale:
The proposed expansion and reformation of TMDC into DFC are driven by the evolving needs of the ShapeShift DAO. The inclusion of fee management and broader asset oversight will equip the committee to make more informed, strategic decisions that align with the DAO’s long-term vision and sustainability. The committee’s priority is to take a holistic approach to DAO treasury management, and must act toward the long-term success of FOX token holders, the FOX token ecosystem, and thus the ShapeShift DAO as a whole​​. By encompassing a more comprehensive financial strategy, DFC will play a crucial role in steering the DAO towards financial resilience and prosperity.

The recent Optimism (OP) grant situation underscores the necessity for the expanded mandate proposed for the TMDC. Without explicit inclusion in the TMDC’s mandate, the management of such assets rests in a state of limbo, pending direct governance actions. This scenario reflects a critical oversight: the failure to anticipate the diversification of assets like the OP grant, which, while crucial for the DAO’s strategy, fall outside the traditional FOX-focused paradigm. The absence of a clear, proactive management strategy for these assets could lead to missed opportunities or missteps, undermining the DAO’s operational efficiency and strategic agility.

Initially, the Treasury Management and Diversification Committee (TMDC) was envisioned with a focused scope, primarily managing the 180M FOX tokens and assets derived therefrom. This scope was rooted in the belief that direct DAO governance should preside over assets outside this purview. However, the landscape of governance and asset management within the DAO has evolved significantly since the TMDC’s inception, revealing gaps in this approach. Meanwhile, the ecosystem of protocol DAO risk management has blossomed into a category. There are numerous examples of teams allocating assets, performing open market operations, changing parameters based on monthly analysis, and reporting it all back to token holders for rigorous review.

The rationale for expanding the TMDC into the DFC and broadening its mandate is precisely to address such scenarios. By entrusting the DFC with the management of the grants and future non-FOX tokens, the DAO ensures a more responsive and responsible stewardship of its assets. This proactive approach empowers the DFC to dynamically manage and leverage a diverse portfolio of assets, aligning with the DAO’s evolving needs and governance discourse, and ultimately fortifying the DAO’s financial foundation and strategic execution.

Benefits:

  • Comprehensive Financial Oversight: The DFC will have a broader mandate, enabling it to manage discounts, fees, grants, and non-FOX token revenues more effectively. This holistic approach ensures that all aspects of the DAO’s treasury and financial health are under vigilant oversight.
  • Strategic Financial Management: With the expanded purview, the DFC can make more informed decisions that align with the DAO’s long-term vision and sustainability goals. This strategic approach allows for proactive management of the DAO’s assets, enhancing financial resilience.
  • Enhanced Governance Alignment: The reformation into DFC reflects a governance structure that is more aligned with the evolving needs of the DAO and its community. It allows for a more agile response to changes in the financial landscape and governance requirements.
  • Operational Efficiency: By centralizing financial oversight and management tasks within the DFC, the DAO can achieve greater operational efficiency. This streamlined approach reduces redundancy and ensures that financial strategies are implemented cohesively.

Drawbacks:

  • Complexity in Oversight: The broadened scope of the DFC might introduce complexity in managing a wider array of financial tasks and responsibilities. This could require additional resources or expertise to navigate effectively.
  • Potential for Overcentralization: With the DFC taking on an expanded role, there’s a risk of overcentralizing decision-making power within a single committee. This could potentially limit diverse input and perspectives on financial management strategies.

Voting:

  • For: Voting in favor of this proposal indicates support for the transition of TMDC to DFC, endorsing the expanded mandate and the strategic approach towards comprehensive financial management. It reflects a belief in the benefits of a more holistic and integrated financial oversight mechanism within the DAO.
  • Against: Voting against this proposal signifies opposition to the changes, preferring to maintain the current structure and scope of the TMDC. This stance might be rooted in concerns over the potential drawbacks, such as increased complexity or overcentralization.
  • For with Changes: Voting “For with Changes” expresses conditional support for the proposal, suggesting that certain amendments or clarifications are necessary before full endorsement can be given. This option is for those who agree with the proposal’s direction but seek modifications to address specific concerns or enhance its implementation.

Thanks for the proposal!

I agree with putting the non-FOX revenue under the management of the TMDC (or the DFC henceforth), although I’m not sure we actually have a lot of FOX revenue currently… Which source of revenue does this limit aim to exclude? For what purpose?

Regarding the no-confidence vote procedure, I’m not really convinced. I think that if it comes down to this, a rogue member will be outvoted by good members within the 12 days it would take any of the members (or really anyone) to submit a proposal to get them removed from the committee by a governance vote (especially since the procedure covers only the case where all the other members agree with their removal).

Maybe I’m missing something and such member could cause damages I’m not aware of before their removal? But even if somehow they managed to get a TMDC vote passed, DAO Signers are a good check against this, and unlike you (correct me if I’m wrong), I don’t think we should aim to get rid of Signers any time soon. The way they are chosen and the fact they remain anonymous is a good compromise between the previous situation (historical doxxed signers) and a fully automated signing mechanism (which I’m not sure many DAO reliably use, without a set of signers as a backup). There is also something to say about the dilution of responsibility Signers currently provide to Committees in general, removing them would increase the responsibility/risks Committee members are exposed to when they decide something (if their internal vote = automated transaction), but that’s maybe another debate.

I suggest a compromise to solve the rogue Committee member situation: an unanimous internal vote of the Committee (excluding that member) allow them to create a “Final Vote” without delay on Snapshot (no Ideation needed, maybe a forum post just so people can discuss it if needed) to ask for confirmation from governance for the removal. As sort of “emergency” vote but with this as only purpose, no way to demand anything else in the vote.
Otherwise I feel that it is strange to have members of a committee elected by a governance vote, and potentially removed without governance vote. In my opinion it shouldn’t be up to elected members to be able to reverse governance decisions/elections.

In all cases we should also settle the effect a removal would have on the compensation of the removed member (which is also a good reason to go through governance). Should they still be compensated pro rata of their time in the Committee? Does it void any pending compensation?

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I totally agree with the beginning of the post. I was against more revenue control. (i thought it was more about all in the treasury, not just new revenue. ill have to reread) I am less against this now.

no confidence. i think thats true. other members could just outvote any bad actor. (semi bad actor) and worse, to me, this makes it that if one person has a counter opinion, others can say this member is a bad actor, and work to vote them out. (which is what my concern about it is)

we have good arguments, disagreements now, and this hasnt come up, but maybe its there in the back of mind?
maybe the risk of 3 of 5 votes brings this up that a bad actor (but convincing, could push a negative action through? (tho then the MS could still stop this) oh, in this case, you wouldnt get the bad actor voted out. so nm.

I like the emergency vote. (maybe it should be broadened to any contrib?)

the Compensation stops upon removal from position. to me thats easy. Calculated pro rata is the usual method i would use.

I am also of the mind that MS is important. i do not trust direct onchain action.

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Most contributors can already be removed by Workstream Leaders under their hire/fire privilege per SCP-92. So I suppose you’re talking about an emergency vote to ask governance to remove a Workstream Leader, invoked by an unanimous internal vote by all the other Workstream Leaders? I think it could work, but clearly out of the scope of this proposal. In all cases we’re talking about exceptional situations here, and processes we all hope we’ll never need to use.

Your comment made me think that this kind of procedure should only be invokable if there are enough people in the committee (both the original proposal and my compromise)… if for some reason the committee goes down to 2 or 3 members because the rest has quit for example (or a member got removed), you wouldn’t want it to be possible for such a small majority (even if unanimous) to be able to do this in my opinion :sweat_smile: But then again, Signers might reasonably refuse to execute decisions (transactions) taken by a committee of so few people and ask them to fix the committee first.

Sounds fair to me too, it should really be included in the terms of a member removal if we codify that, even if it sounds obvious.

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it is in the GOV setup, doesnt need to be in tmdc.

and the leaders already have this in that positions setup too, good point.
so i think this is totally moot, could and should be left out overall i think.

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I’m assuming you’re talking about the end of the compensation and it being paid pro rata of the time in case of removal of a member, if so where is this stated “in GOV setup”? If not, I’m not sure what you’re referencing.

Also there’s not really a Workstream Leader equivalent in the TMDC, since it’s a governance elected committee, with a governance assigned compensation… unlike in Workstreams where SCP-92 gives that power to allocate the budget as they want during their term. That’s why I suggest to state it clearly here, so there’s no doubt as to what the DAO would owe in case of the removal of a committee member.
Another option would be to say that the emergency removal proposal (or internal vote if that’s what people prefer) should settle this issue, it would give the option to pay or not such compensation depending on the gravity of the reasons of the removal for example.

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hm. true, tmdc isnt a ws. didnt think of that one.

for the compensation , might have been in code?
but if they arent working for the dao, they wouldnt be getting paid.

Maybe just my logic, not reality?

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Completely logical, it wouldn’t hurt to be clear about it though in my opinion. We’re talking about exceptional situations in which I wouldn’t put it pass someone claiming that they are owed the rest of their compensation because it’s in a proposal (their election proposal) and nothing says they’re not owed it… especially if it’s in such a serious situation that the rest of the committee is unanimously for their removal :sweat_smile:

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So I have some concerns with how broad this is. “previous and future governance proposals” → anything that was previous already defeated to the TMDC specifically already exists (so shouldn’t require any update), I don’t think you can encompass all “future” proposals as we don’t know what they say yet. Future proposals should delegate to the TMDC/DFC specifically in those future proposals no?

" management of all grants & non-FOX token revenue to any of the DAO’s wallets on any chain" → I think I understand the spirit of this but the language seems too broad IMO. It shouldn’t be within the TMDC/DFC’s mandate to do whatever they want with “all grants and non-fox revenue” they should only manage that within the parameters and purposes of what has been delegated to them, so I think this could use some more specific and limiting language.

Also on the idea of the 180m FOX → could we get an accounting of where this currently sits? With the current treasury sitting above 200M FOX I think we should consider whether this mandate should actually be lowered if there is still ample room, not sure the TMDC/DFC needs mandate over 180 M fox today to be honest.

Small nitpick but i think this should be the specification section not “proposal details”.

So management of discount fee params is already assigned via SCP-153 I believe, is this even needing to be included in this mandate update?

In regards to “oversight of all grants and non-FOX token revenues” this again seems overly broad to me. What does that oversight entail? What can the TMDC/DFC do or not do with this? If the idea is to have no limits then I think that is problematic, if there are limits then they should be delineated specifically IMO.

I think I agree with @Fireb0mb1 here and I don’t see the point of adding this. Ultimately governance is the one who decides who is on the commitee and governance should be the one to decide if someone needs to be removed (outside of them stepping down etc of course). I’m not sure we need extra process here at all, right now those same TMDC/DFC members can simply put up a governance proposal to remove someone from the committee and I think that may be best kept that way?

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First off, big thanks for diving deep into the proposal for reforming the TMDC into what we’re calling the DFC. Your insights and questions are valuable to me as we tweak and improve this idea together.

Replying to @Fireb0mb1:

  1. About Non-FOX Revenue: I get where you’re coming from with the non-FOX revenue management. My thought was to bring everything under one roof, both because 1)it makes for easier and more strategic management and 2) there have been instances of comingling DAO governance-related funds and TMDC-related funds. It’s not about leaving anything out but making sure we’re smart about how we handle all the resources we’ve got.+1 to finding more ways to diversify our income streams.
  2. The Whole No-Confidence Vote Thing: You brought up some great points about this. I’m all for keeping things accountable but also efficient. The emergency vote idea is actually pretty cool, and I’m thinking of how we can fit something like that in, making sure that it’s the community’s voice that ultimately decides who’s in and who’s out. I also want to be mindful of Jon’s comments below, and how he feels that the governance process is sufficient as it is now.
  3. What Happens with Pay When Someone’s Kicked Out?: Absolutely, we need to be clear on the money side of things. Going with a pay-for-what-you-worked approach seems fair to me. It’s all about making sure people are compensated for the time they actually spent working.

Thoughts on @Giantkin’s Points:

  1. Managing Revenue: I hear you on being cautious about controlling too much (like all the treasury). I do want to clarify this would be for just new revenue from this point forward. The goal with DFC is really to be smarter and more strategic with our funds, aiming for the long haul.
  2. Worry About ‘Bad Actors’: You’re right; we need to be careful not to create a system that could be misused. It’s all about finding that balance where we can deal with real issues without giving too much power to misuse. I’ll think more on the emergency vote to make sure it’s fair.

@Jonisjon’s Insightful Comments:

  1. Broad Mandates and Clear Language: You’ve got a point about being too broad or vague. I’m on it to make sure the proposal is clear and specific, so there’s no confusion about what the DFC can and can’t do. What kind of limits could we put in place that would still allow the DFC the flexibility/mandate necessary to, say, allocate OP tokens that aren’t the result of a TMDC swap/stake/vote/action? Or, alternatively, should I be taking these proposals to governance once the TMDC passes recommendations? How should these non-TMDC items be handled?
  2. The 180M FOX Tokens: Great question about where all that FOX is right now. The current TMDC allocations spreadsheet is here: TMDC FOX Allocations - Google Sheets. I am in the process of auditing it to ensure it is 100% accurate. Thanks to @joshuAF for maintaining this.
  3. Proposal vs. Specification: Gotcha on the terminology mix-up. I’ll clean that up to make sure it’s clear what we’re talking about.

Wrapping Up:

All your feedback highlights how important it is to get this right, making sure the DFC works for us now and in the future. I’m all ears for more thoughts or ideas, and I’m pumped to keep working with you all to refine this proposal.

Last Thoughts

Currently, there are no clear guidelines for what to do if a TMDC member steps down abruptly. We have historically left this post open, and that is part of why we lowered the quorum requirements. Other places have empowered the WS Leader to appoint an interim leader if they step down abruptly, but that is a more central/necessary role. As this is a committee with 5 members, I feel that it is probably best to keep it the way it has been, but I do want to express concern that there may come a time when multiple people leave the TMDC simultaneously, which, with governance delay, would effectively make the DFC unable to pass votes and therefore inoperable.

Thanks a ton for all the engagement and support.

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hm. good point about multiple leaving at once. maybe make sure that something like…
if under 3 members of tmdc (or whatever heh) then … the 2 members can appoint temp users to fill up to 2 seats while new members are being discussed.
if under 2, then …

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@Giantkin I think that’s a good idea. So, this language:

“If the TMDC ever finds itself with only 3 active members (through them stepping down or a removal without appointment via governance action), then the TMDC can (with a quorum of 3 and majority rules) vote to appoint an interim member of the committee.
If the TMDC ever finds itself with only 2 active members (through them stepping down or a removal without appointment via governance action), then the TMDC can (via unanimous approval only) vote to appoint 2 interim member(s) of the committee.”

Suggestions?

In general I favor a philosophy with these types of things where you add delegated powers to the committee as they become a significant need, but try to be narrow and specific with the limits of their role/mandate.

So in this case, I would say a number of more specifics about what the DFC will or will not be able to do with the revenue that it has some oversight over would be really helpful. E.g describe the specific things it can do with that revenue (sell for stables for runway purposes, allocate to other crypto like btc/eth for diversification purposes, use for user incentives, etc) and outside of those specific things it should be assumed the DFC cannot do those things. Also a few examples of things it specifically cannot do is also helpful to define the limits (e.g. cannot sell al the revenue for meme coins, or make outsized speculative bets on low mcap assets, etc).

I think anything outside of those specifics should go to governance in some manner (either for amending additional delegated authority to the committee as the needs arise, or for one time asks in specific situations). I know in the past when anything felt sufficiently unclear to TMDC members on the limits of its authority it would often take a proposal to governance anyway in those instances and I think that is a good practice across most such situations.

In regards to the non-TMDC related items, my assumption would be anything not delegated to the DFC or some other committee or workstream, especially where it comes to matters of uses of the treasury, would be matters for governance. Sometimes that will mean new needs arise and things get updated, but other times will be one off governance matters that just get a proposal and are settled.

Thanks for the link. It seems like right now the TMDC has about 87M within its mandate that is unallocated. I would actually suggest possibly lowering this given the current and historical use rates of FOX by the TMDC mean the current amount is actually probably high enough for quite a while. So maybe grant the DFC authority over 135M FOX for now (giving the TMDC 40+M unallocated + the total already allocated) and then have the committee ask for increases if and when the needs arises?

This is a good point, maybe just adding something within the proposal that stipulates if the committee ever has less members than needed to meet quorum due to voluntary resignations the remaining members can temporarily assign one (or two if needed etc) new members to get them to quorum on an interim basis (but then should do to governance to confirm any new members past an interim basis) would help cover that situation?