[SCP-206] No USDC for future DAO labor related contributions

[Tyler_ShapeShift]

Summary

With the drafting of SCP-205, the seriousness of the budget issues that the DAO has continually navigated have been brought out of Leadership conversations and into the forums and governance for community debate. While the issue has been prescribed a solution, I believe that SCP-205 does not present a future that addresses the deficit appropriately.

SCP-206 alternatively proposes a simple future workstream budget referendum to address the budget issue head on: Future proposed workstream budgets can compensate labor in FOX tokens only with USDC reserved for infrastructure COGS.

---

Motivation

Given current market conditions, lack of growth of revenue, and salaries being taken in USDC or unlocked FOX. The DAO has found itself in a more dire place than the last cycle of austerity.

With revenues where they are at currently, the DAO is looking at ~$20-$50k a month. The options for the DAO acquiring USDC to afford our current runway (TWAPs and asset sales) has a timeline that is dramatically shrinking as well. SCP-205 states we have a 7-8 month runway if all renewals do not embrace a more austere, minimal or FOX centered approach to compensation.

Where this proposal diverges from SCP-205 is in its presentation of a solution. SCP-205 takes an unprecedented approach in FOX governance, combining multiple workstreams’ budgets without detailed and specific spending cuts presented for validation or scrutiny. It also presents a solution that will cost $110k in USDC/month while revenues stay at ~20-30k per month.

This proposal establishes a unified approach to the DAO’s survival by addressing the budgeting issue specifically and immediately. This re-establishes a new baseline spend that forces the DAO to rediscover and re-define necessary and essential tasks or roles, with a more appropriate compensation for them without interrupting organizational operations.

---

Abstract

The ShapeShift DAO has operated in growth mode with the expectation of increasing revenues. Current market conditions (FOX token at $0.012) and revenue trends (~$30k a month in total revenue) indicate this strategy is no longer viable. Rather than continuing current spending until complete USDC depletion, this proposal implements strategic restructuring that:

1. Preserves Core Capabilities: Maintains and essential operations to ensure the product maintains uptime while leaning into automation.

2. Extends Runway: eliminates the clock of a death spiral and puts ~21+ months of runway (not including any revenue calculations)

3. Reduces Risk Constraints: Profits allow for and gives DFC ability to use treasury as an asset and generate additional revenues for the DAO.

4. Creates Clear Milestones: Presents budget growth opportunities that could scale when revenue grows to demand it.

5. Provides space for each workstream to present cases for essential spend: Allows validation and verification of budgets on a workstream by workstream, line item by line item approach.

6. Embraces the current state of automation: Resets the DAOs valuation of labor market worth, embracing the most disruptive parts of AI.

---

Specifications

This proposal expands upon the precedent set in SCP-81 and updates the contributor compensation framework of USDC with optional FOX (that is preferably locked), to just FOX (that is preferably locked). If SCP-206 passes, future Workstream proposals will need to compensate all labor wages in FOX that is preferably locked, as well as validate and verify any USDC budget line items with reasoning as to why it cannot be paid in FOX.

The DAO has specific infrastructure costs that are not able to be paid in anything but USDC or fiat currently. SCP-206 acknowledges that some infrastructure costs will require USDC as payment for a time into the future and preserves the USDC for that minimum COGS spend over anything else.

SCP-81 outlines the importance of locked FOX to the DAO. There is no argument that the DAO prefers locked FOX as compensation over unlocked FOX. Future proposals should be in line with this consideration and that the best incentive the DAO has at its disposal is FOX tokens that will be received by people who are willing to hold it and believe in its utility. This proposal not only addresses the budget deficit, it also solidifies and strengthens the community of FOX holders that acquire the FOX via contributions.

This language will be added to the current forum post template and governance process:

“All future workstream proposals must include reasoning and specifications for any USDC spend with rationale as to why the spend cannot be paid out in locked FOX. All labor compensation must be paid in FOX”

---

Benefits

• Extended Runway: Adds ~21+ months of operational capacity not depending on revenue.

• Preserved Essential Operations: Prioritizes product suite, site, and app operations over any individual contributors’ salaries. This re-aligns long term success and belief in the DAO and FOX token with the DAO’s ‘payroll’ obligations. "

• Clear Path Forward: Establishes a baseline budget that allows the treasury to finally grow instead of continually looking for ways to compensate for overspending.

• Quick Results: Proposals are at renewal season already. New proposals will have to adjust proposals and workstream expectations quickly resulting in almost immediate savings.

• Unified Approach: Not a single approach dictated by backroom conversations. Allows all contributors to address how they can still support the DAO under a balanced budget.

• Maintains Optionality: Avoids operational collapse, doomsday wind down conversations, and DAO becomes profitable as soon as old budgets are not renewed.

• Instant Profitability: Creates a new normal for how the DAO can measure success that has the DAO realizing profits by cutting spend rather than hoping for a moonshot.

• Market Timing: If market conditions improve rapidly, DAO is still resourced to survive and then thrive.

---

Drawbacks

• Reduced Capacity: Significantly diminished team of contributors. Output and velocity will assuredly slow down while we continue to embrace automation, making up the gap in the long run.

• Contributor Impact: Many contributors will lose positions; all contributors face reduced compensation, many will not want to continue. This will hurt momentum.

• Growth Constraints: Basically triggers a ‘Survival’ mode of the DAO, prioritizing minimum spend on current operations to continue to create revenue before being able to expand like our current budget/team allows.

• Morale Risk: Organizational downsizing should impact remaining contributor motivation.

---

Rationale

This proposal chooses strategic downsizing along with a prioritization of the FOX token. SCP-205 does not take enough of a cut into our current spend and only kicks the can down the road on the real budget solution: reducing labor costs. This counter proposal provides a real answer to the budget deficit, does not depend on market conditions or increases in revenue, and introduces profit back to the DAO upon passing.

By implementing these measures now, we:

1. Extend operational runway.

2. Maintain the ability to ship product and generate revenue.

3. Preserve product core over any executive suite positions.

4. Create time for market recovery or strategic pivots.

5. Enable sustainability without the need for a transition to a wind down.

---

Vote

• For: Approve the proposal as written.

• Against: Reject the proposal.

• For with Changes: Approve with modifications (please specify in forum discussion)

This proposal implements immediate cost-cutting measures to thrust the DAO into profitability while maintaining product suite operational capacity. With current treasury projections showing only 7-8 months of runway at current spend levels, we must transition from growth mode to lean mode.

[Tyler_ShapeShift]

Ideation Post

Edit: Updated from 10 days to 7 days in ideation.

[Fireb0mb1]

Thanks for posting your Counter Proposal! I’m still reading it attentively, but I just wanted to point out you don’t need an Ideation poll on Snapshot for it:

To avoid delays in the governance process, any counter proposal that follows the format requirements of Ideation and is published before the conclusion of the original proposal must be included as a voting option when the Original proposal is put up for final vote.

One thing that strikes me immediately after my first diagonal reading is that I can’t really figure out that actual impact this will have on most Workstreams in terms of contributors leaving (which you correctly mentioned as a drawback). Maybe there is a way to informally poll this among Leaders and contributors only (Discord poll in a restricted channel/role … with a breakdown per Workstream) to get an idea of the immediate impact it would have on the DAO’s “workforce”? It would be a good data point to evaluate this, but I’m not sure it’s easily feasible though.

[Tyler_ShapeShift]

@Fireb0mb1

To avoid delays in the governance process, any counter proposal that follows the format requirements of Ideation and is published before the conclusion of the original proposal must be included as a voting option when the Original proposal is put up for final vote.

The language on that proposal is a little out dated (mentions mandatory ideation days) and has conflicting comms around what to do with a counter proposal. I did not want to rush the process and feel like I was skipping an important step.

I am happy to either fast track this as a counter to 205 if that is preferred, or allow 205 its ideation time and hope that the proposer will wait the length of time 206 has in ideation to see if it passes and can go against 205 for official vote.

So possible paths forward are:

a: If 205 passes, 206 can skip ideation and be a formal counter.
b: if 205 does not pass, 206 can move through ideation as a proposal that is not a counter.

c: If 205 passes, we could wait to see if 206 passes so they can go against each other.

d: If 205 passes and waits for 206 to pass and it does not, 205 can go up for vote as normal.

[Tyler_ShapeShift]

@Fireb0mb1

One thing that strikes me immediately after my first diagonal reading is that I can’t really figure out that actual impact this will have on most Workstreams in terms of contributors leaving (which you correctly mentioned as a drawback). Maybe there is a way to informally poll this among Leaders and contributors only (Discord poll in a restricted channel/role … with a breakdown per Workstream) to get an idea of the immediate impact it would have on the DAO’s “workforce”? It would be a good data point to evaluate this, but I’m not sure it’s easily feasible though.

Yes this is a hard number to put out or discover, and will best met at individual levels between workstream leaders, current contributors, and community members that are interested in supporting the DAO.

There is and implied assumption that the FOX amounts paid out for the future work to be done will not be as lucrative as the previous compensation protocols and thus certain contributors will need to reassess their relationships and contributions to the DAO.

@Hpayne and the marketing team have been great leaders in showing what can be done going forward for the minimal amount of resources possible.

This proposal would force the hand of all Workstream leaders to challenge their conceptions of what the DAO truly needs to survive, and at what cost it should pay going forward to get there. It will take some following of @Hpayne’s example, in areas where we may see regressions as a result, but it will thrust survival of the product over a continuation is something that is uncomfortable but more familiar than a radical change like what I am proposing.

It is a little bit like the “blow it up” conversations that were presented by @0xdef1cafe long ago, but now with a clear revenue stream and a path to continue introducing incremental improvements while maintaining a profit.

exchange.shapeshift.com went from and multi-month all hands endeavor to a hard weekend of pairing with ai. Now we have https://widget.shapeshift.com/ Claude is integrated in the app taking new feature addition from a multi-contributor multi-month process to something that can be done as fast as we can type (and then audit) it.

I feel it is more than fair to reconsider what the DAO should pay for contributions in this new world rather that what we thought we needed to compensate previously. FOX token is the DAO’s best incentivizer and should also be considered valuable and a token with upside to those that make contributions for FOX. If that means our talent pool has to reset to find the appropriate contributors that value the upside of owning a token connected to a profitable organization.

Because the conversation was thrust via 205 without a clear means to do a reassessment of price discovery for contributions, I did my best to word a proposal that would provide a holisitc and objective new budget bench mark that then thrust the responsibility of asking for budgets in USDC and unlocked portions of FOX on the individual proposers as I feel governance has abided by thus far.

Perhaps this proposal is too restrictive and workstream leaders will make good cases for USDC budget necessities. I am happy to work with the community on feedback to make this trim budget as realistic as possible. If it is naive to believe that the DAO can operate at a profit, I would love to discover the essential things that threaten it’s success in that case and allow the ‘non-essentials’ to go find their value in the open market.

[Giantkin]

This proposal is what i was envisioning.

If we go a few months like this, we can quickly see what we need to adjust as well.

*********

I think option a or b is best. i think it makes it more clear this way.

[Fireb0mb1]

@Tyler_ShapeShift

The language on that proposal is a little out dated (mentions mandatory ideation days) and has conflicting comms around what to do with a counter proposal. I d

I’m not sure what is outdated/conflicting here

That’s a quote from the current Governance Process in the Conflicting proposals section and your Ideation post to me seems to meet the requirements to be a direct Counter Proposal of SCP-205 for which the vote is just about to end, and you posted it explicitly as a Counter Proposal… it’s not “can be included” but “must be included”… so it’s really just path “a”, unless I’m misunderstanding something.

Other paths would likely need to see you amend the text and start an Ideation vote without mention of it being a counter proposal to avoid confusion.

[Bishop]

This proposal is what i was envisioning.

If we go a few months like this, we can quickly see what we need to adjust as well.

I agree. B is my choice.

[Giantkin]

Well, guess its been triggered anyway, thanks FB.

if 205 passes Ideation, then both go into Counter mode to be voted on together.

Thanks

[Fireb0mb1]

Yeah, other paths are possible of course, but the way this was written seems pretty unambiguous, although with SCP205 potentially not passing I guess making this a standalone Ideation might be the way… it shouldn’t be titled a counter proposal at this point.

[Giantkin]

we can fix that if 205 happens to fail.

[Giantkin]

@CJTheKidd

What if the cuts aren’t deep enough across the board renewals are approved, and we are right back where we are today 2 month from now trying look at cutting more.

Fox holders have to approve the spend. I hope they look at the usdc side, with the goal of 0 usdc.

if the fox is too high / job/person it would likely get voted down too.

$500 in fox a day good/bad ? whats the job.

$100? 1000?

I think calculating that out first.

(copied from 205 thread)

@CJTheKidd

@CJTheKidd

• What if the cuts aren’t deep enough across the board renewals are approved, and we are right back where we are today 2 month from now trying look at cutting more.
• What if cuts aren’t deep enough, renewal does not pass, and the delay causes further depletion of the current runway?
• We have workstreams renewing a different times over the next 3 months, if we let current budgets go until renewals are put up and passed then we again contiune to deplete runway.

3. its Feb for the rest. all are ending feb, (before march)

if a renewal doesnt pass, there is no more cost. (Propososals for renewals are often started a month or so in advance. so theres time to redo etc)
if they are posted in forum first, and discussed it saves time imo too.

[Fireb0mb1]

Seems like it should get fixed now that SCP-205 didn’t pass Ideation… if we care not to confuse people about a potential upcoming vote.

Though funnily enough SCP-205 can post itself under say SCP-207, with some tweaks, as a Counter Proposal to this… and potentially be listed as an option for a Final Vote if SCP-206 passes Ideation

[Giantkin]

I already fixed the title. (does it still show the old one for you?)

it doesnt for me.

[Fireb0mb1]

It’s displaying correctly on the forum, I meant on Snapshot and maybe the few mentions of it being a Counter Proposal within the text.

I guess to avoid delays, if nobody is confused, we can reuse that Ideation vote that was already started (but didn’t follow the Governance Process). But that’s kinda the reason why a Counter Proposal shouldn’t start its own vote like this… it should only happen after the original proposal failed Ideation, and with some revisions in my opinion.

[Giantkin]

ya, we cant edit snapshots

course, for the proposal setup, it would have correct name.

I think i suggested a chain in the template for counters. (or if not, i need to copy my thoughts there)

[Neomaking]

SCP-206 doesn’t solve the deficit, it protects the wrong people

I want to raise some issues with this proposal from my perspective as an engineer.

This counter-proposal avoids the real conversation

SCP-205 was trying to address specific roles that haven’t been able to demonstrate clear value. Instead of engaging with that, SCP-206 proposes a blanket solution that hits everyone equally. That’s not fair. An engineer shipping features 12-16 hours a day should not be treated the same as someone who can’t prove what they’ve been doing for months.

If we’re going to make cuts, let’s look at output. Let’s look at who is actually building the things that bring in revenue. Spreading the pain equally protects contributors who aren’t delivering while punishing the ones holding this DAO together.

FOX-only compensation doesn’t reduce sell pressure

I need fiat to pay my bills. If you pay me in FOX, I sell it. The market impact is the same whether the DAO sells via TWAPs or I sell to cover rent. We’re just moving who clicks the sell button.

And “preferably locked FOX”? I can’t pay rent with locked tokens.

The engineers shipping are already at the edge

I’ve been working 12-16 hour days trying to bring in revenue. I’m close to burnout. So are others. This proposal admits contributors will leave. When they do, the workload falls on whoever stays. That’s not sustainability, that’s a death spiral.

I’m not against austerity. But austerity should protect the people actually producing, not treat all labor as equal when it clearly isn’t.

[Apotheosis]

Indeed.

This proposal leads to “maintenance mode” almost immediately - the same state SCP-205 might have entered after we executed on the ambitious (but still realistic, thanks to our agentic velocity) revenue-focused roadmap and were still unable to make a meaningful impact on revenue.

With this path, however, we don’t get that chance.

FOX-only compensation doesn’t reduce sell pressure

Yes. At best, it delays the pressure somewhat (if locked FOX is used), but effectively it is no different from the treasury TWAPing FOX for USDC to pay contributors - except the sell pressure isn’t controlled.

I’ve been working 12-16 hour days trying to bring in revenue. I’m close to burnout. So are others. This proposal admits contributors will leave. When they do, the workload falls on whoever stays. That’s not sustainability, that’s a death spiral.

This captures the sentiment well. With this proposal, we likely lose those who are working the hardest and adding the most value. We lose those that are 100% committed, those without second jobs or businesses to augment locked FOX-only compensation, those working 5-7 days a week to turn this ship around.

[0xFBL]

Many of us accept that the DAO needs to radically change course. What doesn’t follow is a solution demotivating or pushing out the most productive contributors.

Substituting paid accountability with volunteerism, especially without a concrete plan to retain and prioritize critical talent/bills/skills, is not a strategy. It’s ideological signaling. A purity test never goes well for DAO’s even if it feels right.

You get what you pay for. When you pay nothing, you shouldn’t be surprised by the result.

@Giantkin

3. its Feb for the rest. all are ending feb, (before march)

This is incorrect.

[Tyler_ShapeShift]

@Neomaking

SCP-206 doesn’t solve the deficit, it protects the wrong people

SCP-206 doesn’t protect anyone, it stops the DAO’s biggest current USDC obligation from being labor so it can protect the DAO’s USDC for line items in budgets that are able to justify the spend in USDC. Regardless of 206 passing or failing, All current workstream leaders have their renewals coming up:
TOKE: term ends February 28, 2026
PROD: term ends February 28, 2026
OPS: Term ends February 28, 2026
ENG: term ends March 31, 2026

And no one is ‘protected’ from realistic budget expectations in a renewal that will still have to be proposed soon.

@Neomaking

SCP-205 was trying to address specific roles that haven’t been able to demonstrate clear value. Instead of engaging with that, SCP-206 proposes a blanket solution that hits everyone equally. That’s not fair. An engineer shipping features 12-16 hours a day should not be treated the same as someone who can’t prove what they’ve been doing for months.

If we’re going to make cuts, let’s look at output. Let’s look at who is actually building the things that bring in revenue. Spreading the pain equally protects contributors who aren’t delivering while punishing the ones holding this DAO together.

There is governance precedence in how to navigate a community member or member(s) feeling that there are specific roles or contributors that don’t demonstrate value. If this was truly the motivation for 205, it probably should not have included three separate workstreams’ renewals. If this was the motivation, why was it not more of the focus of discussion during votes or governance calls? If this was the motivation, when the proposal failed, why was there none of it’s supporters working with the community to update the proposal to be something more aligned/simpler/more focused so that it could pass?

Please see:
SCP-117 for a proposal that was focused on a specific workstream and their budget.
SCP-123 for proposal revisions in a proposal that did not pass ideation, but had it’s proposer and supporters engage with the community to come up with a revised proposal.
And SCP-182 as it turned into SCP-195 with the engagement and input of many contributors and voters to go from a failed proposal to a successful one.
If you feel 205 was focused on something that was not brought up in the forums and has a spirit that was misinterpreted or confused with all of the pieces presented, I would love to see further pursuit of what you’d like to see implemented from 205 so it can navigate governance again more favorably like 123 or 182.

Your statement about cuts based on output is a strategy for sure. I feel that strategy coupled with the budget that was presented in 205 does not adequately solve the budget deficit. This feeling was shared by many in the forums and looks to be one of the reasons 205 didn’t pass ideation. If we practice the strategy of cutting the lowest performers without meaningfully addressing the budget (205), we have cut of the nose to spite the face and all of the issues you have presented as opposition to 206 are the same reasons you will present when the treasury has been drained by an over budget strategy and it forces you to pursue finding income elsewhere because there’s no money left to pay anyone.

@Neomaking

This counter-proposal avoids the real conversation

What is the conversation you’d like to have? It feels like there’s a lot of conversations being avoided when many of the questions presented to 205 were ignored or fed to an llm instead of considered. I’m not interested in hiding any of my motivations for posting 206 and certainly did not post it with any feelings of ill will towards contributors it will affect in the future. I’m happy to continue the conversation and come up with the appropriate solutions the DAO needs to survive past any one individual contributor, contribution, or even workstream.

Regardless of how you feel about any contributors, their output, your contributions or burnout, the DAO is not just the product of the app. Your statement that 206 is ‘punishing the ones holding this DAO together’ is a misnomer, in both scope of what the DAO is and what punishment is. The consequences of future budget cuts are not punishments and the DAO is based around the FOX token; it is a decentralized governance organization that has a growing product suite that includes the app, but is much more than the releases going into the app.

I think there’s an elephant in the room that’s the actual conversation being avoided but I’ll address that in my next response below.

@Neomaking

The engineers shipping are already at the edge

I’ve been working 12-16 hour days trying to bring in revenue. I’m close to burnout. So are others. This proposal admits contributors will leave. When they do, the workload falls on whoever stays. That’s not sustainability, that’s a death spiral.

I’m not against austerity. But austerity should protect the people actually producing, not treat all labor as equal when it clearly isn’t.

It sounds like the burnout issues should be brought up with your workstream leader and addressed. If you feel that you or your team is not working in suitable conditions, that is on you to navigate successfully whether that is bringing it up to your manager or bringing it to the community if you do not feel like it is being addressed properly. None of that has to do with the budget issues that haven’t changed since before ENG integrated AI more holistically into our processes.

If you work 12-16 hours a day and don’t bring in any revenue (or bring in revenue that is not worth the labor it cost to add it), is it fair to say that the labor and rate we are paying is worth it? Is that fair to the DAO? No.

The DAO is not about fairness, it’s about decentralized organizing, providing non-custodial, open-source solutions, and continuing to iterate on the FOX token, it’s financial engine for doing so.

At what point is fair a part of any conversations in Governance in the DAO’s decisions to move itself forward and why is that suddenly relevant now?

Both proposals admit contributors will leave. All of us have intuited looking at the budget, our revenues and sentiment in the forums and recent ideation posts that there’s no way we make it through a round of renewals without some contributors leaving.

The real conversation here, the one that’s been avoided for months is the affects of AI on ShapeShift and the DAOs new need for top quality dev labor with what we’ve currently got left in terms of resources. There’s no ‘death spiral’ when the work is minimal, development growth is re-established once there is funding for it, and ShapeShift rediscovers it’s actual need for development labor while embracing the work that has allowed velocity to increase exponentially over the last quarter.

I hope my post comes across in a way that doesn’t take for granted or undersell the massive contributions the Engineering teams have done since the DAO its inception as well as recently. I also wish no ill will to any of the contributors that may have to consider alternative forms of employment as we navigate future resourcing.

This sucks having colleagues play lord of the flies. I don’t think that 206 solves all of the issues you have presented, but I do think it gives the DAO a much better chance than 205 ever would have.

It also specifically has the wording that the only change in governance this proposal makes is
”“All future workstream proposals must include reasoning and specifications for any USDC spend with rationale as to why the spend cannot be paid out in locked FOX. All labor compensation must be paid in FOX”

If there are parts about this that you agree with but others that you do not, let’s work collaboratively on language that we both think helps the DAO solve this issue we are currently facing.