[SCP-69] ShapeShift DAO to DAO ecosystem treasury (vFOX)

  • (1) Summary - The ShapeShift DAO is in a unique position when it comes to deal flow of new decentralized projects and DAOs, as well as an opportunity to collaborate with and support the very ecosystem the DAO wishes to provide a decentralized global interface for. One of the best ways the ShapeShift DAO can leverage its treasury to support this, is to form and fund a sub-DAO focused on DAO to DAO relationships supporting, partnering, and investing into the ecosystem the ShapeShift DAO wishes to see evolve.

    (2) Abstract - The ShapeShift DAO community votes to create a Sub-DAO D2D treasury focused on the growth of the decentralized and aligned ShapeShift DAO ecosystem. This would be a commitment from the DAO to fund this treasury with $1 million USDC (or part USDC/FOX and equivalent amounts), and as part of that receive 90% governance rights to the vFOX governance token (venture FOX). The other 10% of the vFOX supply would remain in the sub-DAO treasury to be distributed as incentives to the sub-DAO committee which would source and vote on the allocation of sub-DAO assets (or to be used ultimately for whatever vFOX governance wishes). This would give the ShapeShift DAO 100% of governance rights at the genesis of the vFOX sub-DAO.

    (3) Motivation - There are a number of motivations to create the vFOX DAO to DAO ecosystem treasury:

    (a) The ShapeShift DAO has a large and growing treasury and is in a great position to invest it. By investing in up-and-coming decentralized projects with which the DAO wants to partner, not only will closer relationships between the ShapeShift DAO and its product(s) be formed, but the DAO will also participate in the potential upside of investing early on into the global decentralized ecosystem that the ShapeShift DAO is already betting on and supporting. The potential success of such a model was put on display when the TMDC allocated to SILO in its genesis event, however long term this type of speculative investment is more suited for a dedicated vehicle (such as vFOX) rather than as part of TMDC’s mandate and duties for the larger ShapeShift DAO treasury.

  • (b) Sourcing deal flow and partnering with various projects in the ecosystem with potential bright futures helps empower the ShapeShift DAO to buidl the best possible decentralized interface for the world.
  • (c) The ShapeShift DAO can help foster the wider growth of the decentralized crypto ecosystem by making sure to support projects that otherwise might not get the chance of existence. Furthermore, the ShapeShift DAO community can also offer invaluable support via a group of connected angels that can co-invest alongside the vFOX treasury.
  • (d) By putting ShapeShift DAO treasury assets to work in this sub-DAO format, the treasury receives vFOX which it can use as a treasury asset managed by TMDC and larger DAO treasury governance.

(4) Specification - The ShapeShift DAO will spawn a sub-DAO (vFOX) and commit to funding the sub-DAO treasury up to $1 million worth of USDC and/or FOX. The vFOX governance token will be issued back to the ShapeShift DAO treasury, holding 90% of the supply of vFOX with 10% held by the vFOX treasury for future incentives and allocation at the discretion of FOX holders (who will hold all vFOX governance rights at that point through the DAO’s allocation). The funds do not need to be released to the sub-DAO treasury all at once, instead only as needed based on token positions and deal flow of new opportunities. The goal of the sub-DAO will be to deploy/allocate those funds over the next 6-12 months in order to prove its thesis out, including always holding a long position on FOX in regards to any FOX allocated to it.

The ShapeShift DAO can fund the vFOX treasury anyway it wishes, but preferably this would be done as a combo of FOX and USDC as the treasury will want to acquire and be long FOX regardless (perhaps even long term turning into a liquidity sink for FOX if vFOX governance voted to allocate revenue that way). Funds will be sent from the ShapeShift DAO treasury to the vFOX treasury up to the $1 million limit passed in this proposal as necessitated based on deal flow/ vFOX treasury taking positions. For the treasury to raise any further funds, it would have to ask for more as necessary from the DAO treasury in future governance proposals and it may or may not mint more vFOX to that effect based on governance.

The first act of vFOX governance should be electing a committee/management team whose purpose should be managing sourcing and closing of dealflow, as well as sub-DAO treasury defi positions on behalf of the vFOX treasury and thus managing the mutli-sig of the sub-DAO - it is proposed as part of this proposal (to accelerate vFOX hitting the ground running) that this first team be a committee of 3 (appointed for a term of 6 months to start) including JonisJon, WillyFox, and Kent who will be paid both with long term streaming contracts of vFOX (2% of total vFOX each streamed over 3 years or until revoked by vFOX treasury) from the incentive pool of the vFOX treasury as well as a yearly (committee shared) performance fee of 20% based on treasury gains year to year (USD denominated).

Importantly, based on discussion in the incubation period of this proposal a 20% YoY benchmark will be applied when evaluating the performance tranche, this is to simulate the opportunity cost of putting that same capital into Anchor at 20% (a relatively conservative DeFi strategy for stables). This benchmark may need to be revisited by governance at a later time based on how “normal” DeFi yields change over time. Thus no performance will be awarded on the first 20% gain of capital supplied to the vFOX sub-DAO. For clarity, this performance will be calculated based on the native assets supplied to the sub-DAO (so vs USDC when supplied that way and vs FOX when supplied that way), any credited performance will then be translated into USDC values to appropriately combine the total performance value.

The committee will be responsible for the full life cycle of the treasury, including sourcing deals, establishing and supporting partnerships with vFOX backed DAO’s/protocols on behalf of the ShapeShift DAO, maintenance and strategy of the vFOX treasury positions, communicating to the larger vFOX holder community (primarily the ShapeShift DAO community of FOX holders itself), and multi-sig execution for those various tasks. The committee will communicate on a regular basis on its activities as well as engage regularly with the community to keep the larger FOX community involved.

There should be little limitation on the vFOX treasury strategies that are deployed by the committee except sticking generally to supporting the larger decentralized ecosystem, forming partnerships that benefit the ShapeShift DAO, and generally deploying strategies that are effectively long FOX. In addition to allocating treasury towards new and emerging decentralized projects, it should also include the ability to do things like (responsibly) going leverage long fox and engaging in experimental high risk/high return defi strategies.

If the vFOX treasury proves itself effective over the first deployment of $1 million across the ecosystem then it may make sense for the ShapeShift DAO to increase its funding in a second phase (but of course based on results and in relation to DAO revenues and treasury position at the time).

(5) Benefits - The benefits of this proposal will be the creation of a more nimble sub-DAO treasury which can be used to effectively put the DAO’s funds to work on supporting the wider decentralized ecosystem, forming partnerships that benefit and support the ShapeShift DAO’s product(s), and participating in potential upside of the ecosystem. The DAO will also gain a new treasury asset in the vFOX governance token which can be allocated and used by the DAO as needed.

(6) Drawbacks - the Drawbacks of this proposal related to allocating a substantial amount of treasury funds that may go towards speculative plays supporting the ecosystem and other DeFi strategies that could mean a loss of treasury funds if on the whole the winning strategies don’t outweigh the losing ones. This could mean the elected committee is not doing a good job administering the vFOX sub-DAO treasury, however FOX holders controlling the majority of vFOX governance means they can easily replace those committee members as needed if they are not performing up to what the community would expect.

(7) Vote - For - a FOR vote indicates an approval of creating the vFOX sub-DAO, funding it up to $1 mil over time as needed based on deal flow, forming the initial committee with JonisJon, WillyFox, and Kent elected to serve for the first 6 months, and rewarding the committee as per the specification of this proposal.

Against - an AGAINST vote indicates not going forward with creating the vFOX sub-DAO at this time.

I think after the conversation yesterday, the discussion of the partnerships with Joe and Willy/Growth. I think that this could be possibly included in that, but I think there is a larger convo to have about partnerships/outreach/potential investment opportunities.

Thanks for that feedback ! I definitely think there will be lots of ways for vFOX and efforts on partnerships/growth to coordinate and support each other. I personally still think the difference between allocating this treasury and the reach out for partnerships will be distinct areas though and think the vFOX sub-dao will be great for supporting and strengthening those partnerships that are the lifeblood of the decentralized interface that the DAO is building.

Will keep this in mind if/when the proposal passes in how the initial community contributor program is structured (one of the first things I have in mind to formulate and make so that anyone in the community, including other workstreams, can be involved with vFOX and be rewarded for their efforts).

After majority support in ideation, this proposal has been moved forward to snapshot: Snapshot voting will start later today and run through end of day Wednesday next week (8 days).