- Authors: Brennan Mulligan (DAO Program Manager @ SuperRare Labs), John Crain (CEO @ SuperRare Labs), Jonathan Perkins (CPO @ SuperRare Labs)
- Status: Approved
- Type: Treasury Management
- Implementer: RareDAO Governance Council & RareDAO Foundation
- Sponsor(s): @MoCDA_Museum
- Link to Request for Comment: [RFC] Expanding the RareDAO Vision
- Link to Temperature Check Poll: Discord
- Created Date: 12/01/2023
Note: This proposal is a followup to [RFC] Expanding the RareDAO Vision. It contains an outline of what we believe the DAO can and should focus on, as well as some short term steps we can take to get there. There are two other proposals stemming from the request for comment: [SIP] Consolidate Branding of the Protocol and DAO and [SIP] Establish an Annual Budget for the RareDAO Foundation.
Each of these proposals will be open for public comment until December 13th, at which point amendments will be made based on feedback. Each proposal which receives council sponsorship will go to Snapshot for voting starting on December 15th and ending on December 22nd.
Proposal update: The snapshot proposal for this SIP was originally posted on December 16th at the same time as [SIP] Establish an Annual Budget for the RareDAO Foundation, however it was created with incorrect voting options. As such the proposing author (@SuperRareJohn) has archived the original proposal and created a new one with the correct options. Voting for this new proposal will conclude at 5:30 pm ET on December 25th.
As the RareDAO vision expands and ahead of the RareDAO governance council elections at the beginning of next year, we believe it is prudent to assess whether members of this council should be compensated to perform the work required for the DAO to function. Rather than pass a simple “yes / no’’ proposal, members of the current council suggested that we present multiple options for community consideration: one with no compensation, one with less compensation, and one with more compensation. Council members perform work, and we believe this work should be paid as long as the community agrees on the final decision.
Note: This section was updated on Dec. 5th to improve readability.
When the DAO was initially formed two years ago, a council of 7 respected community members was appointed to steward the treasury, control access to protocol upgrades, and oversee the process of progressive decentralization. Since then, the council has established robust bylaws for the council and foundation, established working groups to facilitate operations and community grants, and overseen protocol development from the cultivation of curation staking through a handful of smaller protocol upgrades. Going forward, we believe that a strong council remains critical to the cultivation of wisdom and sound strategy within the DAO and will play a foundational role as we continue to evolve.
The council controls the DAO Treasury through a 4 of 7 multi-sig, which contains the undistributed $RARE token supply and the DAO’s ETH and USDC reserves, along with other assets. They also hold protocol upgrade authority, and can modify the foundation bylaws and carry out important administrative functions for the DAO more broadly. They are expected to be on-call for multisig transactions and off-chain votes both to keep the DAO running smoothly and respond to emergency situations. In addition, council members are expected to prepare for and attend monthly meetings, administer the governance process through sponsoring proposals and posting them to snapshot, and contribute to the strategic direction of protocol development and positioning. The powers afforded to the governance council and its individual members are described in the RareDAO Foundation Council By-Laws, which can only be modified through community proposal or unanimous council vote. A log of all proposals brought before the council is available publicly in this notion repository.
The council was initially appointed to a two year term, and as such it is time to elect a new council. An election will be held, starting in January, to elect the new council members in a multi-stage process with a round of non-competitive nomination voting in order to become eligible for a final round of ranked choice voting to determine council compensation. This process is inspired by ENS’ system for steward nominations, and more details will be released in the first weeks of January before the process kicks off in earnest. Two existing council members, Charles Crain (CTO and cofounder @ SuperRare Labs) and Fanny Lakoubay (art advisor and former Director of Communications @ RadicalxChange), were recently appointed and will stay on to complete their terms and maintain continuity as we go through our first transition of power. As such, the election will decide who takes the remaining 5 seats.
The existing council has generously served on an entirely volunteer basis for over two years, attending monthly meetings, contributing to the SIP process, and hopping on countless sidebar and one-on-one calls. This is real work (though, of course, part time) and should be compensated to incentivize ongoing engagement as well as ensure an equitable environment for contributors. As opportunities for DAO contribution grow, it is important that we carefully examine the role of compensation and accountability in DAO operations, and the council serves as a useful beachhead in this experimentation.
In this proposal, we present three options for community consideration:
- The new council shall receive no compensation
- The new council shall receive $1,000 per month, paid in $RARE
- The new council shall receive $2,500 per month, paid in $RARE
Once this proposal is posted to Snapshot, voters will be able to select one of the above options to express their preference. If option 2 or option 3 receive the most votes, the funds needed for the first council term would be sent from the DAO Treasury to the Foundation’s operating expense account (a 3 of 4 multi-sig composed of the DAO council, foundation director, foundation accountant, and a delegate of the DAO council) where they can be distributed to council members on a monthly basis. This change would only come into effect following the council election which is currently scheduled to begin in January 2024, encompassing multiple stages with a transition of power in February.
We hope that compensating council members will attract the highest quality community members to participate in the election, and ensure continued engagement throughout the council term. While having council compensation denominated in USD (meaning that the quantity of $RARE changes based on market price) decreases short term upside for the council, it does ensure that the incentive remains steady through ups and downs of the market. Due to the council’s critical role in protocol maintenance, security, and treasury management, we believe incentivizing steady contribution over time is of utmost importance.
Having any compensation draws down the treasury and means that there are fewer funds available for other commitments. Due to the significant $RARE balance still held by the DAO, these payouts represent a small portion of total resources available and this program would be sustainable for a long time. We believe the token allocation options presented above are small enough that they would not significantly affect token supply and will not have an impact on other potential programs. An additional consideration is whether the compensation should use RARE or USD as the unit of account. We decided to shape the comp options around USD because of the more stable incentive structure described in the benefits section. However, this also means that the council’s incentives are less directly coupled to the price of the token as they receive the same amount of USD equivalent each month, even if they receive it in the form of $RARE.