- 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): @flakoubay
- 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, which we recently posted. 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] 2024 Governance Council Compensation and [SIP] Consolidate Branding of the Protocol and DAO.
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.
In addition to forming the council at the DAO’s inception, the RareDAO Foundation was created to serve as a legal entity for the DAO, ensuring regulatory compliance and liability protection for token holders and DAO contributors alike. As we have developed processes which gradually offload responsibility from SuperRare Labs onto the Council and DAO contributors, the importance of the Foundation’s role as a vehicle for progressive decentralization has increased. A key theme over the course of the last year has been developing “operational sovereignty”, that is, the ability of the RareDAO Foundatoin to operate with greater independence of SuperRare Labs and opening the door for decentralization opportunities through things like the grants committee and expanding role of the DAO council. A logical continuation of this is for the Foundation to have its own independent budget, which increases transparency in overhead and staffing costs, and allows for DAO-dedicated resources within SRL to begin a gradual transition into full-time work directly for the DAO.
Details about the rules that govern the relationship between the RareDAO Foundation, the community, and the governance council can be found in the community approved by-laws. Further insight into specific steps the DAO Council, Foundation, and SuperRare Labs have taken to increase operational sovereignty can be found in the public log of internal council decisions.
We propose that an annual budget be established for the Foundation, which will give its Director and the DAO Council more autonomy to perform work independent of SuperRare Labs. A primary initial focus will be identifying work currently being performed within SRL that primarily concerns DAO Operations and transferring it to the foundation, making the areas of responsibility for each entity clearer, and opening the door for further decentralization. In addition, this will create more transparency around existing overhead such as corporate costs and operational expenses. The Foundation Director’s recommendation for the first annual budget, which will be accompanied by a 6-month transparency report, is provided in the below table. Upon passage of this proposal, the funds required for this budget will be transferred in a lump sum to the Foundation’s existing operating expense account multi-sig from the DAO treasury. This multisig is composed of the DAO Council (serving as a single signer), the foundation director, the foundation accountant, and one appointed representative of the council (currently Brennan Mulligan, DAO Program Manager @ SRL).
|Corporate Expenses (Director, Annual Fees, Supervisor)
|Employees / Contractors (DAO Ops & Protocol Development)
|Employees / Contractors (Marketing & Community Management)
|OpEx & Service Providers (Gsuite, Slack, Hats Protocol)
Currently, the foundation pays many of its expenses through the MSA with SuperRare Labs. This is a convoluted process which increases the Foundation’s dependence on a centralized entity, rather than having a more direct relationship with the DAO Council. Since establishing the Foundation expense account, this has improved, but that account cannot accommodate anything more than de minimis transactions. Passing this proposal will allow for a more direct and all encompassing relationship between the DAO Council and RareDAO Foundation, allowing them to effectively operate without oversight or involvement from SuperRare Labs. Removing this operational overhead from the relationship between SRL and the DAO will increase opportunities for real collaboration while decreasing unnecessary cost and effort in maintaining a suboptimal process. Allowing the Foundation to directly engage a small number of full time contributors will further amplify this by creating the possibility for work to be consistently and reliably be performed outside of SRL, increasing the censorship resistance and credible neutrality of Foundation and DAO Council operations.
While there is significant efficiency to be gained by allowing a degree of discretionary spending within the Foundation, this does introduce the need for transparency and accountability. In many DAOs, Foundation spending can quickly grow out of control and it can often be difficult for the community to track where the money is going and maintain oversight.
Maintaining tight feedback loops between the foundation and DAO council during monthly meetings (the agendas for which are publicly available, including any resolutions made during / in-between those meetings) goes a long way towards mitigating this. The council will have ample opportunity to inquire into Foundation decision making and object to transactions which they feel are out of scope or problematic. Additionally, the Foundation Director has committed to releasing a 6-month transparency report to update the community half-way through the year, demonstrating progress and rate of spend against that year’s budget.