Proposal #16: Tracer Growth Fund

Summary

The Tracer DAO is, and always will be, decentralised.

With Perpetual Swaps and Perpetual Pools all planned to launch in the coming months, the DAO is in a position where it needs to efficiently onboard more high quality developers and advisors, and otherwise allocate TCR resources to effectively grow the Tracer ecosystem. It’s increasingly clear that there needs to be some level of expedited and coordinated decision making such that the execution of the Tracer project remains efficient, responsive and competitive within the market, while staying true to its vision.

An initiative that some established DAOs have implemented successfully is a “development fund” (for example, Yearn, Sushi and Reef). The problem usually solved by a development fund is the ability for large (in terms of membership and activities) and decentralised DAOs to efficiently allocate tokens to growth opportunities and operational expenditure. In these cases, development funds have been particularly successful for onboarding talent (Funding Yearn’s Future proposal & Yearn incentives proposal). One problem aimed to be solved by Yearn’s development fund was ensuring that it would have enough YFI and protocol fees to appropriately compensate talent. Tracer DAO is now in a position where it can get development resourcing right from the start.

As per the previous EOI, this proposal if successful, will allocate a portion of the Tracer DAO treasury towards commencing a 'Growth Fund’.

In order for a growth fund to be successful, a line in the sand needs to be drawn between:

  1. Those decisions that fall within the remit of the growth fund; and
  2. Those decisions that do not fall within the remit of the growth fund and; therefore, require a formal DAO Proposal and voting process.

As discussed in this Discourse post, Tracer DAO’s Proposal and vote period is currently 4-9 days. As the Tracer DAO continues to grow, in both membership and activities, it will become increasingly important for the DAO to do certain things without a 4-9 day delay.

It is important to acknowledge that, in a decentralised system such as Tracer DAO, the need to “do certain things” more quickly needs to be carefully balanced against Tracer DAO’s need to remain completely transparent to its stakeholders, and responsive to the demands of those stakeholders.

The following parties offer their services to the DAO in order to create and manage the Growth Fund, via a 4/7 multisig:

Growth Fund Manager ETH address
1. Raymond (Co-founder) of Mycelium raymogg.eth
2. Ash (Co-founder) of Mycelium 0x7F12f21602fF600c9871fc46E298B8c07ff1B4b6
3. Pat (Co-founder) of Mycelium 0x9C58Bdf481Ab88CBfc9FFBb10aAd74bef78c3390
4. Michael and Vance (Founders) of Framework Ventures 0x65DCD62932fEf5af25AdA91F0F24658e94e259c5
5. Richard (CEO) and Aaron (Research Associate) of DACM 0xf8ccf1f5381956f4152B5570627C49D42eABB60e
6. Balder Bomans (Managing Partner) & Mathijs van Esch (Investment Manager) of Maven11 0xF66d7aB001B06b44B473E23d70eaC1E47B19e453
7. Chris Berg (Co-founder) of RMIT Blockchain Innovation Hub 0x219BaD06180F4024A06C372d754E882D175Df098

Collectively, these parties will be referred to as the Growth Fund Managers or Managers.

Growth Fund proposals vs. regular DAO proposals

The Tracer Growth Fund intends to incentivise efforts towards the the short-term and long-term development of Tracer DAO and Tracer. Growth Fund Managers will manage all further Service Provider proposals for development. This includes work that is streamlined through working ‘clans’.

To incentivise efforts towards the short-term development of Tracer DAO and Tracer, the Growth Fund may also be used to fund grants for contributions through a future ‘Grants Program’. The Growth Fund will also be used to fund community initiatives including events, art/design competitions and ambassador programs.

Service Providers may still request to provide services to Tracer DAO via proposal on Discourse. A new category of proposals will be made for requests to be lodged (Growth Fund proposals). The Managers will decide on accepting/declining these proposals. If a proposal is incorrectly categorised as a Growth Fund proposal, the Managers will refer the proposal to a different category e.g. normal proposal to the DAO.

Proposals that fall outside of the remit of the Growth Fund include:

  • Changes to financial contracts and factory;
  • DAO contract changes;
  • DAO fund transfers;
  • Chainlink price feeds (if there are no funds in the DAO, the Growth Fund may be used to fund as an operational expenditure);
  • Future rewards (liquidity mining and airdrops);
  • Public distribution events (Auctions, LBPs etc.);
  • New Governors and Alpha Testers;
  • Growth Fund Manager replacement; and
  • Termination of Growth Fund vesting schedule.

Remuneration

The Managers will not receive any remuneration for the provision of these services.

The following tokens will be transferred to a multi-sig controlled by the Managers:

  1. 280,000,000 TCR Tokens (28% of TCR total supply) vested across the proposed distribution:
    a. 80,000,000 TCR Tokens (8% of TCR total supply) vested linearly across year 1 (year 1 commencing as soon as Growth Fund is implemented); and
    b. 200,000,000 TCR Tokens (20% of TCR total supply) vested linearly across years 2-10.

Deliverables

If this EOI succeeds, the Growth Fund Managers will commit to provide the following deliverables:

  1. A monthly update, via Discourse, including all activities conducted by the Managers; and
  2. Ensuring that the fund is effectively spent.

At this time, it is expected that the Growth Fund will be used to further the following initiatives:

  1. 80,000,000 TCR (8%) new Service Providers and contractors and employees of existing Service Providers;
  2. 80,000,000 TCR (8%) operational expenditure;
  3. 60,000,000 TCR (6%) cash reserves;
  4. 30,000,000 TCR (3%) advisors; and
  5. 30,000,000 TCR (3%) short-term development.

This proposal envisages that the remit of the Managers will be decisions involving growth opportunities and operational expenditure related to the the short-term and long-term development of Tracer DAO and Tracer. Each of the above initiatives are detailed below:

  1. Engaging contractors and new team members of Service Providers, to perform certain services on behalf of the Tracer DAO. For example, developers and auditors;
  2. Engaging professional services to support the operational and strategic decision-making of the DAO. For examples, lawyers, accountants marketing professionals etc;
  3. Cash reserves to cater for situations where the Growth Fund needs to exchange TCR for non-TCR tokens (particularly USD) to support the aforementioned activities of the Managers. For example, unforeseen expenses and DAO M&As;
  4. Engaging advisors to support operational and strategic decision making of the DAO;
  5. Engaging short-term contributors via proposal or grant (can be retroactively reimbursed) and funding events and programs.

Additional considerations:

Innovative solution ideas were raised within the ‘Tracer Drop’ call with RMIT Tracer Drop Episode #04: Development Funds. These ideas will be further explored using the Growth Fund and implemented where deemed suitable. Ideas included:

  • Granting funds (TCR tokens) to ‘philanthropists’ to execute solutions for certain problems;
    • This effectively combines a typical ‘Grant’ model with the long-term incentive structure of venture finance; and
    • These ‘philanthropists’ in time will receive reputation for their work and will become trusted to deliver future work.

Commitments

If the Managers is engaged to provide the Deliverables, it will:

  1. Not use tokens held in the Growth Fund to vote on Tracer DAO Proposals.

Variation and Termination

  1. The Managers acknowledge that, if engaged, its engagement can be varied by future Proposals. For the avoidance of doubt, the engagement of certain members of the Managers can also be varied by future Proposals.
  2. The Managers expects that any engagement will be terminated if they fail to deliver in accordance with the deliverables specified above. If the engagement of the Managers is terminated, all remaining tokens in the Growth Fund will be returned to Tracer DAO’s treasury.

Conflicts of Interest

In the context of the Tracer Project, conflicts of interest include:

  1. Existing Service Providers who are Related Parties; and
  2. Existing (vested and unvested) holdings of TCR tokens.

The Managers wish to declare the following conflicts of interest:

  1. Raymond is a Co-founder of Mycelium, an existing Tracer DAO member (Service Provider);
  2. Ash is also a Co-founder of Mycelium;
  3. Pat is also a Co-founder of Mycelium;
  4. Michael and Vance are Founders of Framework Ventures, an existing Tracer DAO member (Strategic Partner);
  5. Richard (CEO) and Aaron (Research Associate) of DACM, an existing Tracer DAO member (Strategic Partner);
  6. Balder (Managing Partner) and Mathijs (Investment Manager) of Maven11, an existing Tracer DAO member (Strategic Partner); and
  7. Chris (Co-founder) of RMIT Blockchain Innovation Hub, an existing Tracer DAO member (Academic Advisor).

Interpretation

Unless otherwise defined in this offer, all terms beginning with a capital letter which are defined in the Participation Agreement have the same meaning unless the context otherwise requires.

If this offer is accepted as a Proposal under the Participation Agreement, the Managers may more formally document aspects of that Proposal.


Copyright Waiver

Copyright and related rights are waived pursuant to CC0.


Next Steps

In order for this Proposal to take effect, it must be pushed to Snapshot by a current DAO member and then be successfully voted on.

We encourage the discussion of this Proposal in the comments below.

8 Likes

A smart contract wallet might be better than a multisig. The same 4/7 structure could be implemented, but there could be more safeguards for the DAO’s funds.

For instance, in a multisig, if a majority of the managers go offline, there is no way to recover the funds. A smart contract wallet could be give the DAO the ability to retrieve the funds with a successful proposal. It could also replace managers with a DAO proposal if they are somehow compromised

1 Like

Hey @doylio, appreciate the feedback.

For your point on managers going offline, the 7 members recommenced that have been proposed will be committed to being active (one of the reasons which they were recommended). Additionally, the DAO will still have veto power over the Growth Fund, meaning that a proposal may be made to cut off the vesting schedule or replace Growth Fund Managers.

1 Like

Chris Berg @chrisberg (Co-founder) of RMIT Blockchain Innovation Hub has raised his hand as a Growth Fund Manager candidate to replace one of the initial recommended managers (who could no longer commit).

The Mycelium team has confidence in Chris as a Manager and appreciates his contributions to Tracer DAO to date and the working relationship that has been formed.

1 Like

I have a few requests for clarification. Perhaps I lack some context, perhaps some topics might be clarified in the proposal description. (FYI: I don’t having voting privileges at this time, just interested)

  1. If the Growth Fund is to focus on strategic, long term development, to what extent is 4-9 day (voting) delay (via Tracer DAO Proposal mechanism) then a likely issue? Would such delay not be more of an issue for tactical, short term decisions?
  2. Should we specify more in detail what is and is not in the remit of the Growth Fund? E.g. if a Tracer DAO Proposal would be rejected, can it be separately accepted by the Growth Fund? How will this interaction and dependency be governed between both bodies? Can one overrule another?
  3. A separate Grants Fund is mentioned in the proposal, for short term development. Is this outside of the scope of the Growth Fund? Just to clarify as the ‘Additional considerations’ section also includes “Granting funds to …”.
1 Like

Sounds good! I’d be happy to help with the technical aspects of setting up the multisig when it comes time

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Hi @darco, appreciate your feedback here. I will address each of your points in order below:

  1. To address your 1st and 3rd point, we could consider having the separate “Grants Fund” included in the scope of the Growth Fund and increase the treasury allocation. This may make more sense to also include short-term initiatives. Keen to hear your thoughts on this.

  2. One of the points that was considered is that the volume of proposals will increase as time progresses. The thinking behind the solution here is to separate proposals for Service Providers, operational expenditure etc. (Services/Growth) from proposals that will be specific to the many future financial contracts (Product). The Growth Fund multisig will be trusted to make decisions that are in the best interest of Tracer DAO. If the multisig do not meet this expectation, the DAO has veto power that can propose to cancel the vesting schedule of the Growth Fund or replace Growth Fund Managers.

Thanks for clarifying, @adam.mycelium , very helpful. Personally, I would separate Grants Fund from Growth Fund. As shared, I don’t have voting rights at this point, but it intuitively feels that a considerable amount of tokens would be controlled by a small group (4/7 multisig), although not all in one go, agreed. Perhaps my underlying question is about the bigger/target governance picture (e.g. multiple committees such as Yearn with clear scope?); does that exist, plan to get there … It would help to better understand and position initiatives such as Grants Fund and Growth Fund. I realise I’m new so will dig deeper in previously posted material to see what has been discussed on this topic already. Cheers!

1 Like

@darco The Growth Fund itself could also be split up into different allocations which can include Grants if specified.

Future proposals could also further delegate to multiple committees. As time progresses, so too will the demand for multiple committees as the workflow increases.

1 Like