The stated goal of the DXdao is to develop, govern, and grow DeFi protocols and products. The DXdao has a treasury currently worth about $1.2M which it can use towards this goal. As the community grows and product efforts gain momentum, it is important to bring forth the topic of budgeting.
First, I think it is important to do budget planning with conservative assumptions about the treasury value. While it is possible that more money could be infused through continued minting of DXD from the bonding curve, or that the value of the treasury, currently denominated almost entirely in ETH, could appreciate, I believe it is important that the DXdao plan with the ETH it has.
I propose that DXdao set a budget that allows for a 12 month runway. The aim is to build products that will strengthen DXdao’s position, increasing its treasury in the short term through stronger valuation of DXD and in the long term through product revenue growth. If DXdao spends the money well, and the treasury value grows, DXdao can then reconsider the length of its runway and its burn rate.
With just over 4900 ETH in the treasury, a runway of 12 months would translate to a spend of around 400 ETH per month. At current ETH prices around $240, that translates to a burn rate of about $96,000 per month.
How should the DXdao spend its money?
With a nascent product suite, I think that product development should receive the lion’s share of the spending. And the rest of the spending should be on business and community development. This could evolve over time and in response to the kind of traction the products pick up. I think a good starting ratio could be 3:1. So the goal would be to get to spending $72,000 per month on product development, and $24,000 per month on business development.
What is the DXdao’s current spend rate?
Here are the two main current work proposals:
From these we see the spend rates can be approximated as follow:
$3,500 per month on biz dev and marketing
$12,166 per month on software development
If we take the target spend rate to be the $96,000 per month mentioned above, then we can see there is still room to increase our spend. But there is also a lot to spend on. For one thing, the current work proposals are under market rate, and if the DXdao wants to retain these folks, I expect it will need to increase compensation. And there are several projects which need to be staffed, including but not necessarily limited to further developing Mesa, Omen, and the DXdao home site, as well as launching DXswap and potentially developing Mix.eth. Furthermore, there will need to be attention given to the DAOstack platform, the Alchemy UI, and security audits for new code, which will involve engaging with a security auditing firm.
At $8,000 per month average pay, around 12 people can be supported full time. This could be roughly 3 active product teams, and one business development team. This should be further augmented by issuing reputation in lieu of crypto compensation.
For onboarding new workers to DXdao, I think it makes sense for everyone to initially start at a lower rate while they are building up a rapport for the DAO. This will help make sure the DXdao doesn’t commit funds to underqualified or underperforming people, and will hopefully filter for people who are passionate about the DXdao and want to be involved for the longer term. There also should be a preference for workers who wish to earn REP, as opposed to those who just want to make money.