DXdao Expenses Update June 2022

[Powers]

Below is an overview of DXdao expenses over the last 18 months. This data and subsequent discussion undergird the budget conversations that are beginning to take place in squads. As the market turns, the DXdao community will need to make sure resources are being allocated to the right places. You can download the underlying excel here.

To start, here is an overview of DXdao expenses over the last 18 months.

The headline figure is the $263k average monthly expenditures from on-chain transactions. This is likely an undercount because some worker proposals are delayed and trial periods for new workers suppress costs initially. A $300k burn rate is a safe estimate to fund DXdao’s current operations. This is about 3.7 years of runway accounting for just the stablecoins in the DXdao treasury.

Breakdown of expenses

All expenses have been categorized by 1. Squad 2. Type.

DXgov had the biggest increase, while Swapr and DXvoice both saw sizable increases as well. Part of this was offset by the decline in Aqua and Omen development.

Now, looking at some of the individual squads in terms of where funds were spent.

Swapr costs are mostly split between full-time contributors and a third-party dev shop (Space Inch). “Events” accounts for stipends of squad members during travel.

DXgov, meanwhile, has not had a third-party dev shop, but have spend a similar amount of funds on auditing, particularly the $160k audit with Sigma Prime.

And then for DXvoice, it has a lumpy distribution of funds, particularly around large sponsorships. In December, there was a $20k ETH Denver sponsorship, and then the $100k sponsorship of the Copenhagen Flames in January, and a $12k sponsorship for GGG in Amsterdam. DXvoice also has a good amount of expenses related to design, merch (swag) and other overhead.

Large, lumpy expenses

Audit costs are one of the largest expenses for the product teams, but come in bunches. All new smart contracts will incur auditing costs, an important planning consideration for all new product.

Events, meanwhile are a big expense that has increased over the last few months as more and more DXdao contributors are attending ETH-related events

Looking ahead

To reflect on:

• Do these expenses reflect DXdao’s priorities? Are they a good model for the future?
• Are squad expenses categorized correctly? Should some things (QA?) be reassigned?
• How to fund future product development and allocate resources?

Recommendations/going

• Agree to overall budget for DXdao of $1.8m for six months starting on August 1, 2022
• Each squad passes a 6 month budget proposal estimate
• In the future, these could be used to allocate funds to squad guilds

Some accounting things:

• All payment proposals come with a clear squad associated with it
• Worker proposals are all one month long, not counting the number of days. Some contributors did this, while others picked a number of days. So, some contributors are getting paid at a different rate.
• Disincentives to late proposals?

Feedback, comments and questions more than welcome. Here again is the full data download. ‘Contributor Payouts’ and ‘Other expenses’ have all of the underlying transactions, while ‘Combined Squads’ gives organizes the data by squad, and ‘Squad-contributors’ shows expense breakdowns within squads.

Next steps are squads coming up with a budget for the next 6 months, estimating different needs and opportunities with the goal of squad budget proposals by August 1. Here is a template for squad budgets.

[JohnKelleher]

(Accidentally posted before finishing and then deleted).

This is very helpful and clearly a lot of work went into it.

@Powers

Recommendations/going

• Agree to overall budget for DXdao of $1.8m for six months starting on August 1, 2022
• Each squad passes a 6 month budget proposal estimate
• In the future, these could be used to allocate funds to squad guilds

Agree with these recommendations although I think shooting for a 4-5 year runway would be good.

@Powers

Disincentives to late proposals?

This is probably a good idea. Something I am guilty of and working to catch up on now. Once I fell behind it becomes a heavier lift to catch up and keeps getting dropped down the priority list.

@Powers

• Are squad expenses categorized correctly? Should some things (QA?) be reassigned?

I think it makes sense for QA to be a separate squad, though I think funding can probably be allocated to the product squads proportionally based on how much of the QA Squad’s time is being utilized by each product.

[Melanie]

Thank you @Powers for putting this post together! I will be working on a 6 month budget for the ContributorX in the upcoming days.

Just a few comments on the above:

@Powers

Worker proposals are all one month long, not counting the number of days. Some contributors did this, while others picked a number of days. So, some contributors are getting paid at a different rate.

We need to ensure all contributors are being paid at the same rate. Every contributor should be completing their payments based on what is outlined in DXdocs around compensation.

@Powers

Disincentives to late proposals?

I think this is appropriate as long as we can come to an agreement on a fair disincentive. I personally oppose cutting comp (stablecoin or DXD) for late proposals.

[hughesconnor]

From an outside DXD holder’s perspective (read: someone who’s going to play devil’s advocate wrt. stinginess surrounding the treasury, lol)…

I’m actually pretty surprised by the breakdown of expenses - I think top level contributor base pay is quite low vs. what I expected & the industry as a whole, while other expenses are higher.

When I look into the breakdown of other expenses, not too much stands out as controversial - If I were to nitpick, maybe the Copenhagen Flames sponsorship was a little high for something not directly related to our core ops, but really not a huge deal, and the value certainly isn’t zero by any means. Much, much more frivolous stuff has happened with other projects’ treasuries, especially when you account for the timing of the sponsorship; ETH was trading much higher

Audits are worth the expense and in line with rates I’ve seen elsewhere, so no issues there. Especially with DXgov, where it seems like there’s a lot of product being packed into the audit to maximize bang-for-buck.

The only other point I’d raise is the Events expenses. I have no doubt at all that contributors’ presence at events is a huge value-add for the DAO, but is there a diminishing returns argument somewhere? i.e. having 8 contributors vs. 4 at an event will 2x the expenses linearly, but will it 2x the value gained by the DAO? In many cases I’m certain it will; again, I’m not contesting any of the event expenses posted specifically… but more a precautionary response to @Powers ’ comment,

@Powers

Events, meanwhile are a big expense that has increased over the last few months as more and more DXdao contributors are attending ETH-related events

which indicates that over time, more contributors are attending more events. I think it might be sensible to have some kind of sanity check framework (if it doesn’t already exist!) that ensures some cap on event expenses scale up/down with the size and importance of each event.

From the relative numbers (Denver > Lisbon & Amsterdam > Colombia), it looks like this is sort of happening already, but unsure whether through informal social consensus, or codified process.

Overall really good to see these numbers and impressed on the whole! Many other projects got carried away with the bull market & committed to hugely inflated expenses, and are now paying the price. As usual, DXdao has been level-headed and sensible in its approach.