this proposal has moved forward as a signal vote and therefore deserves a complete response.
First off, who am I?
I am a long time DXD holder with approximately 7% of my non-stable crypto portfolio in DXD. I purchased in the bonding curve and after and have not sold since. I spent 2 years working at yam.finance, mainly in operations and governance, which is currently going through a redemption. During that time I participated on and off in DXdao conversations, and have been working for @powers / caneyfork for the last 4 months, mainly helping him with DXdao related operations work such as the Monetary Policy Committee and the development of the budgeting process. He is paying me directly, so no, I am not paid by DXdao, although I plan to apply to join the operations guild in H2-2023.
Who are they?
For those who are not deep in DXdao happenings, it may be unclear who @killswitch is. To those who are, it is very clearly @JohnKelleher and/or a group closely aligned with him. A quick background: John was removed from a position of power (CTO-ish) in DXdao last summer for underperformance and has seemingly held a grudge ever since. @dlabs (dave) and @adamazad (adam) are both members of 3AC and Nimi and recently stopped working for DXdao.
The Proposal
Lets start by dissecting the proposal points:
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Discontinue DXD issuance and redemptions:
If there is going to be a fixed redemption then this is reasonable. But there is no timeframe stated here. Should we assume that it is immediate from passing of the signal proposal? If so, then no DXD can be paid for work to implement the redemption process (it’s a detail but worth noting).
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Discontinue REP issuance:
Starting when? I am going to assume that REP that has already been earned can still be issued. Anything else would deny voting power to those who earned it. Furthermore, a vote of this magnitude should probably be delayed so that contributors who have not synced their REP can do so and fully participate.
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Accelerate contributor DXD vesting and implement a fixed duration claim at 80%. SWPR, ENS, ARB are not included in the NAV calculation
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8% goes to REP holders:
This is absurd. First of all, the DXD to REP holders was contingent upon the implementation of Gov 2.0, which this proposal prevents. REP holders are not “owed” this DXD to claim the treasury. This DXD was part of a deal in return for REP voting power to DXD holders, which has not occurred and so the DXD should not be issued either. Secondly, This provision would be a windfall for the supporters of this proposal who currently hold very little DXD but lots of REP.
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ENS (~600k worth) goes to Nimi:
This is also absurd. DXdao gave Nimi an incubation grant worth $100k and funded 6 months of work on Nimi (worth approx. $72k) in return for 10% equity. Nimi then tried to reneg on that deal and have since posted no updates on progress. Both Adam and Dave are founders of Nimi and have publicly supported this proposal, which is unsurprising considering it commits to pay them over $600k with absolutely no strings attached. I hope Nimi is successful, but as a DXD holder, if I am being forced to give away assets in the treasury, I at least want to get something for them. In this case I get nothing.
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DXdao SWPR tokens go to Swapr Treasury:
This is yet another terrible deal for DXD holders. Part of the value proposition of DXD is the upside of Swapr. If I am now being forced to redeem then I am losing that upside. The SWPR tokens in the treasury belong to DXdao, and by proxy DXD holders and they should be distributed pro-rata to DXD holders before any redemption.
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Arb tokens to Swapr Treasury:
No opinion here as the status of where these are to be sent is unclear and if DXD holders get the SWPR then the ARB value exists via proxy.
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Distribute 6% (-$1.5M) of DXdao Treasury to Swapr Treasury:
First off, what Swapr Treasury? Is this money going to be controlled by the Swapr Guild or by some yet-undeployed governance process? I don’t have a problem with setting Swapr (and Carrot) free as it’s been discussed for ages, but what exactly is being voted for here? Where are these funds going and who controls them? What plans are in place for SWPR token holders to benefit from this move?
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Distribute 6% (-$1.5M) of DXdao Treasury to Carrot Treasury:
My comments are the same as with Swapr. Where is the money going and how is it managed? Will there be a DAO or is this money just going to a multi-sig or guild wallet with no strings attached? Does carrot deserve 1.5M in funding even though it has not proven any traction and doesn’t even have a working beta out? I guess that’s up to REP voters to decide.
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Distribute 0% (~$0) of DXdao terasury to DXgov treasury:
The fact that this proposal completely stiffs DXgov is galling. The responses above show a clear lack of understanding of what DAVI is (it is not purely DXdao focused) and is a slap in the face to everyone who has worked on DXdao governance. If I were rebuilding DXdao from scratch right now I would build around DAVI over Swapr and Carrot in a heartbeat. Arguments that they could go “raise money” could be equally applied to Swapr and Carrot, falling apart at the hint of interrogation.
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Everyone not in Swapr and Carrot guilds gets fired.
There is barely any logic to picking one group over another and something tells me that there are some long-standing grudges being played out here. Your vendetta is not worth fucking up other people’s lives and I find it pretty distasteful.
It is not lost on me that this proposal to shut down DXdao is coming from jilted contributors who have either been kicked out or left, and now stand to gain a serious windfall in treasury assets and accelerated DXD vesting if it passes.
Redemption Dynamics
Lets talk about redemption dynamics a bit because the supporters of this proposal bring them up multiple times in making claims that there will be a death spiral and that contributor DXD will be worthless by the time it has vested.
Both of these claims are built on assumptions that there will be a continuous flow of redemptions and point to the large redemptions of the last few months as an indicator of this. While I cannot project future redemptions, the large redemptions in the last few months should not be extrapolated into the future. Before January of this year, there was almost no liquidity for large DXD holders to exit their positions. Furthermore, they knew that the price would rise to close to 70% of NAV, so it didn’t make sense to exit until now. Large holders who have been sitting on their hands for years are finally able to sell and some are doing so. That is not a sign of imminent collapse, it is a pressure release before moving to a governance model where those same holders will have a say in governance. Trapped whales don’t make good governance decisions.
But lets say people do continue selling and redeeming. Is this bad? If you expect that the DAO will continue paying contributors the same when the treasury has $5M in it as when it has $25M, and there is no revenue, then it makes sense that DXD holders will exit. That is the point! It is a forcing function on contributor spending and focus. The market sets a value on the DAO via the size of the treasury. Contributors must react to that signal and adapt to keep their funding. Like any speculative enterprise, it is up to contributors to find an equilibrium between those who believe in the project and continue to fund it and those who want to exit. All redemption does is create a more liquid market.
The fact that the redemption rate is below 100% slows down redemptions by rewarding those who remain. True believers see the most upside and the most downside. DXD holders are free to express their level of belief however they choose by staying or redeeming.
DXD Holder Choice
This proposal is a curtailment of the rights of DXD holders by REP holders. In a continuous redemption like the one currently implemented, or a fixed redemption where the DAO continues to exist afterward, DXD holders have a choice. They can redeem (right to exit) or they can continue to hold with the hope of additional upside or to get a better deal later (right to stay). But if the DAO is fully shut down and all unclaimed funds are redistributed, then in order to not lose the value of their DXD, holders must redeem. This choice has been taken from them without giving them any say in its revocation.
There is clearly a large contingent of DXdao contributors (REP holders) and DXD holders who DO want the DAO to exist. They want to maintain this choice and exercise their right to stay. This choice could be trivially maintained by simply not shutting the DAO down after the redemption. Any unclaimed funds would continue to be managed by the REP and DXD holders who choose not to exit. While there are many things I would change about this proposal, this is perhaps the most important. Your money grab should not impinge upon my rights as a DXD holder.
