DXvoice Budget and KPI's 2022 [Draft Proposal]

Budgeting and tracking metrics create verifiable results. The aim of this post is to cement DXvoice’s approach to KPI’s and budget, as well as point to how we reached those decisions. In the decision making process, we first clarified existing DXvoice budgeting frameworks, then moved through the creation of agreeable KPI metrics, and finally discussed potential budgetary options to meet those targets. Before we get into the how, lets chat about what 2021 looked like and DXvoice will build off of it.

2021 Budget Framework and Data


In 2021, DXvoice was formally established. This occurred around June and was followed shortly thereafter by an initial funding proposal of $75,000 in July. This funding was dubbed an “initial allocation” and implied that a “consistent” long-term budget would be prepared upon following funding proposals. For a variety of reasons, this follow-up proposal has yet to come, including; hiring/contributor challenges, Omen reprioritization, challenges approaching traditional marketing as a DAO, and inability to facilitate micropayments outside ETH Mainnet, etc. As a result, DXvoice has only spent just under $50,000 of the $75,000 funding proposal.

With the aforementioned funding proposal, DXvoice prepared an “initial” budget. This was transitory in nature and, as mentioned, not designed as a long-term solution but rather one that could be immediately utilized. The following targets were set:

These targets were tracked in the “DXvoice Annual budget 2021” working sheet and included a variety of options for tracking potential incoming and outgoing funds. The sheet was designed to work dynamically with any budget and was created in preparation for future funding proposals. In fact, the “DXvoice Annual budget 2022” document has already been prepared and ratified for future use.

The above budget focuses on DXvoice funding proposals, but ignores a large component of DXvoice budget for planning purposes - the contributors! According to data scraped by @ChrisPowers weighting each contributor relative to their time commitment to DXvoice, the average monthly contributor expenditure for the squad rounded to $14,668 for the 2021 calendar year. This included a clear growth path from the beginning of the year to the end, representing squad maturity and growth. When including all expenses mentioned above alongside contributor costs, DXvoice expended on average $25,000 in the 2021 calendar year. When accounting for all expenses, including contributors, the same data implies DXdao’s 2021 average monthly expenditure sits around $205,000; this puts DXdao’s current marketing to expense ratio at 12.19%. It’s worth noting that challenges in hiring development talent may be artificially skewing this metric.

When focusing on targets, as mentioned in the “DXvoice 2021 Recap and Outlook”, DXdao and its products saw impressive social growth over the course of 2021. Notably, the total member count grew over 170% to 10,000+, and Twitter activity was parabolic with more than 2m impressions and 500k unique account visitations. These numbers and their respective YOY growth will provide an excellent baseline for our potential KPI targets.

Proposed DXvoice 2022 Budget and KPIs


KPI’s

“Optimistic Social Engagement Focus”

As I will speak to below, it is challenging to operate with a traditional marketing mindset in a DAO for a variety of reasons. Long story short, payments and ownership are difficult if not impossible surrounding centralized advertising avenues. Some of the more prominent options such as Google straight-up disallow crypto-related advertising on their platforms. Additionally, since DXdao is not yet generating much revenue from its products or participating in paid consulting, it is challenging to track traditionally cost-effective marketing-related KPIs, such as CAC (Customer Acquisition Cost) or LTV (Lifetime Value of Customer) ratios. Last but not least, to the best of my knowledge it is not possible to track the visitation or retention of our landing pages or dapp’s so long as we host via IPFS - nor work with many relevant SEO tools.

For the above reasons and more, it makes the most sense for our KPIs to follow primarily social metrics. Although it may not be technically the most accurate metric to track for each situation, a majority of initiatives including events, advertisements, and branding revisions should all be trackable to a capacity back to social metrics. Deviation from mean relative to campaign dates, etc.

It’s worth noting the “Key” in KPI. There are plenty of social metrics we could track, but these four provide a strong and focused approach to diversifying offensive behavior (Impressions and Profile Visits) and defensive community behavior (YOY Member Growth and Messages) without diverting attention between too many possibly unrelated metrics. These targets represent an annualized 200% YOY growth pattern and 100% retention growth, which will be a challenge that may depend heavily on DXdao product strategy and other external factors. The ratio between growth and retention will likely be dynamic throughout the year, and targets could be adjusted if later desired.

  • 200% YOY Member Growth (31,500 Members)
  • 4,075,000 2022 Twitter Impressions (100% Growth)
  • 910,000 Twitter Profile Visits (100% Growth)
  • 81,000 Messages (100% Growth)

Alongside this, DXvoice can utilize on-chain data from DXdao’s various products to support these metrics. EG: How many unique traders are interacting with Swapr? What does the TVL look like? etc…

Total Budget Figure

“Relative Expenditure Optimistic”

Relative expenditure is referring to the percentage allocation of marketing in DXdao’s budget. Currently, this figure sits around 12.19%. Projects in the web3 space typically allocate 10% - 40% of their budget to the “marketing” blanket in my anecdotal experience, occasionally slightly below or above. Considering this, “Relative Expenditure Optimistic” would simply shift the currently undetermined ~12% marketing to expense ratio to a predetermined 20%.

The greatest benefit to utilizing relative expenditure is flexibility. If DXdao scales its product teams, by holding a target of average expenditure we are better able to accommodate these efforts while remaining within the bounds of an overarching DXdao budget.

2021 Baseline:

  • $205,000 Avg. DXdao expenditure /m
  • $25,000 Avg. total DXvoice expenditure /m
  • 12.19% Marketing to expense ratio

Relative Expenditure Optimistic:

  • $246,000 Avg. DXdao expenditure /m (Implied/estimated 20% growth for 2022)
  • $49,200 Avg. total DXvoice expenditure /m
  • 20.00% Marketing to expense ratio

Of course, I have some bias as the current lead of DXvoice, but I think an optimistic expenditure makes much more sense in 2022 when compared to any previous year. DXdao products are becoming usable, they are starting to create some revenue, and many more will be released throughout the tail-end of the year. A 20% Marketing to expense ratio will be a considerable step in the right direction to increase DXdao’s brand awareness and status in the space.

Also, using relative expenditure makes the most sense as long as DXdao remains without revenue, as it will give us a relative guideline to follow without under or over-utilizing DXdao funds relative to development.

Budget Utilization

“Equilibrium // 70 20 10 Rule”

This approach would follow the common “70-20-10 Rule” in marketing, known by some as the “3-to-1”. In this method, budgets are utilized in a 70% allocation towards safe and tested marketing methods that appeal to large audiences. See: current defensive content strategy, DXdao presence at events, etc. This portion should be consistently refined and focus on safe and reliable campaigns.

The 20% allocation would focus on moderate risk or methods that appeal to emerging audiences. This would have a higher relative cost but focus on capturing groups that we haven’t done so previously. Examples would include DXdao hosting its own events or sponsoring others, awarding grants at hackathons, etc…

The final 10% allocation would target experimental or high-risk campaigns. The most prevalent example of this would be the recent Carrot Awareness Activation campaign, but we could also experiment with more interesting things such as Swapr rabbit hole/user onboarding tasks, trading competitions, etc…

The primary benefit of such an approach is flexibility. If there is a justifiable reason to increase the spending of one category in a quarter, such as several important events back-to-back, it will not conflict with the initial funding proposal. Similarly, if there isn’t a need to fully utilize the funds prepared for a category, this strategy prevents unnecessary utilization to meet targets.

I am of the opinion that DXvoices budget allocation, knowing that DXdao is a complex organization and considering all of the challenges of traditional marketing as a DAO, could use a bit of flexibility. Adopting the common 70 20 10 rule would allow us to focus on consistent safe growth while having the opportunity to take risks and remove any confinements. If the entirety of the riskier allocations would be most beneficially utilized on branding for a given quarter, it would be within the confines of the strategy.

What’s next?


DXvoice reached these conclusions through several meetings and discussions on targets and budget. In fact, much of the above post is ratified from my own initial proposal for the topic. If you wanted to follow along on some of the thought processes, or were looking for a bit more clarity on some of our choices, please take a look at the working doc.

Now that the squad has agreed on some targets and a budget, we wanted to collect any feedback here on the forum primarily surrounding the targets and utilization of the budget, but of course, any words on KPI metrics are welcomed as well. After any discussion, a proposal will be issued on DXdao mainnet that:

  1. Confirms budget amount and any associated stipulations (Length of budget agreement, etc)
  2. Authorizes the new multi-chain multi-sig for DXvoice
  3. Requests one month of the above budget to said MS

This post also serves as an open call to other DXdao squads. Both trackable KPI metrics and budgetary targets are incredibly important to both aggressive and defensive organization, and grants DXdao much more clarity on its runway and any associated costs. Please feel free to reach out to me if you’d like to discuss how to get started, or any other feedback.

You can find the text for the funding proposal below. This will be submitted on chain after living in the forum for a few days or after any subsequent feedback:

The proposal is being submitted to approve the following terms with DXdao governance. Detailed explanations can be found below:

1. Authorization of the DXvoice squad to a maximum annual budget expressed as 20% MER (Marketing to Expense Ratio) for the 2022 calendar year.
2. Authorization of the new multi-chain multi-sig for DXvoice identified as “0x00Ce8162527Da8bD59056E2A54C3726886cBa676” on Ethereum, Gnosis Chain and Polygon.
3. Request for 41000 xDai on Gnosis Chain identified as one month of the authorized budget to the new MS “0x00Ce8162527Da8bD59056E2A54C3726886cBa676”

Budget

Assuming the passage of this proposal, DXdao authorizes DXvoice to a target annual budget expressed as 20% MER for the 2022 calendar year. True DXdao expenditure will be collected through on-chain proposals throughout the period, with 20% of values found throughout the year of 2022 being targeted for utilization for DXvoice purposes.

These funds will be utilized in accordance with DXvoice strategy and following the guidelines presented in the [DXvoice Budget and KPI’s 2022 [Draft Proposal]](https://daotalk.org/t/dxvoice-budget-and-kpis-2022-draft-proposal/4223). Strategy has been prepared in accordance with the targets outlined in the post.

Multi-chain MS

Assuming the passage of this proposal, DXdao recognizes the “DXvoice Multi-chain Multi-sig”, identified as “0x00Ce8162527Da8bD59056E2A54C3726886cBa676”, as the primary DXvoice multisig on Ethereum, Gnosis Chain, and Polygon. This will replace the currently existing “DXvoice Multi-sig”, identified as “0x35685398af991F43813475E189F791610ad0BE2b”, for use in the movement of funds for the DXvoice squad.

Any remaining funds on the “DXvoice Multi-sig” will be transferred to the “DXvoice Multi-chain Multi-sig” on its respective chain (in this case, only Ethereum). This proposal also authorizes the use of the same address on any alternate chains, provided the address can be secured by the signers. More [context and list of signers can be found here](https://daotalk.org/t/dxvoice-multi-sig-transition-to-multi-chain/3709).

Budget Request

Assuming the passage of this proposal, DXdao will fund the “DXvoice Multi-chain Multi-sig” with 41000 xDAI on Gnosis Chain. This will be used to facilitate payments//micropayments on sidechains, and will not interfere with the existing funds on Ethereum. Follow up requests will be created on an as-needs basis, rather than monthly or quarterly.
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Great to see all the detail and analysis in this post. And I agree that as DXdao matures, it makes sense to ramp up spending on DXvoice as a percentage of overall expenditure.

In the “What’s next?” section it would be good to see example numbers laid out reflecting what was discussed in the post.

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Thanks John!

I’ve included the proposal text in the “What’s next?” section now that covers the true actions of this proposal. This should hopefully make things a bit more clear. This will be submitted on chain after living in the forum for a few days or after any subsequent feedback.

I’ve also been speaking with @0xVenky surrounding the potential for product specific KPI’s that could be monitored alongside our primary squad KPI’s. You can find the thought process for this below, or in the working document.

On-chain metrics provide the most realistic possible metric of true protocol growth, and indirectly highlight the joint efforts of protocol improvements and product awareness. The below example would refer specifically to Swapr, but would require explicit attention for each facet of DXdao that is to be marketed. Note: It’s impossible to measure Swapr YOY growth as it has only been deployed and seriously used for under a year relative to the end of 2021.

2021 Baseline:

  • $128,084,000 Total Volume
  • $13,550,000 Average protocol TVL Annualized
  • 208,505 Total number of transactions
  • $47,150 Annualized protocol fees

Relative On-Chain Swapr Example 2022 Targets:

  • $385,000,000 Total Volume (200% Growth)
  • $29,000,000 Average protocol TVL Annualized (151% Growth)
  • 1,000,000 Total number of transactions (380% Growth)
  • $140,000 Annualized protocol fees (200% Growth)

Although the efforts of the Swapr development/product team are weighed here, lots of these metrics will be supported or even carried, through Swapr’s growing name share and outward-facing initiatives such as partnerships and GC advertising. Where applicable, this strategy can be extended to any DXdao product with verifiable on-chain data. The number of Carrot campaigns and the associated collateral, number of Guilds created, etc…

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