- The first Restructuring and Refocus proposal presented a multitude of uncertainties; political, financial, and otherwise.
This text outlines an alternative proposal with a more democratic and information based approach. Among its goals, it aims to accomplish:
- A dynamic and transparent process utilizing “Phases” to accurately communicate goals and actions. Deadlines act as a forcing function to accomplishing them.
- Budget adjustment from current $3,550,464 at 3.26 years of runway, to $2,223,534 at 5.21 years of runway. (Which could be reduced further by current Nimi uncertainties).
- Better involve DXD holders within governance processes and DAO direction.*
- Introduce accountability structure including dynamic reward and punishment system through budgetary and goal cycles.
- Introduce structure for DXdao to analyze and justify its financial expenditures and product focuses.
- Standardization of contributor proposals and associated punishments for failing to engage governance.
Hey everyone. These last few weeks have been tough between contentious governance proposals and restructuring discussions, and I hope everyone is hanging in there and staying healthy.
A little over two weeks ago, a draft proposal titled “Restructuring and refocus” was posted to DAOtalk. This thread, signed by John, Geronimo, Connor, Federico, Yuriy, and Ross, highlighted some important and difficult discussions surrounding DXdao’s lack of revenue, challenges with efficiently shipping, culture, and runway. After deep conversation and contention, a follow-up thread was posted titled “Restructuring and Refocus - Draft #2” on DAOtalk to address some community concerns.
Fun fact: despite massive participation, the restructuring and refocus thread is only the 57th most popular DAOtalk thread by views.
This proposal has been prepared by 0xKLOM.eth with the context that there currently is no other option – opposition of the initial proposal vilifies the individual, making it very difficult for many to take a stance. In my opinion, the current draft is not sufficiently justified, may have malicious undertones and regularly contradicts itself.
- I consider myself close friends with individuals on both “sides” of the original proposal. I’ve attempted to remove ALL emotional perspectives and focus as much as possible on facts. I hope that concentrating on these aspects of the discussions doesn’t detract from our personal relationships; I do not intend to attack or support anyone with this proposal.
- As mentioned above, the original proposal is currently the only option. As a result, pushing back on aspects could be perceived as attacks, which is not intended. This pushback would exist in a similar capacity if there were another existing proposal, and would not differ based on proposer.
- Some aspects surrounding the process of this proposal have personally affected me or frustrated me. This frustration could bleed through into this post.
- I have zero political bias. I prepared this proposal entirely independently, focusing on facts and data. I have not reached out to individuals to garner support and would expect any discourse to exist in public forums.
- 0xKLOM.eth and its wallets have accumulated over three digits of DXD. My size is not size, but DXD represents a significant (perhaps unhealthy?) portion of my actual portfolio (this is ignoring DXD vesting for contributions to DXdao).
- My team and I have been conservative on costs and continue slimming our financial footprint. Each of us serves an essential and widely needed role at the DAO – and its products. 0xKLOM.eth does not fear its position at DXdao, regardless of the outcome of any restructuring. 0xKLOM.eth’s course isn’t altered by bribes, threats, persuasion or anything in between.
Here is a collection of indisputable facts related to the proposal and underlying issues.
The original proposal, and second draft, DO NOT accurately assess DXdao’s budgetary situation. “…a burn rate of nearly $4M per year…” is implicated, but the draft proposals do not point to any resources to verify this. This has been shared in private but, to the best of my knowledge, has not been used in the forum. The proposers have pushed against the credibility of existing budgetary frameworks.
DXdao has had difficulty shipping, creating value, making money, AND propagating its vision. It’s no secret that this is the case. Products are not released in a timely fashion, with others terminated before they can even see the light of day. Existing products lose support before they have a chance to pick up traction and, worst of all, have little to no financial justification before the DAO dives head first into expensive audits and development cycles. Non-technical tries to move with this and various other operational challenges… leading to the blame cycle. EVERYONE is to blame for the DAO’s current state, including myself.
There are questionable, if any, accountability regimes in place. @nylon did the best job at describing this. The DAO moves directionless from one product to the next without justification. Then, when things don’t work or go on far too long, leading to a blow-up, everyone shakes hands at the end of the day. “We say we will do something, and we simply don’t, we forget, things fall between the responsibility of people, and we miss valuable opportunities.”
DXD, as a token, does not have sufficient utility, financial alignment, or governance power. This is another “no shit,” but it is worth listing here nonetheless. DXD represents a financial claim to the success of DXdao and an underlying claim of the treasury but lost its primary utility through the community pause of the bonding curve. DXdao has yet to make true on its promises of returning revenue (Swapr), nor does it have any code (that is utilized) to distribute this revenue. DXD has never had voting power in the DAO, and Governance 2.0 delays have pushed the target to introduce this even further. There is no other utility at this stage beyond a raw ERC-20 asset.
Some of the signers on the original proposal have come out in unison to vote against a proposal paying a contributor’s past work. This is a touch flabbergasting to me, and I would have loved to hear additional context on the governance call, but opposing participants were not present. I don’t want to interject any opinions here, but all context can be found in this thread. It has also sparked discussion surrounding individuals exceeding 4% REP that I will not be commenting on.
Below is a collection of things on my mind surrounding the recent governance discussions to contextualize the below proposal. Some may be less relevant than others and are presented in no particular order.
A lack of clarity on the budget seriously brings the credibility of this proposal down. There appear to be two conflicting budgetary statements, one from @jpkcambridge on July 24th, 2022, and two from @powers on June 17th, 2022 (Expenses) and on July 25th, 2022 (Budget). The differences between these two statements are non-negligible at $3,945,200 and $3,550,464, implicating a difference of roughly 400k annually.
My opinion is that when making a significant structurally altering decision, there should be quantifiable and verifiable data to back it up. The expenses and budget sheets by @powers seem to account for some of my most immediate concerns. This includes but isn’t limited to data ripped straight from all on-chain proposals on our governance bases, contributor split time allocations indicated in their proposals, and squad-based forward-looking budgets rather than current expenditures.
Portion of the budget sheet provided in this thread.
From what I can gather, without a full deep dive, the discrepancies lie predominantly in not fully accounting for split contributor roles, unclear auditing costs, and some unclear commitments. (Thank you to @dinocres for putting together a more precise rendition of the original proposers’ budget sheet). @powers’ budget also accounts for 5 - 10% of every contributor proposal spent on governance, as indicated by the original restructuring proposal. Whether or not this is being executed upon or understood is another discussion.
For these reasons and more, I am choosing to reference the remainder of this proposal using the July 25th, 2022 (Budget) by @powers. I do, however, invite the community to scrutinize each of these budgets and, perhaps more importantly, identify or justify any discrepancies between the two.
Implicated squad based budget changes, updated 7/25/22.
The original proposal vilifies any opposition and weaponizes rightfully upset DXD holders against an imaginary enemy. I’ve seen and heard DXD holders share the idea that opposition to the original restructuring proposal equals free lunch, to block DXD from governance, and drain the treasury, among a variety of other things. I don’t think that this imaginary enemy exists.
Those in opposition to the original restructuring are some of the most aligned individuals I’ve met, many of whom are DXD holders that joined the DAO specifically to help push things in the right direction. We all want the same thing here, and I would like to think everyone is identifying these problems but is recognizing the originally proposed solution isn’t the best path for the DAO.
The original proposal takes an “accountability for thee, not for me” approach. Initially, the proposal pushed the creation of a “product development” squad to oversee the creation and success of new DXdao products. I don’t see any issue with this idea, but I was frustrated at the approach. There was a focus on cutting certain areas for budgetary reasons while introducing a new, unmonitored expense with no budget that listed responsibilities that were implied to have already been held by the proposers. It also implicated nothing towards product budget in reference to the overarching budget. I am glad this doesn’t appear to have been pushed in the second draft.
It couldn’t help but feel as if there were malicious undertones to the original proposal. I spoke with the proposers sometime before the initial submission and the second draft. I shared various thoughts and opinions that seemed to have been unacknowledged. (Worth noting that there were no changes between myself to internal, but there were removals from internal to external). Let me paraphrase some of these points:
Compartmentalize this proposal. You had mentioned time constraints and momentum as reasoning for not splitting it into individual votes, but even myself reading through it as someone agreeing with a majority of the points, I identify things that I would not vote in favour of. I actually think splitting this into separate votes is fantastic leverage for executing upon momentum.
Be more specific on overall expenditure, the current figure, exactly what each action would reduce it to, runway targets considering solidity dev talent, etc.
Better explain and focus on accountability. Its pretty clear to everyone that there is a deep underlying accountability issue. That includes me, you folks proposing this, and those who are being proposed to. I feel as if this proposal does not have a structure to ensure leaders remain accountable and motivated.
This is less of a point to me, necessary evils and all, but if anything in this proposal is related to specific contributors (culture), it should be explicitly stated. If not (simply role viability), it should still highlight those affected. This allows the governance process to better understand why changes were made and reference existing contributor proposals to assist in the decision-making process.
To my knowledge, these remain unaddressed, or their implications are removed. So the question then becomes, why?
I was in the middle of some personal life crisis’ when I spoke with the proposing group. I prefer to keep the details private, but I was under immense pressure and stress at the time. There were a few standout things about this call that shed a bit more context:
- The framing of the call was that the group had left my squad budget untouched and later implied that if I were not to support the restructuring, they would be reallocating those funds. Clearly, this is politically motivated, but one could infer that these cuts aren’t being made surrounding objective or quantifiable results but rather those that support the proposers. Does DXvoice lose value if it doesn’t support a proposal?
- They had described a clause in the proposal to allow the Nimi team to be paid 100% by the DAO to work on Nimi for no indicated return. I also didn’t understand why it was being lumped into this restructuring as it would have profound cost implications to the budget that were unaccounted for – and was effectively leveraging DAO resources to pass a proposal. This has since been removed from draft #2, but it was enough to highlight that getting this passed was far more important than the underlying budget discussion, in my eyes.
- I was pressured to decide by the evening or the next day latest. At this stage, I was in the middle of the mentioned crises. I do my absolute best to distance personal matters from my professional life, but I was struggling, and I don’t think I should have been pressured into a position at the time. (Albiet, I understand the importance of capitalizing on momentum). FWIW, I’m still in the middle of this situation and tried to take the week to myself, but I needed to step in with my team and for governance purposes. (Hi!)
Of course, we can only infer based on present information, and it’s not my place to describe or speculate on what the agenda (if any) might be.
The proposal points to culture as justification for cuts but doesn’t implicate the cause or reasoning. Let me explain in my own words:
“This is less of a point to me, necessary evils and all, but if anything in this proposal is related to specific contributors (culture), it should be explicitly stated. If not (simply role viability), it should still highlight those affected. This allows the governance process to better understand why changes were made and reference existing contributor proposals to assist in the decision-making process. John recently had a respected governance process, where he was able to justify and point to his actions alongside the submission of his contributor proposals. This configuration removes that aspect for those affected by voting through a budget effectively barring proposals from the individuals in the removed squads, which feels slightly removed from the way we handle governance.”
The action of these proposals appears unclear. Who is getting cut precisely? If they are being singled out, is there a particular reason? Culture? Workplace dynamic and behaviour? Not delivering? If it’s more broadly about the value of a squad, why isn’t their justification deeper than “…every contributor should have 10% of their time allocated for governance”?
I, for one, would LOVE to trim fat – squads not bringing value to the DAO, but to take a practical stance on this, I need to see actual figures. For example, what does Bizdev accomplish month to month, why is it not presently bringing value, and how will DXvoice consolidate all its responsibilities? Why is governance a useless role, and does DXgov even have the resources for consolidating its responsibilities considering perceived delays on the product side? Can the exact responsibilities and quantifiable value add of these squads be identified and their removal justified?
DXdao has bred a culture of saying no because the solution is not perfect. I am just as guilty of this as anyone else. Decision-making in a DAO focused on decentralization, first and foremost, is hard. This does not excuse a culture of inaction and has likely resulted in a variety of missed opportunities, both financial and cultural. “Pissing into the wind” has been a long-term adage internally that emerged from this exact phenomenon.
I recognize that by creating this alternative proposal I am further propagating the “no because the solution isn’t perfect” mentality, but I think that the implications of the original proposal are extreme and require additional discourse. I address this further in the proposal segment below.
Option A: DXdao identifies an opportunity but indicates a variety of challenges would prevent timely/efficient/cost-effective execution. No action.
Option B: DXdao identifies an obvious path to success, but indicates challenges with ownership/decentralization/process. No action
Option C: All options exhausted. No action.
With the lengthy preamble out of the way, let’s briefly highlight goals. DXdao has many problems that need action, some immediate and others for further in the organization’s future. Solutions will be detailed in the below proposal.
- Expenses and budget need to be clarified immediately – There are contentions highlighted above surrounding runway, budget, expenses, and more. This NEEDS to be clarified and revisited to a single agreeable point of information. Where are the discrepancies? How can they be solved? Should the budgets set forth by squads be reevaluated considering recent discussions?
- DXdao needs to reduce and limit its expenses – Another “no shit” moment. Reducing our costs is incredibly important to preserving capital throughout a bear market environment but should not prevent us from capitalizing on opportunities.
- DXdao needs to revisit, formalize and provide accountability to product metrics – Several have tried in the past with varying success. There was a time when I tried to push this personally but didn’t feel enabled or empowered to see it through.
- DXdao needs to introduce the money angle to its decision-making process – Currently, Fridays host the public “product strategy” call, but it has widely followed “saying no because the solution is not perfect” and solutions aren’t typically garnered. DXdao has spent almost zero resources discovering how to become a profitable organization. No one has sat down and quantified whether a product can be profitable in practice, how much capital would be required to get it to that stage, or whether it will be competitive. Yet, we continue to push forward with expensive audits and product prioritization that is not quantified. This is the largest missing aspect of DXdao currently in my eyes.
- DXdao needs to suspend all onboarding temporarily – Until DXdao and its squads have formalized a budget, set key targets, and provided accountability outlets, all further onboarding should be paused. Of course, anyone is able to submit a proposal and justify the importance of their role over the temporary block. (SC devs, looking at you).
- DXdao needs to reiterate the importance of active worker proposals, square off all outstanding proposals, and introduce processes to prevent inactivity in the future – This is already being discussed here and here, which is great to see but requires further steps. We have spent so long preaching actual on-chain governance yet have a variety of “contributors” falling behind constantly. Hell, I am guilty as we speak, with my latest proposal expiring August 31st. Things get busy, but we need a fire under our asses. Proposals on-chain are gospel and arguably the MOST critical aspect of DXdao and its governance, and no one should consider themselves an active or full-time contributor without this.
- Governance 2.0 should be priority number one. Period. – I have tried to push this point for some time. DXdao’s strongest link is its governance. No questions asked. Governance 2.0 is an enthralling model that has interested everyone I have spoken with that has a remote interest in governance. We have been practicing on-chain governance for YEARS. We have the unique angle and opportunity to not only create a profitable business but also propagate DECENTRALIZED governance in the Ethereum ecosystem. We need to prioritize this further.
0xKLOM.eth’s post surrounding outcomes from the events surrounding ETHdenver.
0xKLOM.eth proposes a multi-phase, dynamic approach to solving the outlined problems. This would include three “phases”, each having explicit and quantifiable goals with deadlines acting as forcing functions.
The best part? I WANT people to disagree with the details. This process will focus on granting an avenue for the DAO to discuss and clarify its overarching goals, how exactly to tackle them and grant ample opportunity for justification surrounding difficult decisions. This is in contrast to the only other option presently, which appears to be taking a “this way or the highway” approach. This post and associated signal proposal will solely authorize DXdao to utilize this framework to solve its issues, not on the specifics of the outlined phases. To be fully clear: The draft proposals for each below phase require additional community discussion and justification; the primary discussion for this thread is surrounding the goals and approach to tackling them.
Phase 1: Low Hanging Fruit
Phase imaging courtesy of Midjourney.
Phase 1 represents the conditions that both need to be expedited and are least contentious. These are unlikely to require significant discussion and greatly benefit from a quick governance process.
- Disengagement from contractors
- Limiting auditing budget to $150k annually, with additional spending requiring full financial justification
- Limiting event budget to $150k annually
- Temporarily “restricting” further contributor engagements until phase 3
- Involve DXD holders in restructuring phases
- Decrease both number and length of weekly calls where appropriate to increase productivity
Immediately after the passage of the parent proposal “Restructuring and Refocus – Alternative Proposal”. This proposal could reasonably be submitted as early as September 14th to 16th, aiming to pass by September 19th or 20th.
As mentioned above, this data has been abstracted from June 17th, 2022 (Expenses) and July 25th, 2022 (Budget).
- Current overall, current stable balance, implied stable runway: $3,550,464, $11,586,262, 3.26 Years
- Current audit budget: $150,000 Implied annualized through fixed cost estimations
- Current event budget: $404,196
- Audit budget reduction: $0 standardized through limitations
- Contractor disengagement reduction: -$432,000
- Event budget reduction: -$254,196
- Final goal, implied stable runway: $2,864,268, 4.05 Years
DXdao needs to make money, but it needs to collect itself first. In the process of rediscovery, the path of least resistance should be taken immediately to tighten the budget and ensure a healthy runway.
If cuts need to happen, contractors are the least friction and have been implicated in other discussions and proposals.
The auditing budget didn’t appear to be established in this budget and instead focused on fixed cost estimations intra-squad. This would adjust it to a blanket $150k commitment, with additional costs requiring “full financial justification”. Audits are important to security and for establishing reliability, but shouldn’t be rushed without discovering whether the product can be profitable. “Can this product reasonably recoup this $200k audit? How long would this take?” should be our first questions when thinking about a product audit. (Code that handles DXdao funds is a different story). Why jump into an audit for a product that can’t be profitable? What strategy backs up such an audit?
There has been plenty of discussions surrounding the reduction of events that are all very justified. The original restructuring proposal implicated $150k, which is a reasonable target. This will allow DXdao to further discuss priority. Which members should be going to which events? Who is important to have there? What are we trying to accomplish?
The budget is an important discussion that needs to be respected. Until DXdao can move through the phases laid out in these proposals, or effectively otherwise solve its issues, it should place a blanket “block” on new contributors (until otherwise specified in a future phase). Anyone is able to submit a proposal regardless, but due to the block additional scrutiny and justification will come naturally.
Finally, DXD holders should be granted an avenue to share thoughts and participate in the voting process. If a DXD guild is not yet ready for these proposals, we should instead allow snapshot votes and implicate that REP holders will respect a certain percentage towards the outcomes of these votes.
Phase 2: Accountability, Access, Anatomy (Structure).
Phase imaging courtesy of Midjourney.
Phase 2 represents the meat of solving our core issues. How do we prevent “no because the solution is not perfect” and other cultural issues? How do we incentivize budding talent and new ideas to flourish? How do we keep leaders accountable for the deliverables of their squads? How do we make DXdao profitable?
I don’t think that I alone can solve the plethora of issues plaguing us currently, but there is a very obvious avenue to tackle this: Bogota.
Since Phase 1 has yet to pass, goals will be highlighted over pure actions. Community discussion and Bogota findings will chisel this into a set of full actions.
- Introduce accountability structure to squad leaders
- Establish a consistent budgetary and goal cycle for ALL of DXdao
- Introduce processes for the financial viability of future products
- Create a framework for future potential products and how they fit in our suite strategy
- Introduce “money makers” to our decision-making process
- Tighten processes surrounding sensitive contributor chats and their participants
- Discovering and implementing long-term contributor proposal solution
- Address penalties for contributors working off-proposal
- Discuss whether contributor guidelines should be adjusted for high-demand roles
- Further increase avenues for DXD holders to express both their opinions and voting power in governance
Immediately after the events and retreat in Bogota. This gives room to focus on these problems in a time previously allocated to tackling them and bring the solutions to a coordinated and time-sensitive on-chain vote. No later than October 28th, 2022.
As mentioned above, this data has been abstracted from June 17th, 2022 (Expenses) and July 25th, 2022 (Budget).
Honestly, this section is the biggest “no shit” of them all. DXdao needs both a strict accountability structure and consistent budget/goal targets. It’s something that is currently missing and has played a large role in the story of product shipping issues. Previous attempts have failed, but lacked the accountability aspect and standardizing punishments and rewards for failure and success respectively.
Financial focus is the absolute biggest puzzle piece to me. Focusing on justifying the existence of our products from a financial standpoint, prioritizing based on competitive moat and profitability, introducing outside capital or even consultants with more knowledge than the current community to advise on direction. There are lots of angles here.
After the passage of Phase 1, I’ll be pushing for a deeper discussion on refining the goals, specifying actions and deliberating them at previously allocated time in Bogota.