Establish a Sub-DAO and Multi-Sig to Execute Nascent Strategies

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Objective:

Create a Sub-DAO with a multi-sig to provide a structured seasonal capital allocation to NFT-Fi projects and other nascent strategies. This Sub-DAO will act as a council aimed to execute innovative NFT-Fi strategies and evaluate emerging projects without affecting the core V2 strategy contracts.

Summary:

I propose Floor forms a Sub-DAO funded with 110 ETH, managed by a multi-sig for executing and managing NFT-Fi strategies. This Sub-DAO is accountable to FloorDAO and will produce bi-weekly reports on strategy outcomes.

Seasonal Strategy Execution: Allocate a set amount of 25 ETH per quarter to NFT-Fi projects under specific themes (e.g., perps, options, lending) to assess yield generation. The first season will focus on perps/options, with future themes and projects decided by the Sub-DAO.

Reporting and Analysis: The Sub-DAO will provide regular updates and comprehensive seasonal analyses on project performances to inform integration into Floor’s treasury strategy.

Capital Management: Upon approval of this proposal, 110 ETH will be sent to a ⅔ multi-sig consisting of 3 addresses, managed by Nobi, Toes, and Caps, who will then jumpstart the NFT-Fi Seasons.

Funding Request & Compensation: 110 ETH will be sent to the new multi-sig, with 25 ETH being spent on NFT-Fi seasons quarterly and 1000 USDC being paid monthly to each signer as compensation.

Motivation:

This approach allows for the exploration of new NFT-Fi strategies and project evaluations while mitigating risks and adhering to Floor’s risk-averse philosophy.

This proposal introduces a structured, risk-mitigated framework for exploring NFT-Fi strategies and projects, aiming to enhance Floor’s NFT-Fi ecosystem engagement.

The proposal is open for discussion for 4 days before a Snapshot vote.

3 Likes
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I think it’s a really interesting idea to investigate the effect of more intricate / experimental strategies alongside the core DAO. I just have a few questions about this approach that I think may need clearing up before I’m comfortable voting in favour:

  • 110 ETH is quite a substantial amount of the TVL, could this be split into quarterly or bi-annual payment milestones dependant on performance?
  • How would the strategies be decided? Would this be at the complete control and discretion of the sub-multi-sig?
  • Are there any perceived estimates on return?
  • At the end of the 12 months, I would imagine that the 110 ETH (minus the proposed $3,000 per month overhead) be returned to the core DAO Treasury, or would be extended depending on performance?
  • The funding request assumes that 10 ETH would be $36,000 which currently isn’t far off. If this value were to change, is the requested amount essentially 100 ETH + 36000 USDC?

I don’t have a problem with the multisig signers receiving recompense for their actions, if this compensates their additional time spent on facilitating strategies and relationships, and generates yield to the core Treasury. I think it just needs some clarification on the above points, at least from my perspective.

We could set up a revenue strategy that would place any profit back into the sweeps, which is quite nice.

2 Likes
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I’m wondering about other ways to achieve a similar objective, if that objective is to test novel trading and yield strategies and explore new protocols.

This subdao would have overhead of $36,000 a year as a minimum starting point. There’s also the trading funds that the treausury has to lend at risk.

Can we use a bounty or award system instead? If there’s a protocol we want to experiment with, set up a prize pool for the top performers over some period of time, judged in whichever criteria we think will be most useful for us to test. Let individuals risk their own capital and try their own creativity. In a bull market, with lots of users running around, this could be a better ROI for us in terms of data collection vs expentidure. And there’s only the fixed cost of the award pool.

Protocols would enjoy this more as well, as users are more appealing to them than 100 eth in TVL from one multisig. And it certainly can pay to make frens with more nftfi protocols.

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I’d like to see the payment streamed or requested quarterly rather than paid upfront as described in the proposal.

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Certainly for the multi-sig compensation paid in FLOOR, although for executing on strategies paying quarterly and upfront makes more sense.

I’d also like to ask if anyone in the community would be interested in taking my place on the multi-sig. With my focus now on developing the Flayer product and further V2 product features any multi-sig activity is a distraction. I am fine staying on as an uncompensated signer purely for safety/emergency use, but I’m sure someone else could be more valuable in this role – I’ll also post this in Discord.

@scottrepreneur I like the Hats approach you mentioned in Discord, which will help retain hierarchy within the DAO whilst also giving the Nascent Strategy multi-sig the same level of autonomy. I think that structure should be included in this proposal.

1 Like
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Here’s an example tree I built out quickly. Happy to refine/expand based on ideas proposed or broad support.

Screenshot 2024-03-22 at 08.10.07
Screenshot 2024-03-22 at 08.10.071920×1319 130 KB

Quick Hats Overview

FloorDAO Tree

  • FloorDAO wearers top hat (#179)
  • Remaining flexible in the current system, we’ll leave an empty hat for potential expansion in the future (for potentially claimable hats) (#179.1)
  • Nascent strategy team wears #179.1.1 which controls a Safe linked in the authorities section of the Hat

Advantages

  • Sub-DAO team remains fully autonomous in its actions on the Safe
  • DAO can update wearers of Hat and swap signers (signers can no longer remove themselves)
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For clarity here, for proposers:

  • Strategy budgets can be requested at the beginning of each epoch (quarterly, here)
  • Strategist compensation can be streamed or escrowed for payment retroactively

Appreciate you all making room for the community in these initiatives. Send it higher.

1 Like
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Thanks for returning this to the forum to discuss some of the finer points, I think we’re almost ready to go with a few clarifications.

I’d like to reiterate some of @Twade earlier questions.

Funding

110 ETH is quite a substantial amount of the TVL, could this be split into quarterly or bi-annual payment milestones dependant on performance?

As part of the snapshot this looks to be changed to

  • Q1: 30E for the first quarter (5e for gas and 25e for strategies)
  • Q2: 25e for the second quarter

after 6 months the remaining unused 5e for gas will be returned to FloorDAO

  • Q3: 30E for the third quarter (5e for gas and 25e for strategies)
  • Q4: 25E for the fourth quarter

A question on the strategies…

  • Does each strategy only run for the quarter with the ETH then returned to the DAO, or can the strategies run into new quarters and over the 12 months?

Reporting & Performance

@Twade also queries if this is about performance, and Nobi has previously include this…

The Snapshot indicates

This Sub-DAO is accountable to FloorDAO and will produce bi-weekly reports on strategy outcomes.

and also

Reporting and Analysis: The Sub-DAO will provide regular updates and comprehensive seasonal analyses on project performances to inform integration into Floor’s treasury strategy.

  • Are there any examples of the types of reports that will be produced?

  • What is the baseline for performance after the first 6 months that will determine if the scheme should continue?

Playing devils advocate, we could always drop the 110ETH into a 3.5% staked eth return, but those returns are smol and not very exciting when it comes to what can be done with Defi which I think is what this proposal is all about.

Using some back of the napkin math the programme will need to generate approximately 21.78E to out perform just staking in Lido (this assumes 0.001e per Floor and all of the 10e expenses used). I do think it would be short sighted to focus purely on the returns as a qualifier to continue/discontiue the strategies because an active Floor Sub Dao will bring more eyes to the DAO and all the tools Floor may be using (Sudo, NFTX, Flayer, Wasabi, etc).

Having said that, it would be great to see the numbers the Sub DAO are targetting, both financially on returns but also if there are any other factors.

Remuneration

Although members of the Core team makes up the Sub DAO, if the new responsibilities fall outside of their roles they should 100% be rewarded for the additional work these stratgies bring.

Should these be set up as Llama pay or Sablier streams which could be set for 6 or 12 months on a linear stream? That way the DAO then can cancel these if the Sub DAO members change or if the programme ends early.

Although it would probably take longer to implement and we should get moving on this sooner than later, I like the idea of a tiered compensation structure based on the success of the strategies chosen:

  • 5% profit returns: 10% of profits allocated as compensation
  • 10% profit returns: 15% of profits allocated as compensation
  • 15% profit returns: 20% of profits allocated as compensation
  • 20%+ profit returns: 25% of profits allocated as compensation

If the strategies earn more, so should the strategooooors.

(this of course could result in no remuneration being allocated despite users working which I disagree with, and potentially a ceiling should be included to avoid the signers looking for 100x returns to maximise profits. I don’t forsee this as an issue with the current signers, however I’m thinking in the future if new unknown community members request something similar that checks and balances are in place.)

1 Like
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We could get creative with DAOHaus (molochv3) and Hats here.

Original DAO multisig could be only lootshare holder, and other members could hold only voting shares (and get hats as well). From there you setup minion vaults (safe multisigs owned by DAO contract) and could modify them to allow hat users to be other signers alongside the DAO. ETH can be moved from treasury into a minion via proposal without worrying about ragequitting members taking loot share (only FloorDAO multisig will have lootshares - and even better make FloorDAO a shaman), but they can then execute strategies via the minion once funds are there.

This reduces the ability of hat wearers colluding and stealing funds - and FloorDAO has executive plug pulling powers.

Hats also work beautifully with dework permissions, so FloorDAO can setup paid (and USD pegged) bounties for work items - takes a bit of work, but I see huge value in making all work tasks (strategies, reports etc) succinct, well defined & scoped and achievable in a reasonable time period. This would be instead of creating paid roles or comp for open-ended responsibilities, as you would then need to review output as well as place a lot of trust in the member.

We have had issues with Sablier, but that could just be on us. Doing it the dework way however means that the FloorDAO multisig (or a specific hat wearer) would be the only one able to pay out the bounty tasks (and amount assigned), which would come directly out of a specified multisig (eg FloorDAO)

Happy to chat with anyone about what we have learned at BuildersDAO around governance & comp setup.

@scottrepreneur I did see some Molochv3 <> Hats integrations in the works in the docs & github. How far along are these? Any suggestions on the above?

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Moloch voting isn’t really tenable on mainnet which largely rules it out here I think

The Hats protoDAO is currently using the Onboarding shaman (described here) to coordinate moloch voting/loot shares with applicable hat wearers. (e.g. if you’re wearing the necessary hat, you can convert your loot/rep into votes). Asked the Hats team if we can update the reference docs on this and will update this post when available.

The tasks necessary to succeed in this goal are less discreet bounties, I think. Signers are more catching alpha and transforming that into successful tx’s on behalf of the dao.

1 Like