Introduction
This proposal proposes a comprehensive framework designed to align the interests of active contributors with the long-term objectives of Stake DAO. It aims to ensure contributors’ sustained participation and support the DAO’s ongoing and future development.
Context
Since its inception in January 2021, Stake DAO has experienced significant team turnover due to various challenges, leading to a misalignment between current active contributors and the DAO’s long-term objectives.
Initially, 40% of the SDT supply was allocated to founding contributors and initial supporters through a 2-year vesting contract (though nothing was allocated to support the project’s development aside from contributors’ alignment). This figure was later adjusted to solve this issue and facilitate the future growth of the project by asking all contributors to send back 10% of their allocation to create “the Foundation”, a pocket of tokens used by the DAO for future recruitments (see this medium post) or other DAO needs. It has hardly been used yet.
However, the original team suffered a massive turnover in the first two years for several reasons, and none of them is still contributing as full time active contributors.
Today, the team of active contributors, which is the one that built most of the lockers, all their current architecture, and Votemarket as well, was not part of the initial team. All the current active contributors arrived between Q2-2021 and Q2-2023. None of the current active contributors were in the original vesting contract and received an initial contributor allocation, which creates a challenging situation in terms of alignment with token holders. They all joined over time on the promise that they would receive an allocation of tokens (with pre-negotiated terms) when the entire legal structuring would be completed.
The agreement between the founder and the current team was the following: contributors would receive a certain amount of tokens that would vest over 4 years, starting on July the 1st, 2023, and ending on June the 30th, 2027. Should the vesting start later than this date, it would start with a cliff that would correspond to the pro rata of the time “missed” since the theoretical start of the vesting. This vesting would stop immediately should the contributor stop his active contribution to the DAO for any reason.
Furthermore, since the StakeDAO Association was established, three distinguished professional board members have been working for the Association (not all full-time) and actively contributing to its governance and strategic direction. It makes sense to align these key contributors with the DAO strategic path. Therefore, for them, the proposed solution is to have for them a combination of 4-year locks and 4-year vesting, representing a total of 425,000 SDT.
The total requested amount for this contributor alignment program is 7,435,000 SDT ($1.75m at current price, representing c.$500k per year for four years for the full team).
This figure comes from the agreed amounts between new contributors and founders at their recruitment or after. The total active contributors, including association active members, currently represent a headcount of 13 contributors, which corresponds to an average allocation of c.530k SDT per contributor over four years.
With the current team having joined post-initial allocation, this proposal seeks to rectify alignment disparities to enhance DAO cohesion and effectiveness. The day has come, and it is up to the community to allow active contributors to receive an allocation of SDT, or not.
Description
This proposal outlines accordingly a legally compliant contributors’ token allocation and its related vesting schedule, starting July 1, 2023, over four years, with specific clauses for early termination based on their active contribution. It details the use of “Foundation” funds for initial vesting cliffs and introduces a controlled inflation mechanism to manage subsequent allocations. Governance controls are emphasized, allowing for community-driven adjustments to the proposal based on DAO needs and contributors’ performance.
As detailed previously, the proposed vesting corresponds to a 4-year vesting contract that started on July 1st 2023 and will be ending on June 30th 2027, with a cliff on the deployment date of the contract corresponding to the “missing” vested tokens until this date.
For instance, contributor Bob is awarded one million SDT, and the vesting contract is deployed on July 1st, 2024. Bob, therefore, will receive 250,000 SDT on July 1st, 2024, and 750,000 is streaming over 3 years to the vesting contract, vesting at a rate of 250,000 SDT per year. If, for instance, on June 30th, 2025, Bob stops his active contribution to the DAO, or if the DAO or the Association decides to end its relationship with Bob, the vesting would stop, and the remaining 500,000 SDT would be streamed instead to the Association (still through the vesting contract) for future recruitment or any other need serving the DAO’s goals (for example for the replacement of the leaving contributor).
A Dune dashboard will be created to track those vests.
Finally, the Association proposes a set of targets to be reached by December 31st, 2024:
- TVL: $150m;
- 2024 total DAO revenue: $2.2m;
- Lockers’ market share: 15% for Curve, growth on other key lockers;
- Governance value backing of veSDT: $3.5 (figure displayed on the calculator page).
Should those targets not be reached, the Association’s board members are entitled to enter into discussions with aligned contributors and potentially revise the terms of their vesting.
Technical implementation
This is the high-level principle of this alignment proposal. Its technical implementation could work as follows. The cliff could be financed by the initial “Foundation” funds, which are more than enough (currently 2.5m SDT, with an additional 750k SDT currently in the process of being recovered from initial contributors who didn’t send back the funds so far, expecting a total of 3.25m SDT with a lower level of certainty). Additionally, to avoid a large number of tokens being minted as a one-of and at risk in the vesting contract, the remainder could come progressively from inflation. The DAO would control the contract via veSDT on-chain voting.
StakeDAO Association would have the special right to adjust/cut the vesting of tokens for contributors whose contribution relationship with the DAO has stopped. At any time, the DAO is always in control via governance proposals. For instance, should a contributor aggressively dump his vested tokens, putting the project in jeopardy, the community can decide that his contribution is no longer beneficial for the project and should, therefore, be stopped alongside his vesting.
Assuming the vesting starts around July 1st, the Association would, therefore, distribute a cliff of 1.75m SDT, and inflation should be increased by 0.71 SDT per block for the remaining three years (until the total allocation of all remaining active contributors is reached).
The amount of SDT staying with the Association (so the remaining “Foundation” funds after payment of the cliff) will be used for specific purposes such as recruitment, with a primary focus on the missing strategic functions such as marketing. They can also be used for other purposes benefitting the DAO if agreed properly.
Implementation details
Should the proposal pass, the steps to implement this allocation are the following:
- A senior smart contract developer needs to start working on the vesting contract. The expected time is 2-3 weeks.
- The contract needs to be reviewed by other devs and peers.
- The contract will then be deployed and publicly visible so that everyone can check it.
- “Foundation” funds are to be sent to the Association, which will distribute the cliff.
- Inflation is adjusted to send the corresponding stream to the contract.
Proposal Specifications:
Administrators: veSDT holders
Community Feedback: Minimum of 3 days
Voting Duration: 7 days