SDIP #9: Improve transparency by Formalising DAO Governance

Voting details

This proposal will be in #discussion for as long as it takes to reach a consensus. Historically between 1-5 days of debate are sufficient to reach an agreement. Following this period assuming no major rework is required, this proposal will be assigned an SDIP and moved to a snapshot vote for the community to decide.


This proposal intends to increase transparency by:

  • Defining how the DAO determines instructions for the freelancers and how the independent freelancers are incentivized to execute them.

  • The costs involved in executing the instructions of the DAO.

This proposal seeks approval to:

  • Empower Stake DAO Multisig members “to make personnel & budgetary decisions” for three months;

  • Task the Multisig with “facilitating the creation and transition to a sub-unit DAO structure.”

  • Implement a framework to execute payments to freelancers.

  • Delegate powers for different DAO Sub-units (as per their objective) so that they may execute their purpose.

  • Budgets to fulfill the requirements as set out in this proposal.


Since the inception of Stake DAO, the Multisig has fostered a ‘sub-unit structure’ by encouraging the development of autonomous Sub-units consisting of freelance contributors.

The DAO now has multiple Sub-units specialized in different functions that help to make Stake DAO what it is. These Sub-units execute day-to-day tasks as set out in the guidelines in the various SDIPs approved by the community under #governance.

The Sub-units comprise various independent freelancers that execute tasks for the DAO based on the instructions or laws specified in SDIPs and voted on by the DAO community via snapshot voting in SDT/xSDT.

Some of these Sub-units and their purpose is as follows:

Engineering - Build and maintain all code.
DevOps - Run validators, build and sustain DevOps architecture.
Analytics - Provide platform and user analytics to inform policy decisions.
Policy - Determine policies for emissions, fees, etc.
Marketing - Share the message of Stake DAO, cultivate community and attract freelancers.
Multisig - Ratify decisions and execute SDIP alterations to the protocol.

These Sub-units act out the instructions of SDT holders as defined in SDIP’s. Their consistency provides the rationale for formalizing their existence into a decision-making framework that enables them to continue acting in the interests of the DAO. To support this framework, there is a need for:

1. New Processes of Freelance Payments

Managing the relationships with the freelancers who fulfill the governance decisions regarding the development of the DAOs services and technologies takes substantial administrative effort. So we propose to delegate these tasks to an external partner specializing in managing the legal relationships between the freelancers and a DAO, including the invoicing processing, tax, social insurance, and payments. So the DAO and its Sub-units can focus on making decisions; the decisions will then be executed by the freelance contributors, which the external partner handles. The DAO 'entity’ itself cannot maintain these actions. The budget will be defined quarterly and estimates around 25 freelancers part time plus a safety surcharge of 20%. The unused budget will be transferred back to the DAO after each quarter.

2. Legal and Regulatory Advice

As regulation and AML rules are getting tighter, the DAO must have a solid legal base on which operations take part. To analyze the situation and develop necessary rules and actions, we want to propose a law firm and regulatory expertise based on the actual status of the DAO and also on the actual regulatory frameworks in which the DAO might stay. The DAO will mandate an experienced advisory that is already advising major projects on the blockchain. The budget for the first three months won’t exceed 20,000 USDC. The surplus budget will be transferred back to the DAO after the period.

3. Marketing Expenses

As the DAO competes against other significant players, marketing actions like Twitter campaigns, Events, Competitions, Hackathons, etc., are becoming more critical. To enable the DAO to process these payments, we require the implementation of a specialized framework to manage legal relationships between but not limited to freelancers, the DAO, and external partners. The approved budget per quarter will be up to 60,000 USDC, depending on the amount of events, etc. The unused budget will be transferred back to the DAO after the period.

4. IT and Tech expenses

All tech and IT infrastructure will be provided as a service by an external partner who is an IT service provider. This provider will administer and maintain, e.g., AWS servers, Vercel, GitHub, and any other Tools or services the DAO needs in order to function. The budget will be around 45,000 USDC per quarter.

5. Day-to-Day expenses

Further unforeseeable costs can come up. A contingency additional budget of 20,000 USD per quarter is proposed. An external partner will provide the processing of these needs. If already transferred to the external partner, the unused budget will be transferred back to the DAO after the period.

To ratify the organic structure that has been formed, we present the first phase of a progressive decentralization initiative to enhance the governance of Stake DAO. This proposal seeks to update the decision-making structures within the DAO and does not require software implementation.


Approval of this proposal intimately connects SDT holders to Stake DAO products and teams through direct decision-making powers and transparency. As a result, the community will have direct control over who gets to make decisions. Rather than being asked to make specific, operational decisions, SDT holders will conduct how power flows within the DAO, thereby wielding holistic and defined control over every aspect of Stake DAO.

This proposal concerns a three-month Multisig empowerment period will start on November 31st, 2021, and expire on February 28th, 2022. Thus, before the expiration date, SDT holders should approve a new proposal to establish the future direction of Stake DAO budgets for February 28th, 2022 onwards.

If approved, this proposal formalizes the structures and powers that dictate the instructions of Stake DAO. If approved, it would supersede previous SDIP’s relating to decision-making and ratify our current de facto operational governance practices.


Sub-units are small, autonomous groups of freelancers empowered by SDT holders to act independently in the best interest of the DAO within a specific domain of action and with discrete decision-making powers.

Each sub-unit will be organized around a group of signers. The signers for each sub-unit should be nominated by rough social consensus of that sub-unit and be reasonably acceptable to the Operations sub-unit. Sub-unit signers are empowered to choose their consensus mechanism for decision-making and curate their discussion and feedback groups on telegram. Decisions issued by Sub-units will be executed on-chain by the Multisig until a more decentralized system is approved for implementation.

It is important to note that Sub-units are not the only teams that can work on the Stake DAO ecosystem. Each of the current Sub-units was formed in a permissionless manner, emerging based on need as freelancers grouped around a specific cause. This proposal merely formalizes that several such informal groups have achieved sufficient consistent goals, results, and decision-making autonomy to deserve delegated powers from SDT holders.

More informal contributors should continue working, alone or in groups, seeking to have their contributions ratified by SDT holders on a granular basis; after the fact. These informal groups may also submit proposals to SDT holders to formalize their sub-unit

SDT holders will have the power to determine all aspects of Stake DAO through SDIPs and are currently defined in the table below. What Stake DAO is today may not be what it is tomorrow — what SDT holders dictate through SDIP’s (including the definition of SDIP’s) may change Stake DAO in the future.

Proposal Description Hypothetical Examples
Stake DAO Improvement Proposal (SDIP) A proposal to execute on any power delegated to SDT holders or outside the scope of delegated powers Formalise a new sub-unit and assign it power; Change SDT tokenomics; Do anything outside the scope of proscribed powers, like change budgets, branding; revoke a delegated powers from Sub-units; mint a new power, etc.

See below for additional thinking on delegated powers and underlying Sub-units.

Sub-unit Objective Membership Pool
Engineering Manage on-chain DAO functions Protocol Engineers, Strategists, Architects
Policy Manage emissions, allocations, and budgets Economic Strategists, Financiers
DevOps Manage the infrastructure and validators Architects, Protocol Engineers
Marketing Share the message of the DAO Messaging Working Group, Copywriters, Content Creators, Community Working Group
Analytics Inform decision making with Data Data Analytics
Onboarding Inform freelancers Operations
Operations Coordinate contributors Operations

The Multisig

The Multisig is a proxy sub-unit utilizing a Gnosis Safe multisig for on-chain execution. While most of the decision-making powers previously held by the Multisig move to Sub-units, the ability to execute on-chain stays with the Multisig pending future proposals. The Multisig is tasked with validating the decisions issued by Sub-units within the constraints of their delegated powers and with ‘Veto Power’ should they feel a decision needs further review. As we iterate on governance in the future, SDT holders can delegate this ‘Veto Power’ to external arbitration or other forms of secure adjudication.

Decision-Making Powers

Power Delegation Description
Manage Sub-unit Powers SDT Holders SDT holders can vote to create, assign, or revoke discrete powers to or from Sub-units.
Change Multisig Signers SDT Holders As the Multisig will continue to hold critical powers over the near term, only SDT holders can vote to change its signers
Formalise Sub-units SDT Holders Formalize or deconstruct Sub-units to control which Sub-units can hold delegated powers
Change Signers SDT Holders As Operations has the power to change signers of other Sub-units, this is a unique power to change the signers of Operations
Spend Treasury Funds SDT Holders Spend funds from the treasury
SDIP Power SDT Holders SDT Holders have the power to propose an SDIP on anything not already delegated
Executing SDIPs Multisig The power to execute decisions made by SDT holders and Sub-Units on-chain
Veto Power Multisig This power allows the Multisig to spike any decision and is an emergency measure in place
Transitionary Power Multisig A temporary power enabling the Multisig to operate under the mandate of this proposal until the set of Sub-unit delegated decision-making powers covers all needed transactions
Emergency Powers Engineering Immediately intervene in case of attack or bug to shutdown or rollback on-chain DAO functions
Manage Strategies Strategists Activate, deactivate, tune, and maintain strategies
Define Protocol Functions Protocol Engineers Decide what code is considered part of Stake DAO and what isn’t as specified by SDIP’s
Manage Protocol Protocol Engineers Maintain and improve the Stake DAO Protocol
Add Strategies Engineering Add new strategies to vaults
Delegate Transactions Multisig Create delegated transactions for the Multisig to sign and execute
Freelance Payments Operations Create, deploy, modify, or terminate compensation packages
Set Budgets Policy Create budgets for grants, freelancers, operations, or other workstreams
Ratify Sub-unit Signers Operations Formally approve or remove signers for each Sub-unit

This proposal requires no further implementation beyond adopting new processes utilizing the platforms currently active within the DAO.


Formalize the organic decision-making structures in Stake DAO.


Do not formalize decision-making structures in Stake DAO.


This SDIP is a tremendous step in the right direction and has my full support.

I see this bringing many positive returns with the first few being:

  • Increasing community engagement through transparency
  • Providing an additional layer of support for DAO objectives
  • Further decentralising of the SD ecosystem

Same opinion like Poseidon. This is a milestone in achieving a fully working decision process of a true DAO. Sensitive decisions are taken by the Multisig Sub-unit, which itself is legitimised by the token holders. Stake DAO is creating a blueprint for other projects who also aim to be fully autonomous.


Definitely in favor of this proposal ! Really glad to see such a good structure and organization for the development of StakeDao.


This operational structuring is an absolute no-brainer. Can easily expect DAO decision execution speed to significantly increase, if this is implemented.

Immediate pros I see:

  1. Efficient, transparent DAO treasury usage
  2. Faster on-boarding
  3. Clearly defined powers of stakeholders in the DAO, incentivises participation/contributions from the community, which will be a growth-boost