This Week in DAOs: All About Treasuries
This Week in DAOs: All About Treasuries
MakerDAO's progressive decentralization and Index Coop's governance debate, plus the launch of Bankless DAO and PartyDAO
The goal of Boardroom’s Stateless initiative is to establish a community-driven resource covering digital and distributed organizations and their governance.
Earlier this week, we published “D(?)A(?)O’s: A framework to analyze decentralization and autonomy in DAOs’,” by James Duncan. Tomorrow, you’ll receive the official Stateless Weekly newsletter with a collection of the best content about DAOs and governance this week as well as weekly governance updates for a growing number of projects.
📰 This Week’s News
MakerDAO’s Progressive Decentralization Continues: The Maker Foundation - the organization set up to bootstrap the development of MakerDAO, a decentralized lending protocol - announced that it transferred 84,000 MKR from the Foundation-controlled Development Fund to MakerDAO, placing it under full control of Maker Governance.
Index Coop <> Crypto Relief India: A debate is taking place in the Index Coop governance forum about whether they should make a contribution to Crypto Relief directly from their DAO treasury.
Bankless Media Launches the Bankless DAO: Bankless launched Bankless DAO - a decentralized community driving adoption and awareness of bankless money systems like Ethereum, Bitcoin, and DeFi through media, culture, and education. Bankless is one of the first media brands leveraging their existing distribution and community to bootstrap a DAO - everyone should watch closely as the DAO engages external contributions and the community experiments with myriad use cases and incentives around content creation and distribution.
The PartyDAO Crowdfund on Mirror Raises $90k: PartyBid is a pop-up DAO whose sole purpose is to win an NFT auction. Read about it here. Crowdfund backers with at least 10 $PARTY tokens can now join the PartyDAO discord.
In this week’s deep dive, we talk about two big stories that, when taken together, offer evidence that pools of capital governed in a decentralized manner (i.e., DAO treasuries) are going to shape and impact the world around us for years to come.
MakerDAO’s Progressive Decentralization Continues
The Maker Foundation - the organization set up to bootstrap the development of MakerDAO, a decentralized lending protocol - announced that it transferred 84,000 MKR from the Foundation-controlled Development Fund to MakerDAO, placing it under full control of Maker Governance.
The transfer took place at 01:23:36 PM UTC on Monday, May 3rd in Ethereum block number 12361485, meaning - given the value of MKR at the time - ~$443,100,000 in value was transferred. Thanks to an increase in the MKR price later that day, the value of the re-allocated MKR reached as high as $536,844,000. It’s now worth around $436 million.
This means MakerDAO now joins other decentralized finance protocols such as AAVE, Uniswap, Compound Finance, Balancer, and more as projects with hundreds of millions if not billions of dollars of value in their treasury.
It’s not just the vast sum of money that makes this a significant development, however. It is the fact that these resources are now entirely out of the hands of the Maker Foundation and in the hands of MKR holders and participants in MakerDAO, representing a major milestone in MakerDAO’s progressive decentralization.
From the Foundation’s blog announcement:
“The Foundation has placed no conditions or expectations on MakerDAO regarding the returned MKR. Instead, MKR holders, much as they do in governing the Protocol, have total independent control to decide how (or if) they incorporate this MKR into their future plans.”
Thus, the MakerDAO community - and the crypto ecosystem as a whole - is entering a new chapter with many challenges and open questions.
How will these massive DAOs compare to previous major allocators of capital like corporations and governments? Will this new form of organization, governed by human- and code-based consensus, prove worthy of the hype?
For those looking for answers, discussion on MakerDAO’s open governance forum is already heating up.
Index Coop <> Crypto Relief India
Another story from this week is very much related to the questions posed above. Indeed, one could argue that it necessarily follows these questions, representing a “one level deeper” look at DAOs and decentralized governance in practice.
Before we get into it, however, some background: Crypto Relief India was founded less than two weeks ago as a way to pool resources from the crypto community to buy equipment and supplies (like medical oxygen and vaccines) and support children and families affected by the CoVid crisis in India. They’ve already raised around $3.5 million. You can keep track here and donate here.
The story here is the very interesting debate that took place in the Index Coop governance forum about whether they should make a contribution to Crypto Relief directly from their DAO treasury.
To get caught up on the ongoing discussion, check out this link.
For those that don’t know: Index Coop is a community-governed project “focused on enabling the creation and adoption of crypto index primitives” such as the popular DeFi Pulse Index and the Metaverse Index.
The crux of the debate is this: how should DAOs think about their mandate? Said differently, how should they think about the scope and purpose of their community-governed treasury?
There were a couple different objections from the community to the idea of Index Coop donating to Crypto Relief. First, there was concern about resource allocation and prioritization, “Index Cooperative is effectively a startup...We should not be donating other people’s money that the Coop needs to finance growth for the future.” Second, there was apprehension about the precedent it would set, “I really do not like the precedent this would set either for the Coop...We would be incentivizing the creation of an activist class within the Coop that would spend the Coop’s intellectual and financial capital.” Another contributor said “we do not want to set a dangerous precedent when it comes to giving in the future especially around politically charged issues. Those kinds of debates can destroy communities and distract us from our core mission.”
On the other side, community members made the case that donating to Crypto Relief is a value-add to Index Coop in addition to being a charitable act:
“There are some parallels of DAO treasuries with corporate treasuries and university endowments. But there are also ways in which open communities are quite different. Even the nature of moats are different. Community matters, attracting new talent matters, being culturally relevant matters.”
Another contributor added:
“Community is the single most important moat for our organization - and community needs more to thrive than just revenue. Communities should be a force for good, they should help every member grow and improve, and they should help other communities in times of need. We need to be careful here - and charitable giving like this needs to be very closely analyzed and examined.”
Seemingly, a consensus has been reached on whether and how to donate. In short, Index Coop is going to make a one-time contribution to a sub-DAO with a defined mission, with 50% of funds donated directly and the other 50% set up for matching individual donations. Going forward, they will discuss a dedicated, predefined budget for giving like this in the future.
It will be fun to keep up with how the Index Coop implements this and other initiatives like it going forward. One interesting takeaway from this case study is that it gives us a peek into how implementations of treasury-related decisions are going to work in practice: via sub-DAOs (a topic we’ll undoubtedly be discussing at length here).
Moreover, the debate itself is a great example of the challenges and opportunities presented by decentralized ownership. When James Duncan said that DAOs offer “a path for thousands of governance experiments to run concurrently,” this is what he meant. What works for one community might not work for others.
One thing is for sure: in this new paradigm, all it takes is an internet connection and some motivation to take part in the governance of industry-changing protocols and world-changing pools of capital.
We think that’s pretty cool.
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