Receiving workstream budgets in governance tokens alone creates a burden on contributors & WS leads to navigate how best to turn that into the resources to pay one’s bills.
As the USD price of GTC fluctuates, it creates a reinforcing concern of increasing sell pressure (more tokens need to be sold to meet the same USD equivalent) and accelerating the depletion of our treasury.
How might we address these concerns
If workstream budgets were awarded in both GTC and a stable coin, this helps to reduce the burdens described above. Knowing that the amount of stablecoins in the treasury is finite, I would propose the following approach to issuing stable coins as part of our budgeting process:
Under any circumstance, a workstream may request up to 15% of their workstream budget in stable coins
A GTC/USD rate, falling below a price, would allow for the percentage to increase. Here is a table for discussion:
GTC USD equivalent
Percent of Stables allowed to request
Any price
15%
Below $1.75
25%
Below $1.50
35%
Below $1.25
45%
Below $1
65%
Below $.75
85%
There needs to be sufficient stables in the treasury to accomplish this, and gathering such stables should not further jeopardize the GTC/USD rate
Implications of this approach
If we took this approach in S15, we could have seen $450K in stables removed from the treasury, and $2.5MM in GTC removed as part of our budgeting effort (assuming each workstream requested their allowed amount of stables). With only $3MM of stable coins in the treasury, this amount will last for 6 seasons.
With the treasury diversification we will have access to more stables, but the timing and amount is still not clear.
This seems very reasonable. We’ve had gnarly fluctuations, mostly to the downside. I wonder if workstreams would think the same if we were in bull mode.
Amazing articulation of a local minima of instability and insecurity that Gitcoin is in!
Solutioning
This proposal just tapes over a couple major issues.
Tape Over Cracks
I think you articulate one of the cracks in the proposal really well.
This is a hard problem because “how do you raise $1million/month to continue operations when the primary asset on your balance sheet is going down?” is a hard problem.
It’s especially hard when you havent created an escape velocity in momentum towards solving the hard problem (or worse, you haven’t even reached consensus about how you’re going to solve the hard problem yet so the creation of new velocity through action is blocked).
The biggest crack you are taping over in this proposal is that if you are in the situation in which you need to use the policy, GTCUSD is going down. If GTCUSD is going down it reflects an accelerating lack of confidence that GTC is a good asset to hold.
Yes, it would be good to create a pocket of psychological safety for the team to have salary in stables. But it’s a mirage because it’s only temporary. What happens when that pocket of psychological safety runs out of oxygen?
Yes, the DAO’s dumping of $1m/mo on market is SOME source of downward pressure. But anyone who has read the bull case for GTC knows there will be other sources of downward pressure too. Some of them are within the DAO’s control and some won’t.
So that brings me to my final point - What will the DAO do in this situation?
Will DAO members have the hard conversations with each other? Will they rally around each other? Will the DAO cut budgets? Will it reorganize? Will it somehow become more effective at realize the bull case for GTC? Will it leanly find sources of downward pressure on GTC and relieve them?
or
will Gitcoin continue to just wander around in the abyss of being a pre-product market fit and pre-revenue startup with a $12 million/year burn & dwindling treasury and let the downward spiral of lack of confidence continue to accelerate until GTCUSD is over the brink?
or
something else?
I think the DAO should get serious about reverse engineering an upward spiral from the downward spiral.
But it’s not up to me. The narrative that Gitcoin collectively pursues is the narrative that it will manfiest. (Gitcoin = multistakeholder system of token holders, protocols, GTC HODLers, GTC builders, DAO citizens, the ecosystem, Vitalik)
I’m on the opposite side of the downward pressure in the market of ideas. I’m a knife catcher I now hold GTC bags. As someone who’s been holding GTC bags, I think this proposal is a good start but I do not support it and encourage the DAO to vote against it.
But if it paired with another small proposal (or set of proposals) that answers the above concerns, I would support it.
I think Gitcoin’s got good bones but in all sincerity it’s a distressed asset. A lifetime ago, before I got into investing in DAOs, I used to work real estate and got into flipping houses. Gitcoin reminds me of a house with good bones in a neighborhood that’ll maybe get hot in a few years, but it needs some repairs/TLC.
GTC/USD is a very low liquidity market in between ETH/USD and GTC/ETH.
The upward price on GTC/USD is due to ETH/USD recovering.
The flat/downward price on GTC/ETH is a sign that people who are more deeply involved in the Ethereum Ecosystem (ppl who hold ETH - like most of Gitcoin’s contributors, token holders, stewards) do not think that GTC is a better hold than ETH or other ETH-based assets.
TLDR I think a medium/long term reversal on GTC/ETH is a sign of this upward spiral.
Hey - you make some great points here! Thanks so much for weighing in as always.
Would encourage you to check out @DisruptionJoe’s survey results here: Mentimeter where he’s asking about contributor’s thoughts on protocol revenue + growth and revenue forecasting.
With GTC now hovering around $1.40 - it may be in our best interest to explore this again such that we can “buy” GTC at a price lower than we previously diversified it at. Meaning, if we have confidence it will go above $1.50 again the future, now might be a good time to deploy stables and supplement budgets with stables instead of all GTC.
I know we are still working on revenue and GTC utility (I think Passport will be the first to introduce some things here), but overall, the treasury management could be better.
One minor aside, I also think we should be deploying funds in the matching pool to bring about more yield. Even earning 5% (the Coinbase going rate on staked Eth) over the last year would have resulted in another dozen Eth coming into the pool.
I now hold GTC bags. As someone who’s been holding GTC bags, I think this proposal is a good start but I do not support it and encourage the DAO to vote against it.
