Hey all, I want to offer some of my thoughts from going through the Treasury Diversification and talking with nearly two dozen firms over the last 5 weeks…
The bear is here and it’s only going to get worse over the next 6-12mos. Crypto markets are tied closer to the US stock market than they have ever been (and global markets), and the US Fed doesn’t give a shit if they tank the stock market trying to get inflation under control. The general sentiment is that Investors across Web3 are slowing investment and feel like they can wait ~8mos to scoop up a lot of “good deals” as token prices, valuations and shitty projects are going to die out over the next 6-12mos.
This news is not all doomsday for Gitcoin though! Gitcoin has an incredible brand and deep reason for existing that is of interest to many of the folks I have had a chance to chat with. there are headwinds though as money is tightening, and scrutiny is finally being applied to most funding decisions (ie, folks are asking about longevity of projects and roadmaps again!). It’s through these conversations and conversations with other DAOs, and protocols that I have learned and deeply believe Gitcoin is not in a position to fuck around - we need to really focus on the core thesis that we are a protocol DAO with great impact (funding for public goods).
gets on soap box for impact
Season after season we have failed to really make progress on our Protocol development, but continue to grow budgets. To top it off GR13 shrank quite dramatically, likely due to market sentiment. This trend will continue and we will continue to see funding dry up where it was once bountiful. Our community needs us to survive and to thrive, web3 needs us to survive. Gitcoin is the light that fuels the ecosystem through bear markets and we can only do that with funding ourselves, and an eye towards the most important thing (advancing our protocol to make grants permissionless and pervasive).
We aspire to do more, to have a larger impact and to invite our community to build, curate, fund and deliver with us.
So - Here is where we are:
- We have not secured the right “lead” and may not find the right lead given the sentiment described above. This doesn’t mean investment is Gitcoin is a bad idea, merely the 10x over night gains will be harder for someone to realize or justify in this market.
- A community/party funding approach is likely in our best interest given the reach we have and the importance of finding mission aligned investors. Gitcoin is a community project, and always has been. Its our community that makes the Grant program successful and we want to find a way to honor and elevate that. I am going to work with Llamas to evaluate how might we launch a community round like Tokemak and Syndicate did to invite qualified participants to join our community and have a seat at the governing table.
- Deep liquidity matters. Monday (May 2), Tokemak launched CoRE3, which offers DAOs the opportunity to establish liquidity in a way that TOKE holders can decide how to deploy that liquidity. I am bullish on this tech, and the Tokemak team after spending hours with them. But I fear we may have missed the boat by just a week or so
Extending our liquidity ensure we remove some of the whip saw in price of token over the long term. I want to continue to explore options to help smooth price changes.
- There is an idea I have been circulating that could offer upside in 4 dimensions of our chess dilemma. It would bring the community in, remove supply of GTC and also incentivize core user action on platform (create high quality grants and fund grants). More on that below.
- The purpose of our diversification round is to invite more folks to the governance table who can help us navigate where we are, and where we are going. Second, it offers the DAO the ability to pay budgets in stables if governance rewards are no longer sustainable (ie a large bear market). This rationale is respected and appreciated.
Given the details above, I expect us to share more feedback on a the community round approach we are exploring to get feedback from the community before we proceed. It is important to note that volatility in token price will make some of these details very time sensitive, but we will share more in a second post soon.
Here is the 4-d chess idea:
GTC was airdropped to tens of thousands of community members, to ensure those who helped us become successful had a governing stake in the platform they frequented as well. Since that airdrop nearly a year ago, the vast majority of GTC has now gone to mostly DAO members (250 or so people). There is a disconnect between those using our platform and those building our platform. Said differently, I want to bring back the voice of those using the platform to our governing process. Here is what I have in mind (admittedly, this needs to be validated more with the communities support).
(this is a discussion, not a decision)
Starting in GR14, we can use Matching Pool funds to purchase GTC from the open market (in a small and measured way, perhaps $150K worth to start that prevents trading against the sale). The GTC will then be wrapped such that it is not tradeable until after it is unwrapped, but it can be delegated and used in voting while wrapped. To unwrap the wrapped GTC, a user would need two wrapped GTC to receive 1 unwrapped GTC. This means, if someone wants to divest of their governance rights, they can, but at a 50% hit to the governance power they hold. The DAO would keep the other 50%. Here are a few of the goals of something like this:
- This wrapped GTC is in addition to the matching pool rewards and would be given to the top X Grants and funders of each round (maybe top 25 Grants, and top 250 funders). This bring those most active on platform into the governance conversation (or they can delegate) and brings our Users voices to the conversation.
- Slowly buying tokens on the market helps reduce the supply (though likely not in any significant way given the size of WS budgets) and also offers the DAO the ability to ensure GTC is in fact going to those “best actors” of our platform Round over Round.
- This is a novel way to test if wrapped GTC is actually used and delegated for voting, or if it is dumped on the market at a 50% loss. If the tokens are unwrapped, the DAO is retaining 50% of them to be distributed next time/round.
- This ups the anti for both donors and high quality projects to be on the platform as there are now rewards for those donating
(this will take some Sybil work to make sure we aren’t attacked, but I know a team that may be up to the challenge!)
There is a light at the end of tunnel are we getting closer on our path forward. This has been a tremendous learning opportunity for me and others, and I appreciate everyones patience while we navigate this diversification round. I am interested in exploring other novel ways to help the DAO diversify some of its treasury given, so please chime in if you have any other thoughts!