PoolTogether

Forming PoolTogether Treasury Management Committee

This proposal has been written by the proposed co-leads and members from the Llama DAO working group.

##Introduction
In the Llama DAO Treasury Management Report, the working group recommended that PoolTogether form a Treasury Management Committee (TMC) that reviews potential capital management decisions, analyzes ongoing tokenomics, and negotiates deals on behalf of the DAO. Going forward, it will be important that a core group of community members can use their expertise to advise the community on treasury fund allocation and management.

Whenever a community forms a community-led working group, it’s important to outline the basic parameters (e.g., duties, responsibilities, compositions, etc.) but it is paramount that the discretionary power granted to such a group be measured with checks and balances that the community can use to manage the committee’s conduct and performance. There are a variety of DAO governance frameworks that PoolTogether can look to when determining how to strike a balance between granting discretionary power to a committee and ensuring the community has an adequate check on any powers granted. Yearn’s Governance 2.0 model and Index Coop’s Working Group model are two excellent examples of communities’ granting a limited amount of power to a working group to allow a working group to move with speed while ensuring the community has a check on that power. @BraveNewDefi reviewed both of these models when he proposed the Nexus Hub model within the Nexus Mutual community.

The Llama DAO Working Group has collaborated with the proposed committee members to expand upon their thoughts previously shared on Discord and outline the Duties, Responsibilities, Powers Delegated, Community Checks, and Committee Composition in the sections below.

##Duties and Responsibilities

  • Identifying and negotiating suitable terms with external entities such as creditors. If the PoolTogether community were to determine through governance that they wish to utilize UMA Range Tokens or UMA KPI options, or instead that the protocol ought to take on debt using Maple Finance, it should be the role of the TMC to initiate conversations with external entities on the specific terms and details of any deal that involves the use of these products. Once the terms of a deal are near final, the TMC will put together a term sheet for the wider PoolTogether community to discuss and review. The Committee itself cannot execute any deal without first receiving approval from the community through a PTIP and governance vote.

  • Advising the community on Tokenomics/Treasury-related matters. Although anyone in the community is free to put forward tokenomics/treasury-related proposals, we hope the TMC will grow to become a first point of contact on feedback/advice on these proposals. The TMC should be responsible for providing feedback on all treasury related PTIPs in the forums in addition to putting forward its own proposals when appropriate; for instance, the Committee could perform the research required to inform the community on prize pool incentivizations/drip across L1s and L2s as the protocol expands in its multi-chain mission.

  • Execute Approved Strategies. After treasury strategies are presented to and approved by the community, the Committee would execute said strategies and handle their implementation. For example: if the community determines that Range Tokens are to be used to conduct a debt raise, the Committee would be responsible for selling the Range Tokens and sending the proceeds to the treasury.

  • Review Treasury Management RFPs. Working together with PoolGrants, the Committee can issue RFPs for investment strategies, treasury analysis, tokenomics review, etc., and review the proposals submitted. Nexus Mutual’s Investment Hub is an example of how to structure a committee that can review various investment strategy proposals.

  • Select RFPs and Collaborate with PoolGrants. The Committee can put out RFPs and work with PoolGrants to select community members who are able to conduct research and analysis for the Committee on treasury and/or tokenomics related issues. The Committee would be responsible for managing any RFPs selected, and the committee members would provide feedback and support to community members working on RFPs.

  • Provide Quarterly Reports. The Committee would be required to submit quarterly reports on their work, which would include a record of treasury-related transactions and a summary of the protocol’s positions. This report will ensure the Committee’s actions are transparent, and this report can be used to judge the performance of the Committee.

  • Conduct financial transactions out of a multisig when required by an approved strategy If the community were to decide to initiate a discretionary buyback strategy, the TMC would be required to conduct these buybacks. Similarly, if the community determined that they wish for PoolTogether to take on debt that would require making periodic interest payments, the TMC ought to ensure that these payments occur.

##Powers Delegated and Compensation

  • Discretion to approach and negotiate with protocol teams, creditors, investors, and other external entities as outlined in the committee charter. Once the committee is formed and the members are approved through governance, the community would be delegating the committee the responsibility to represent PoolTogether in any negotiations or deliberations regarding the terms and conditions of any deals.

  • Approval to operate on a 3/6-month basis, as overseen by the community. The community can determine the term length of the committee and when reviews should occur. Llama DAO would recommend a quarterly to semi-annually review period for the TMC.
    Forming a PoolTogether Treasury Management Committee

  • Control of a multi-sig and ability to execute approved strategies, make financial payments where necessary. The six PoolTogether community committee members can serve as multi-sig signers. The Multisig would require three of six signatures. The TMC would be responsible for managing active positions, so funds required for servicing debt, conducting buybacks, etc., would be held within a multi-sig managed by the committee.

  • Hourly compensation at the same rate as PoolGrants. Members on the committee would receive hourly compensation that matches the rate for PoolGrants members, which is set at $100/hr. The co-leads would work up to 15hrs/week at the aforementioned hourly rate, while other members of the committee would serve for a maximum of 6hrs/week at this same rate. These are maximum hours and will likely not be reached on a regular basis. All members of the TMC will be required to log their worked hours on a timesheet to provide transparent accounting of contributions and compensation. The payment and time commitments are subject to review by the committee members and the PoolTogether community, but Llama proposes these terms as they align with the agreement for the PoolGrants committee.

  • **The Multisig will acquire approximately 1 ETH and distribute it evenly to the three leads up front to pay for gas fees. This will allow the leads to use fresh wallets.

##Community Checks

  • Ultimate approval of any terms, strategies proposed by the Committee. The PoolTogether community would have to approve any investment strategy proposed by the TMC before it can be executed. The TMC will be responsible for determining the terms of deal but approval will be subject to a PTIP and community vote.

  • Power to redirect the committee. Community members can conduct a temperature check if they believe the TMC is not focussed on the most important treasury management matters or strategies. If a temperature check passes and the request is for the committee to shift their focus, then the committee ought to be redirected.

  • Ability to replace members who do not fulfill the requirements of the role. If there are members who do not meet the duties and responsibilities of the role, are frequently absent, etc, the committee can remove that member with three votes from other committee members.

  • Authority to add and remove powers delegated to the committee The community can, through the normal PTIP process, add or remove powers to/from the committee as they see fit. This ensures that the committee is always ultimately just an extension of the will of the community itself.

  • Authority to dissolve the committee. The committee will be subject to periodic reviews, and if the community is unhappy with the TMC’s performance or the community does not believe the committee is necessary anymore, then the community can vote to dissolve the committee.

##Composition

PoolTogether community members have expressed interest in being on this committee, and Llama believes there should be a lead or co-leads that can define leadership within the committee. Currently, there are three members who have stepped up to take on leadership roles, and co-lead roles are appropriate to manage such an important committee.

@RegisIsland, @underthesea, and @therealtuna have indicated they would like to serve as the co-leads for the TMC.

@gabor, @Drcpu, and @Mkkoll are the other proposed members with an additional seat allocated for Llama DAO: members within the Llama DAO Working Group can rotate their duties within this seat.

A community-wide vote would occur after the proposed committee writes a charter document for the TMC, which would include the aforementioned details and any others the group believes are necessary. This charter document would be proposed to the community and voted upon through a PTIP.

##Next Steps

The above parameters are the recommendation of Llama DAO, and this post can serve as a guidepost for forming a Treasury Management Committee. If the recommendations presented are agreeable, the Committee can work to create a Charter and propose a PTIP to form the committee.

Do you support forming this TMC as outlined
  • Yes
  • No
  • Unsure

0 voters

4 Likes

I’m all for implementing this committee and I think it is overdue. But here are my recommendations:

Co-Leads - I am not sure there needs to be three co-leads, two seems right to me. If there needs to be three then I would suggest making one of those co-leads the ‘point’ person. (but then this looks a lot like just having a Lead)
How would the co-leads duties differ from a TMC member? Would the co-leads duties differ between themselves?

Community Approval -

What does this look like? I think the point of the community empowering the TMC is so they can make discretionary actions mitigating the glacier like movements of a DAO. I am concerned making every decision go through governance may defeat the purpose of this committee. Perhaps there is a balance between the two. More serious decision go to governance while others can be made within the committee.

Pilot Period -

I think a one quarter pilot period would be appropriate to start.

Multi-Sig -

I think four signatures should be required. And it makes sense to leave Llama DAO member off the multi-sig if they will be rotating that seat more often.

Gas Fees -

I would suggest an ETH reimbursement process instead. Where the committee keeps track of their expenses and then reimburses them at the end of the month.

Budget -
What does a quarterly budget look like? I see just for admin cost being max $80k but I would be interested in what the ask is for the TMC to operate throughout a quarter.

3 Likes

Co-Leads

Out of personal experience at the grants committee, I would recommend setting a clearly defined hierarchy instead of having multiple leads at the same level.
This could be a lead and deputy lead or whatever else you come up with.
Flat hierarchies have a problem of accountability for decisions where the leads disagree.

This doesn’t mean that the roles need to be operationally different, just that there should be a hierarchy in place in case of disagreements.

2 Likes

Multi-sig parameters

You suggest a 3-of-6 multisig. I would think 4-of-6 or even 4-of-7 is better. The Llama DAO member could be included in the multisig too. Requiring a majority ensures that a consensus is necessary for executing transactions and generally is more secure.

Control of a multi-sig and ability to execute approved strategies

Here I am sceptical of the custody risk that could exist when executing a strategy, depending on the amounts that are transacted. If there are multiple millions being handled, a multisig with a bunch of anons on it is quite a high-risk intermediary. I personally have full trust in the suggested members, (except drcpu, I don’t know him well enough, no offense) but it would probably be good to have some sort of risk framework with mitigations in place before handing over such sums.

Hours

A maximum of 69 (kek) hours per week seems way too high to me. The grants committee currently has a maximum of 53 hours (not including Praneeth who rarely works) per week, which we usually don’t even use half of.
I consider the treasury management committee’s scope a lot smaller than grants committee, so I think reducing the maximum total weekly hours to around 30 should be more than enough. If the concern is that there could be single weeks with spikes of work, I’d recommend having the policy be that hour limits are enforced on a monthly rather than a weekly basis. That is also the policy at PoolGrants.

Composition

Since Llama provides experts with strong financial background, I think it could be worth considering to have 2 seats filled by Llama instead of just one, or perhaps get another external financial expert from somewhere other than Llama onboard. As far as I know, out of the suggested members only Gabor has formal finance experience. I’m all for having community members step up to prove themselves, but also some more experience and different perspectives mixed in may be nice.

4 Likes

A big thanks for writing up all of your thoughts! I’ll respond to them below and maybe some of the others can chime in if they think further clarification is required.

The goal of the TMC will be dealing with treasury-related proposals and handle negotations / setup etc with other parties. When those initial steps are done, we can write up a final proposal which is voted on by the community. I don’t imagine the things tackled by the TMC will be small asks since they will be related to things like treasury diversification, buy backs etc which will all require a significant amount of funds. Hence, it seems sensible for us to couple back the final proposal to the community before receiving the funds to finalizing everything (provided it gets accepted).

We debated between three and four sign-offs. In the end we decided three would be enough since it offers more or less the same security, but it would be slightly faster to process transactions since only three people need to be “online”. As far as the Llama DAO member is concerned, this proposal was written in conjunction with them. They were interested in filling a seat to in order to give advice, but noted that they’ll likely share that position between themselves (e.g. in case of holidays or other impediments etc for one of them). In our mind, they’ll serve more as advisors then as executors. We thought that, given they explicitly indicated they would share the seat, it would be bad opsec to add them to the multi-sig (and essentially have them share a key). In any case, I don’t think any of us have a strong preference for either, so if the community feels four is more appropriate, we can do that.

Pre-funding the expenses to a wallet only used for official TMC business was my proposal to include, so I’ll clarify the reasoning:

  1. In most community initiatives up until now, there was no clear plan for paying back transaction costs. In my opinion, this is a problem because we were essentially relying on the goodwill of a couple of community members to front the costs.
  2. Tracking transaction costs requires non-insignificant adminstration. With a pre-funded wallet that is only used for official TMC business, this “issue” disappears and the end result is pretty much the same.
  3. For the TMC-members there is a significant advantage in being able to use a fresh wallet with pre-funded ETH in terms of accounting. Not having to use your private stack of ETH means there are a lot less tax implications (in many countries).

Of course, this requires a certain level of trust from the community, but I think the creation of a TMC does that anyway. If this is something the community is not comfortable with, we can rethink the steps on tackling this issue.

I don’t think we (can) have a real quarterly budget in mind yet, it really depends on what types of diversification / buy backs / … we follow through on and what amounts the community is comfortable with. Admin costs should max out at $80k, but we feel that they’ll likely be a lot less, similar to, or less than the Pool Grants admin costs.

Yes, we agree that there is definitely a risk here. Hence the reason why we’d want to run every proposal by the community first and not really have access to any funds until those are approved. I don’t think we can really minimize it more than that except by not being anonymous (in which case I would vacate my seat, I am not a fan of disclosing my identity online). In any case, we are definitely open to suggestions. Also, no offence taken. :slightly_smiling_face:

We modeled hours after the grants committee to keep it simple, but expect that this would very likely be too much. I think nobody will object to a more reasonable proposal by the community.

6 Likes

Just like the Grants Committee members applied for the grants positions as a selected member of the TMC i wanted to state my position here and reason for stepping forward.

My beliefs about PoolTogether

I first heard about PoolTogether in mid-2019 very close to its initial inception as v1 and was kind of blown away by the simplicity and power of the concept. I believed then as I still do now (but with even more conviction tbh lol), that PoolTogether is one of the most likely DeFi tools to benefit from a mass-adoption wave in crypto and blockchain technology that i believe is coming in the next 2-3 years.

PoolTogether gives people access to a sound savings account and hijacks the negative human tendancy towards gambling and turns it into a positive, saving and winning. Users either save each week, or they win. There is no loss. Hence ‘no-loss lottery’.

Regarding the TMC

My vision of the TMC is as delegated members of the community that are entrusted with the ability to manage treasury positions that may be high touch, on an ongoing basis.

Regarding the nature of such a team, it is prudent to scrutinize any risks or security issues when you may be delegating management of potentially large sums, especially to anons. It will be up to the TMC to put forward operating principles and a charter to define the exact parameters and scope of their activities. This will come if the general idea of forming the TMC is something the community agrees with in the first place.

Of course, the treasury team would not be acting fully autonomously and will always be seeking the input of the community and providing well reasoned arguments and data for why any given proposal may be a good or bad idea. The TMC allows for speed of execution and removes some of the friction of putting every decision to PTIP. Which is why naturally, you want members on the team who have some value to bring to the TMC. I think that every stated member has some value to bring from financial expertise to general communication skills and strategic thinking.

What value can I bring to the TMC
As a proposed member of the multisig, I believe I bring value to the community in many ways:

  1. Outreach - I’ve demonstrated my conviction in the protocol by using it and trying to promote its use in other communities. e.g ethfinance DAI Pod and an upcoming Bankless DAO Dai pod.
  2. Community building - I am currently running a competition to find a new icon for the discord
  3. Participation - I am an active member of the community, attend all Community Meetings and provide my opinions on various topics as well as helping users in the discord.
  4. Motivation - My self interest and motive goes as far as wanting to be part of something great. The Defi space is changing the world before our eyes and i want to be part of that. I commit my time here because it is fun to be part of something actually ground breaking and can give powerful financial tools to the masses.
  5. Technical skillset - As far as technical skillset to bring to the TMC, I’ve been participating in crypto for a while and I know my way around block explorers. I have a passing understanding of the functions of PTIPs and can vet and sense check any proposals the TMC puts forward.
  6. Approach to financial decisions - My financial decision making and thinking leans long-term and extremely conservative. I hold most of my portfolio in cold-stored ETH or staking the beacon-chain. I generally avoid risky farming plays and only dabble with small amounts in different tools and protocols as an educational exercise. You could say I am not a ‘moonboi’. :sweat_smile:

If my particular skillset is not considered a fit for the TMC, then i am happy to continue what i do and make my own work within the DAO. :slight_smile:

4 Likes

I’m all in for this!!
i would echo what my fellow grants cmte members have suggested in that 3 co-leads might now be the best approach. in fact, i’d recommend a single person be charged with the management of the group.
for the reviewer (or other non-lead member role—i’m not sure reviewer is the right title anymore) i’d prefer to give them more room to participate if/when they’d like.
in grants we have folks who act as true reviewers, commenting on proposals every other week or so. but most of the people who are in that role now are getting involved in these projects in lots of different ways and doing much more than just giving their quick input and then signing txs.

my feedback:
there absolutely needs to be a role charged with mgmt… my opinion has always been that’s best left to a single person.
reviewers for the most part do more than just review… they should have the option to work a good amount more than allocated should they choose

2 Likes

Thanks for all of the feedback and input. I like the suggested 4/6 signatures and the 1 quarter operational period. I want to address the concern for 3 co-leads from my personal perspective.

I believe a lot of this is very uncharted territory and we are confined to comparing it to what we know. It is thus natural to compare a potential treasury management committee to the existing grants committee. And in-fact we have taken much of our prospectus from that design and success. While we have all witnessed a two co-lead structure result in some tension, I do not think we should assume that would be the case for any committee going forward. Nonetheless we have designed this with 3 co-leads because of our diversity in fiscal perspectives, ability to work as a team, and perhaps most notably the ability to make final decisions if necessary by 2 of 3 majority. On a higher-level though we are viewing the lead role as more a designation for time input as opposed to managerial status. Ultimately we want this to be a team effort and for every voice on the committee to be equally valued.

All that said, I am more than happy to be part of this team as a lead or not.

4 Likes

Very well said by @underthesea!

I am very excited to see this committee come together and I think 3 co-leads would work just fine. I see this committee as a point of contact for negotiations on certain treasury solutions similar to the KPI options being worked on by UMA. This committee can also provide in depth analysis on Pooltogether tokenomics. I see the 3 of us taking on the bulk of the workload and having the support of the rest of the team. I believe as a community governed platform it is important to ensure everyone has an equal say in treasury management decisions including those not on the committee.
I am happy to be a part of this committee in any regard but would be especially happy to share the workload with @RegisIsland and @underthesea Our different perspectives can echo the many perspectives of the entire Pooltogether community. I look forward to the future. :ocean: :trophy:

2 Likes

Initial Impression:

  • I am in support of forming a Treasury Management Committee. I think it is an important step in our mission to achieve true decentralization. At the moment (as I see it), the treasury decisions come from the will of the active PoolTogether community members and the guidance and leadership of PoolTogether Inc. The TMC could help to strengthen the power of the community. It is very important that their decisions represent that of the community and not that of outside influencers.

In regards to salaries:

  • I do not think that these responsibilities compare with PoolGrants and so the compensation is probably not comparable. I’m also not sure that I agree with the compensation for the PoolGrants in the first place, but I did not participate in that decision so I have no real input on the matter.
  • I would like to see the members paid in USDC from the treasury income (reserves) and not POOL reserves. My thought here is that we should think about DAO operations as that of a traditional lottery company. Kind of like we are paying our employees. Maybe they could get “stock options” too, like the UMA tokens, or they could purchase POOL at a discounted rate OTC. If we determine that we can’t afford to pay them from the reserves, then we should be thinking if we can afford to have a funded TMC at all until the reserves mature.

In regards to proposed members:

It’s important to document my first impression because it is likely to be shared by others. “How do you assign this kind of responsibility and salary to an anonymous individual on the internet without even a resume?” I’ve had to think about this quite a bit. DAOs are still relatively new, nobody actually knows what the right answer is and we are all learning together.

  • RegisIsland, underthesea, and therealtuna have demonstrated their ability to manage important responsibilities on behalf of PoolTogether and each of them have made significant contributions to community and protocol improvements. I think they would be great co-leads for the inception of the TMC.
  • Gabor, Drcpu, and Mkkoll are also great community members that I think could provide valuable inputs.
  • I really like the idea of rotating a member of Llama DAO. If there is another sort of DAO that could add value with a member, I would like that idea too. I think it could be good to have someone working minimal from another high profile DAO with a large treasury just to advise and say “that works” or “that didn’t work for us.”

As for what others have said:

  • Mcoso has a good point about reimbursement of gas rather than up front (I guess I would just like to understand the options and benefits of each, rather than 1 option up front).
  • I agree with Torgin about 4 out of 7 and the Llama involved (let them handle how they rotate that wallet). Maybe we use “the executive signers” and move based on the recommendation from the TMC? The idea being that it is a large diverse representation of the PT DAO and requires 8/13 signatures. Some people in the TMC are represented there.
  • I’m not worried about a maximum hours unless someone is actually hitting it each week, then I would hope that in the analysis report that we find those hours as necessary. If someone is abusing the system, then the report should not be bashful.
  • Torgin mentioned concerns about experience, which as I mentioned was my initial concern. I remember writing a “Delegation Pitch.” Maybe we should request a TMC nomination pitch or something along those lines. Could be real nice to see what all projects in PT folks have worked on for people that aren’t watching closely. (Looks like Mkkoll already did this)

Final Thoughts:

I have read through this proposal a few times now; the more I read it, the more I like about it. In some organizations, you spend so much time thinking about what could go wrong, that you overlook all the good things. There are some very talented people in this community and I think that the TMC could enable them to have a bigger impact over all.

3 Likes

I voted no, so I want to add my thoughts as to why.

I like the idea of a Treasury Management Committee as outlined by @RegisIsland, but I have concerns around having a 3/6 multisig manage a significant amount of funds. There are not nearly enough members nor confirmations to make me feel comfortable with the risk profile. I do not want a multsig of that degree to custody a significant amount of funds. As an example we have an 8/13 multisig for the executive team which will briefly custody $1m.

What was described above includes:

  • Business development / partnership management
  • Treasury research
  • Execution
  • Reporting

I’m 100% on board with the bd, r&d and reporting. I think having a dedicated team researching this would be valuable.

In terms of team composition, my preference would be to have just a few people dedicated to it. I don’t think having a few part-timers is enough for thorough analysis of how to manage and strategize the investment of millions of dollars. We need a dedicated team that is spending the time and hard work doing the due-diligence, in my opinion.

Finally, there is a lot of talk about compensation before we’ve seen any deliverables. My preference would be to see results before jumping into compensation, when we don’t know how the group is going to perform. Once we see the degree of professionalism and practicality then I’d be more comfortable deciding on the org structure and compensation.

2 Likes