[DAO:e4b5eb9] Proposal for a Finance Committee

Governance
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by 0x247e0896706bb09245549e476257a0a1129db418 (LordLike)

This is a proposal for a committee of subject matter experts responsible for DAO financial management, which will include treasury diversification, MANA valuation analysis, monitoring of protocol expenses and treasury assets, and DAO financial model and strategy.

According to the outcome and report of this passed grant, it has been suggested that the DAO form a Finance Committee.

The committee will be responsible for analyzing all aspects of the DAO’s financial management, including treasury diversification, MANA valuation analysis, monitoring of protocol expenses and treasury assets, and developing a financial strategy for the DAO.

The purpose of this committee is to provide a clear picture of the DAO’s financial strength and ability to meet its obligations. To achieve this, the committee may need to gather and analyze various financial data, such as financial statements, budgets, and other reports.

Having a detailed financial model would benefit Decentraland as it would serve as a reference for operating decisions, such as revenue, expenses etc. This committee is crucial to driving forward important strategic initiatives, such as treasury diversification, data and analytics transparency, and expense reporting and management.

The tasks of the finance committee may include:

  • Treasury diversification to ensure that the DAO has enough stablecoins to fund operations in the event of a MANA price drop

  • Providing a financial model and strategy, and making relevant recommendations to the DAO

  • Providing reports on DAO’s financial performance, including platform financial statistics, treasury performance, expenses details, and implications on the long-term financial forecast

  • Maintaining, evaluating, and updating a living business operating model and financial projections to inform and drive strategic decision-making, such as expense management, treasury diversification, token swaps, and organic growth initiatives

  • Leading conversations and negotiations in financial transactions engaged in by the DAO, such as grants and token swaps

  • Approving and periodically reviewing the DAO’s annual budget and ensuring that funds are being expended for their intended purpose

  • Leading efforts and serving as the team liaison with the community regarding treasury management and diversification and risk management

  • Conducting ad-hoc financial analysis at the request of committees, squads, and the community to assist in financial decision-making

  • Conducting a financial audit at the request of committees, squads, and the community

  • Monitoring financial risk exposures and taking steps to control them, and flagging potential financial problems.

This proposal aims to provide a starting point for the community to come together and reach consensus on the need for this committee, its name, structure and exact responsibilities.

Yes: DAO should have a Finance Committee.

No: Leave as is.

  • Yes
  • No
  • Invalid question/options

Vote on this proposal on the Decentraland DAO

View this proposal on Snapshot

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The same persons who did that proposal also asked for a grant to setup a plan and enact it, twice, but it was rejected both time:

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https://multis.com/post/nail-your-dao-a-guide-to-dao-treasury-management

https://aragon.org/how-to/how-to-manage-a-dao-treasury

https://vitalik.ca/general/2022/09/20/daos.html

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I think it was very large budget for such small amount of time, also i doubt grants is the best solution. Financial planning is so vital,those who do not have it are doomed to failure.

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Are ppl not already doing this in some way?

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IMO, this should be requested through a Grant with a reasonable budget.
@web3nit in the new grant program a grantee could choose that their project will have more than 6 months of duration. this will give them the opportunity for example to propose a project with a 1-year project of duration giving them vital time to plan financial recommendations.

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Why it cant be done by forming committee ?

For example - wearable curations committee, dao committee were also formed not through grants.

I think grants is not best decision because its ongoing process that should not be canceled if grant not pass, especially that for such short period as 6 months, concerning vital financial health of DAO

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Didnt understood your question, what ppl ?

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Yes, but in the new grant program, the project could have 12 months duration and a vesting contract that matches (12 months).
So, the period will not be a problem.

Why not should it be canceled if after one period of duration is not necessary for the DAO?

I got your point and is really interesting. Thank you for sharing it!

1 Like
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No, we just sell MANA to pay for grants right now.

1 Like
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Got you, maybe you are right, anyway its first stage to understand what community think.

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Thank you also for your thoughts.

1 Like
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If there isn’t already a DAO team for this then I think there definitely should be. I’m pretty sure the DAO and the Foundation are both on 200million $MANA + vesting contracts and the Foundation definitely has a finance team. This makes sense in my opinion. Voting yes.

1 Like
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Responding to this and @web3nit

I thought there had people on town halls who had discussed how the funds are being diversified. I guess I’m wrong. I do remember at one point there was a grant of ppl who were putting together financials on the dao tho, right?

1 Like
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Right, here it is

https://governance.decentraland.org/proposal/?id=a31bfa40-ed02-11ec-aa01-87bd234b340d

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I hope someday DCL DAO will have such specialists, treasury without proper management can run dry very quickly.

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Looks like this was approved but they missed all 6 of their grant updates. Did anything ever come of this? @Zino @HPrivakos

2 Likes
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Report available in this post with recommendations, one of them was to create Finance Committee

https://forum.decentraland.org/t/dao-qmursmt-preparing-detailed-financial-statements-budget-and-long-range-forecast/12514/7

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I like the idea of having a committee for this because it allows us to set the pay rates. The main thing I did not like about the previous proposal for diversification is that they were charging 100s of thousands of dollars to broker a few transactions and justifying it because it was at or below “market rate”. It would be nice to see someone who is more engaged with the community step up to do this for the community and not for the pay.

We also need to consider who the large amounts of mana are going to go to. There was not enough information about the specific buyers of the MANA in the original diversification proposals. Offloading 10s of millions of mana to a single holder can have larger consequences in dao voting if that person was to then realize they could now vote for grants to receive the funds they just provided to the dao.

I would like to see a team have already done the research to bring buyers to the table, make a proposal, and only receive the commissions if the community votes to engage with the buyer and execute the swap.

1 Like
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Hi @DCLCurations !
Yes, of course. They finished the project and made this report (you can check it in their proposal)
After, they no longer made updates because it was not necessary. It is something that we must improve in the Grants Program: What happens if the grant ends before the project’s duration?
Thank you for bringing it to the front!

1 Like