[DAO:e8cd843] Establishing a DAO Treasury Management Process

Governance
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by 0x247e0896706bb09245549e476257a0a1129db418 (LordLike)

SUMMARY

This proposal aims to serve as a foundation for the systematic management of the DAO Treasury, focusing on long-term financial analytics and planning, as well as the development of a sustainable financial strategy for the DAO.

This can enhance DAO stability, enabling it to meet its financial obligations over extended periods and maintain its operations and programs, such as Grants and Tenders, in the long term.

ABSTRACT

On February 20, 2020, the Decentraland DAO was given 222 million MANA by means of a 10-year vesting contract.

Systematic Treasury management will help diversify economic risks, improve transparency, and create additional revenue streams for the DAO.

The suggested measures include, but are not limited to, improving financial reporting and transparency, expanding the DAO’s holdings across a range of assets, and adopting efficient systems for managing the DAO Treasury.

DETAILS

The proposal suggests:

  • Implementing internal controls to ensure DAO Treasury is operating effectively.

  • Adopting accounting principles to improve transparency.

  • Establishing financial guidelines and templates.

  • Optimizing Treasury operations.

  • Creating DAO financial programs, such as liquidity provision or asset investment.

  • Developing easily found, convenient and detailed financial reporting and dashboards.

EXPECTED OUTCOMES

  • Development of a transparent and automated DAO Financial Report System.

  • Creation of a financial model for DAO decision-making.

  • Development of a DAO Financial Strategy.

  • Establishment of efficient systems for managing DAO Treasury funds.

  • Creation of comprehensive risk assessment strategies.

  • Definition of long and short-term DAO financial budgets.

  • Creation of an internal control framework.

IMPLEMENTATION PATHWAYS

  • Engaging in Community discussions on Treasury management.

  • Formulating Treasury Management guidelines and documentation.

  • Establishing a DAO Treasury Committee or Squad.

The establishment of a DAO Treasury Management Process will be a collaborative process involving the Community, and its points will be proposed in Draft and Governance proposals after discussion with members.

Please share your ideas and concerns related to this proposal in the DAO Discord or comments (forum post).

VOTING OPTIONS

YES: I support the establishment of a DAO Treasury Management Process.

NO: Leave as it is.

  • YES
  • NO
  • Invalid question/options

Vote on this proposal on the Decentraland DAO

View this proposal on Snapshot

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The idea of selling off MANA in order to invest in physical assets seems like a misguided venture for an online metaverse DAO. There is a lot of logistics there that would basically turn us into a centralized investment vehicle, while also adding massive selling pressure to our native token.

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Its just an example how DAO can diversify its assets.

The main idea of this proposal is to create DAO Treasury systematic management process.

4

Treasury management in general has almost always gone poorly for DAOs - the average person is not a successful trader and mistakes will only compound with DAO complexities, vested interests and bad actors.

There is no situation where we should speculate with DAO funds in order to try raise capital, we should be focused on mana income streams and how to ensure they are spent correctly, but the DAO already has multiple systems in place for this.

I do not understand the accounting piece when we already have a full display of financials on this website, most accounting practices do not review the legitimacy of transactions, simply that they are filed correctly and tally is balanced up which any user can check and perform thanks to open source tooling.

It feels like we are continuously adding more layers of bureaucracy that enable attack vectors, the more we add the harder it’s going to be to commit good faith business as the complexities constantly increase. The DAO should be able to make these decisions with the current tools we have without causing more obfuscation.

The additional overhead is likely to outweigh most benefits, and holding assets would simply complicate the fact that we need liquid funds. Perhaps a single DAO vote on moving some MANA to Eth as its our foundational platform and staking does indeed return a guarantied ~4-5% in base currency would be good, but I fail to see why we would need yet another layer of decision makers to make that happen.

1 Like
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Implementing basic accounting-financial principles, guidelines and models, led (made) by proficient in this field members (experts), can enhance efficient resource allocation and bring long-term sustainability for DCL DAO. The aim is not to create unnecessary complexity but to establish a more effective process and reduce economic risks.

For example, without a clear financial plan, it becomes challenging to determine the funds necessary for maintaining basic DAO operations and Core Units. Understanding the required budget is crucial for steady growth. This proposal poll isn’t binding, it is a starting point to discuss with Community all ideas, thoughts and concerns on this topic.

Here is what ENS does in direction of managing Treasury:

https://discuss.ens.domains/t/updated-endaoment-proposal-karpatkey-steakhouse-financial/14799/2

https://www.coindesk.com/tech/2022/11/23/ethereum-name-service-selects-karpatkey-dao-as-endaoment-fund-manager/

https://discuss.ens.domains/t/endowment-weekly-reports/16665/12

ens
ens1420×1444 216 KB

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Establishing a DAO Treasury Management Process

This proposal is now in status: FINISHED.

Voting Results:

  • Yes 81% 4,010,863 VP (80 votes)
  • No 19% 948,168 VP (10 votes)
  • Invalid question/options 0% 0 VP (0 votes)
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Establishing a DAO Treasury Management Process

This proposal has been PASSED by a DAO Committee Member (0xbef99f5f55cf7cdb3a70998c57061b7e1386a9b0)

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Joe on behalf of r3gen here :wave:

We are a team of specialist web3 financial service operators who have worked with major ecosystem participants including Aave, Gitcoin, Index Coop, Squid, Aragon, Inverse Finance and Treasure DAO.

We agree with this proposal, and believe transparency, credibility, and trust are the foundations of a successful web3 community. That’s why were interested in offering a hand of support helping enable this proposal to be implemented successfully.

We have brought together a cutting-edge technology stack which provides an unparalleled live financial reporting services for web3 organisation. We operate as a service layer on top of this stack, delivering bookkeeping and financial reports services on top.

1. Service Triangle
1. Service Triangle1251×529 65.1 KB

Get real-time financial insights at your fingertips with our live dashboard – say goodbye to outdated reports and hello to informed decision-making!

2. Insights Dashboard

A solid P/L and balance sheet isn’t just a testament to our past success, it’s proof that we’re here to stay and ready to take on the future.

4. P&L

Stay ahead of the game with our real-time cash flow monitoring and scenario testing. Don’t let cash flow surprises catch you off guard.

5. Forecast

Show to your community that you value transparent by embedding customised financial reports on your website

6. Shortened Reports

Additional resources

We value the feedback and insights from the Decentraland community, and the proposer, on whether you feel these services would be beneficial.

1 Like
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Hey @web3nit

Very interesting proposal. DAO Treasury strategies, not relying only on native tokens, are vital for the sustainable development of DAOs.
0xloth from Morpho here. Morpho (morpho.org) is the 3rd biggest lending protocol on Ethereum with +750M$ of deposits to date.

I would love to discuss with you Decentraland’s existing treasury strategy and explore with you some diversification ideas
Are you free to chat in the coming days? You can find me on TG at @Oxloth

1 Like
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Hi, nice. Sure, I have messaged you in TG.

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@web3nit @maryana Do you want to promote this to a Working Group?

Considering that this is also being discussed in the Strategic Planning working group, what would be the specific issues, goals and objectives to discuss?

1 Like
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Yes, that would be great. Establishing a dedicated Working Group could allow us to focus on the systematic treasury management, long-term financial strategy, and economic risk diversification. The main goals would include developing a transparent DAO financial report system, creating a financial decision-making model, and setting up efficient process for managing DAO Treasury funds.

2 Likes
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Hey @Fehz @web3nit
Glad to see this is turned into a working group. I would love to join/support you if helpful on general diversification strategy. How working group usually work?

1 Like
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Hello, please look at this Decentraland DAO proposal to fully understand how working groups work.

https://governance.decentraland.org/proposal/?id=b6ee62d0-c892-11ed-a454-057e86adfb11