[ TIP ] Self - Earning DAO Engine V1.0

[ TIP ] Self - Earning DAO Engine V1.0

Rationale


Surfing thro 1inch Ecosystem you must’ve seen lots of Interesting things .
like recently Passed an 1IP for Derivative Aggregation etc.
& the Newly Made DAO treasury by the time you’ll read this Post would have surpassed 10 Million in funds & that’s just from pure protocol Earnings . Amazing !

But Now the Main Task that remained is How to Utilize this enormous amount in favour of our beloved Governance users that always supported the Protocol day & night with all their Might & investing their Valuable time into it to make it even better & Not depleting the Treasury at the same time .

With that in Mind I wanna put forth a General Proposal to present this strategy that can make DAO users to be more Aligned to governace than ever before .

TIP stands for Treasury Improvement Proposal
Calling it V1.0 as i Believe it’s about to go through various iterations

Motivation


There are various posts in the Forum that included how DAO should invest the Treasury funds in different ways to be self sustainable . While there are different ways , it also poses different types of risk apetites to the strategy . We can simple understand this with a seesaw diagram -

  • istockphoto-1062404040-612x612

If DAO wants More control , it might loose APY
If DAO wants More APY , it might loose Control

So , What’s at stake ?

Should we never put Fund Allocation out of the DAO ? Is there no way ?

To answer this i think the Best ways that are known in the Investment World called as ‘Diversification’, ‘Insurance’ etc.

How to Implement such thing on DAO Treasury ?

Strategy Layout -


Proposal Action items :

  • Vote for DAO Treasury % Allocation
  • Choose & set up Committee | The Triad
  • Decide on Collaboration with Selected Protocols

DAO process: Proposal \ Voting \ Filteration \ Selection \ Announcement

Dev Team Tasks :

  • Analytics Dashboard UI - Treasury Breakdown , Selected Projects , Allocation Size
  • Reassessment UI - Project Health Factor , Contract Changes Detection

Treasury Fund Allocation Voting :

1st this voting will decide on How much of Treasury Funds should be deployed for this strategy

Treasury Fund Allocation -
  • 10%
  • less than 10%
  • more than 10%
  • Less than 50%
  • More than 50%
  • less than 80%
  • More than 80%
  • 100%

0 voters

Category Voting -

The Allocated Fund from DAO treasury will then be divided into 3 Profiles
based on Risk & Reward factors -

[L] Low Risk - Highest Security standards with a Low APY
[M] Medium Risk - High to Medium Security standards with a Better APY than [L]
[H] High Risk - Low Security standards but Highest APY of them all

Examples -

Low Risk are like the Blue chip protocols that have highest security standards , High Fund safety but a bit lower apy like Aave Protocol , 1inch Earn
Medium Risk are like Yield Aggregators like Idle.finance
High Risk are like Exotic projects with somewhat lower security & are not much old & battle tested alike low risk ones .

This is important & Here i’d like to gauge DAOs risk Apetite to Which Category they want the Treasury funds to invest into . Max 2

1. Choose Category for Highest Fund Allocation of Treasury :dollar:
  • Low Risk - Low APY :green_square:
  • Medium Risk - Medium APY :yellow_square:
  • High Risk - High APY :orange_square:

0 voters

2. Choose Category for Medium Fund Allocation of Treasury :pound:
  • Low Risk - Low APY :green_square:
  • Medium Risk - Medium APY :yellow_square:
  • High Risk - High APY :orange_square:

0 voters

3. Choose Category for Lowest Fund Allocation of Treasury :yen:
  • Low Risk - Low APY :green_square:
  • Medium Risk - Medium APY :yellow_square:
  • High Risk - High APY :orange_square:

0 voters

By combining data from these 3 Polls , we can see if DAO wants to Diversify & Invest Treasury Funds into all 3 categories or 2 or just 1


After the Fund Allocation and Investment Profile is voted on .
It’s time to Move on to Next interesting stage of -

Finding - Analyzing - Selecting

To Make it happen in a Decentralized & Fair Manner . I Propose the Formation of A Triad

A. 1inch High Table called High Command :man_judge:t2:
B. 1inch Committee called 1inch Berserkers :man_guard:t2:
C. 1inch Investigators called 1inch Watchtowers 🕵🏻‍♂️

Functioning :

A. High Command:man_judge:t2: - The Main Task of this Entity is to Decide the Members of 1inch committee & Analyze submission requests finalized by 1inch committee

High command contains a consortium of DAO members , Existing 1inch Multisig. & 1inch Contributors

For the sake of conversation let’s say : The Amount of power distribution can be 40 20 40 where 60 - 70 quorum is required to pass & 1inch Multisig have the right to veto in case of malacious submission

I’ll let the DAO decide the %age & Quorum

Poll -

  • Veto is good :white_check_mark:
  • Veto is not good :x:

0 voters

Distribution of High Command Power
  • Equal
  • not Equal
  • DAO should have more power
  • Contributor should have more power
  • 40 to DAO 40 to Contributor 20 Veto is Good
  • Other - Comment

0 voters

B. 1inch Berserkers:man_guard:t2: - This committee Appointed by HC will then Start the Hunt in the search of Best protocols & Examine Several Instruments offered by such Protocols Under a Deadline set by the HC { Approve/Disapprove Submissions within a reasonable time frame }

1inch Berserkers could be 1inch Staff & Dao members or Other project Members etc.

Committee responsibility:

  • Report Projects to High Command after proper & careful research
  • Set up repositories & other details under review in below template
  • Be responsive via telegram , discord , forum etc.
Template

Project Name :
Docs Link :
Founders/Team Info :
Founded : Deloyment Age of the protocol
Instrument Type : Options , Leverage , Farming , Lending , Borrowing etc
No of Exploits : Major , Minor , Critical , None
Expected APY - Low , Medium , High
Number of Audits & Reports link -
Latest Audit Scores - Certik etc.

  • Committee setup

    • Share the PGP public keys - using 1inch committee tools or else.
    • Share Twitter or Github accounts of the committee members
    • Commit at least X Amount 1inch tokens [ If necessary ]
    • Share a Multisig address of the committee members - Rinkeby and Mainnet.
Note

Although any project or their staff can actually showcase their project in the eye of HC or berserkers but it should include a proper format of information block Template in Forum or repository
After a Berserker selects a project & researches enough that it’s good for submission he will present the protocol or project highlighting all the details in above specified Template .

I’ll reserve three posts under the post to put the project list into different categories & admins are also allowed to edit it on

After the Reporting Deadline is over , Let’s say the deadline is 15 days , All the entries will be fomalized into a list & then showed into a simple poll


C. 1inch Watchtowers🕵🏻‍♂️ - Just 5 days prior to this poll - 1inch Watchtowers🕵🏻‍♂️ can Vote for Objection for the Exclusionof a specific protocol & submit proper reason for it .

  • HC doesn’t have any influence over 1inch investigators & abide to work freely

All reports submitted HC will be examined & if the Reason is justified & Severe , will remove that Protocol from current voting until the decision or to next voting until the reason is rectified .

  • Over Successfully Approved Allegations Watchtowers will be rewarded
Submission Template

Protocol Name -
Objection -
Severity - L ~ M ~ H ~ Critical


Diversification quota :ice_cube:

There will be time when the amount of protocol applicants can be more than what dao can take . To finalize this we should decide how many protocols should DAO take under each investment category

Amount of Protocols in Low risk Category to be selected should be
  • Less than 5
  • 5
  • More than 5

0 voters

Amount of Protocols in Medium risk Category to be selected should be
  • Less than 5
  • 5
  • More than 5

0 voters

Amount of Protocols in High risk Category to be selected should be
  • Less than 5
  • 5
  • More than 5

0 voters

As the DAO Fund grows with time the Amount can be increase via DAO votings to extend these limiters via careful consideration


After All the Votings are Done & Projects are finalized :white_check_mark:

A FINAL SNAPSHOT will be ready for Execution :fast_forward:


This can be made into trials before we go all in .
As the markets are ever changing , DAO can decide for reassesment voting if DAO wants to bring in new potential projects or kick out projects. Pulling out Funds in Case of Drop in Health Factors

Vote

Projects Reassessment :memo:Should be done
  • Biweekly
  • Monthly
  • Quaterly
  • Weekly
  • Yearly
  • Other - Comment

0 voters


:man_mechanic:t2: Developer Tasks -

Summary

If community see any reason to do it in Trials we can also do it that way & after that an Automated system can be built as a watchtower for community to see .
Although Analytics can done via Google sheets etc. but Later On if the idea passes we can work for full implementation of such Dashboard in UI

Active Analytics Dashboard showing -

Current allocation of Treasury
Projects
Funds allocated to diff projects
Current risK scores
Interest Accuring Data etc.


As a final note , Before i put into a proper proposal template , i want to get as much feedback i can get . Next time it’ll be very concise . :white_check_mark:

If you have any question regarding this Or think any of step is unnecessary or can be made better , Please let me know in comments :smile:

Articles on BB Strategy

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Made with :orange_heart: by 0x56052f4c56b249fba414757ceb82f55a8b1aef99

7 Likes

Holy Smokes . What a Proposal ! :exploding_head:

5 Likes

Very good proposal, totally agree! Let’s make 1inch better!

4 Likes

Thanks for putting this together. It has a lot of positive points. Let’s give it a few days and see how the votes tally up. It could serve as an initial layout perhaps. It needs to be tweaked a bit. Taking into account the past few days and red, I think we need to play things safe and grow slowly. I definitely don’t want the invested funds to get rugged looking for high APYs.

3 Likes

So far Major Support shown to Medium APY which could be around 5 to < 20% Which i think is doable
Anyway if we were to deposit to a Low APY pool 1inch earn seems one of the best fit in terms of security .

like idle finance 12% apy with built in coverage product

Then there is Bancor & Balancer with good %age

:100:%

1 Like

Yeah It’s safe to assume that Medium APY lies anywhere between above 5% in this Model .
But This can be properly defined into next phase as for different individuals this %age could be different .

Also , In next Phase I’ll also add a proposal of Exclusive Fund Allocation for Triad’s Functioning , Reporting & Rewarding like Financial Incentives

& if there’s a general conflict happens during polls which results in Two Sided conclusions , I’ll have those metrics directly pushed to Snapshot Voting .


On same note , Projects Representatives like @Kat.IdleDAO @mosayeri @Max can put forth demands they think can fit more properly in Selection Criteria of Protocol for DAO fund Allocation into their Project

1 Like

Hey @jisalazar . I Hear you . Fleshing it out more as we Speak :slight_smile:

3 Likes

Rewarding sounds nice . Also i saw one of the admins talking about the nature of committee members to be well versed & informed about the protocol .

& Thus to deal with that i’ve made a proposal to include

> Meta Delegates

in our DAO , so that we can increase more educated & proactive participation . This seems to be a good fit if your propsal passess so that we can allocate funds to these dao users for their engagement

3 Likes

Best Picture of the TRIAD

1 Like

I also believe the committee members should be elected for a fixed period (Maybe for a quarter), after which they can be re-evaluated, perhaps by a snapshot vote. Commitee members should also be compensated for their role (agreed before period starts), thus creating some competition for the roles, ensuring that members are inventised to be pro-active.

1 Like

Good Point ! Defining a mandate period for the committee, a quarter sounds like enough time to evaluate the committee’s performance. Maybe we can start with a slightly shorter mandate for an initial committee pilot (1-2 months).

Agreed on committee compensation, as we’d need to incentivize proactiveness. Compensation can either be a % of the total budget assigned to the committee, or a fixed amount adapted to the DeFi market average.

I’ll Add this . Thanks

1 Like

One thing I think unlcear in this proposal is how High Command members will be selected , min. no. of members & their tenure & what if we found that there is a bad actor sitting in their position

1 Like

I was actually waiting for the votings to finish to a good level & so it seems members agree with 40 40 20 preset . if that’s case .

High Table members should be no less than 7
3 chair reserved for dao members
3 chair for 1inch contributors
1 chair for multisig

Note -

1.Contributors can’t occupy DAO chair
2. Relection in case of bad actor spotted on chair & all other votings put on Hold until the High Table is full again
3. 1 Chair of DAO can directly be reserved by a 2 contributor reference vote

Selection -

I don’t think contributors or mulisig need any voting but DAO chair do with the help of delegation pitch & snapshot vote .

There will be a section in UI where everyone can see all current Members of Triad & tenure & their decisons

Will Add it

2 Likes

I’ll Close Down Votings & will move it to Next Phase very soon .


Changelog -

  1. APY limits - As majority votes indicate Majority towads Medium & then Low APY

I don’t want to put lower bars but setting up Hard Floor of no more than 30% APR .
This means Medium APR can’t be more than 30% for any project that fall into this category.

  • :white_check_mark:
  • :speak_no_evil:

0 voters

  1. Tenure of The Triad

1inch committee & 1inch Watchtowers will not have any Tenure as their Sole purpose is submissions to HC

Only HC DAO seats will have a Time period after which anyone can challenge/apply for the DAO chair under HC .

  • :white_check_mark:
  • :speak_no_evil:

0 voters

  1. Rewards

Allocation of 100k from treasury to incentivise participation of the Triad in

30 30 30 to each

while 3% As bonus to the most active member in each group

Distributed after the Treasury Allocations are Finalized .

  • :white_check_mark:
  • :speak_no_evil:

0 voters

  1. HC selection

Only for DAO chairs with the help of delegation pitch & snapshot vote . InstantGovernance voting can also be applied

High Table members should be no less than 7
3 chair reserved for dao members
3 chair for 1inch contributors
1 chair for multisig

No further votings Unless all chairs are full

  • :white_check_mark:
  • :speak_no_evil:

0 voters

  1. Introduction of 1inch Relief Fund Warchest [TBD after Snapshot*]

To mitigate future fund loss due to hacks or unforeseen one-off events, like the UST depegging, is by deploying The 1inch Relief Fund Warchest . It will allow investors to recoup a portion of potential losses . The amount that investors receive in the event of loss is determined by a score that equals:

(Staked Amount * Staked Multiplier) * (Duration of Stake in Minutes ) * ((Tier +1)/100)
If you are invested in a pool that has a $100k exploit then the relief fund will pay back a “relief amount” that is either 100k or up to 50% of the treasury of the relief fund (The lower value)

The distribution between affected users is the following:

This builds a system that theoretically can recoup up to 100% of investor funds after an exploit. The total amount depends on how many other users in the pool were also in the Relief Staking Pool, their score, their percentage in the TVL and the size of the exploit in proportion to the relief fund (Only 50% of the fund can be allocated for a single event).

After an exploit event all users that received a relief will have their score reset to zero and a new score will begin accumulating based on the relief received in ratio to their total investment.

The staking multipliers will start high, and go down every 21 days to encourage early movers. After an exploit event the multiplier will reset and go back up to incentivise new funds to enter the pool.

Note -

1.Contributors can’t occupy DAO chair
2. Relection in case of bad actor spotted on chair & all other votings will be put on Hold until the High Table chair are Full
3. 1 Chair of DAO can directly be reserved by a 2 contributor reference vote


Thanks to All these Governance Gentlemen @RoundElephant @Poker @dryec @polaks @jisalazar @chicoproducion @3.1415r @Roxan @Robert @0xBaer

3 Likes

I like the idea of the roles being something that is valuable and coveted, not a chore with a list of tasks. having proactive members is key to guiding the DAO and the project initiatives.

A 3 month mandate for committe members seems short, but I think it’s good to start out with. They should be incentivised depending upon the amount of work done. Something % that is directly linked.

I was thinking about the triad, which seems like a good distribution of power, but it’s still a but grey with respect to the makeup. What if each lower strata voted for the upper one. This would ensure the will of the majority from the ground up.

The position of DAO chair as a figure head is important and must be analyzed a bit more, what would be the exact function? what would their main tasks be?

3 Likes

I think posts say specifically that Main task is take reports from lower strata & finalize project list .
But you’re right about the importance of DAO chair , i’m wondering if we can make DAO chair selections more robust than Only using just delegation pitch & snapshot vote .

But wouldn’t that be susceptible to favouritism ?

1 Like

Noted . I’ll Structure it properly for everyone to understand the diff. better & How it’ll be Handled .

Further , Closing Down All Votes & Moving on to Next Phase . Thanks All .

3 Likes

Appreciate the great work!

Agree on almost all points. And would like to bring to your notice about timing - especially speed of information can be very important, if it has to travel through 3-4 layers, before being acted upon.

Especially when the investment decision turns out to be wrong ( which can happen at times), irrespective of whether truth be found at whatever level, the decision to unplug and save funds is as crucial, as the speed with which it’s carried out.

Trust the next stage of proposal adequately & explicitly addresses this.

2 Likes