Detalhes da Proposta

Ação Informativa
Tipo de Ação de Governança
ATIVO

Treasury Funding and Management Post Funding

13 gostei
4 não gostei
8 comentários
Enviado: 11 Feb 2025, 19:36 UTC (Epoch 539)
Atualizado: 2 May 2025, 07:38 UTC (Epoch 555)
# ID:219
cr

cryptocrow

Enviado: 11 Feb 2025, 19:36 UTC (Epoch 539)
Atualizado: 2 May 2025, 07:38 UTC (Epoch 555)

Resumo

As Cardano’s ADA price rises, there will be far too many grifters looking to capitalize on the Treasury instead of building quality applications. Having been in crypto since 2017 I’ve seen countless projects come and go while pocketing large sums of capital obtained from the public and these projects rarely seeing the light of day. Not only do I as a Drep have no interest in throwing capital all over a wall to see what sticks, but I have no interest in creating ADA sell pressure by funding projects with little chance of amounting to anything. Below is my first draft proposal to handling the funding of Cardano based projects and establishing a team to effectively manage these relationships.

Motivação

  1. Perform Rigorous Due Diligence • Evaluate the Team and Technology: Assess the development team’s background, experience, and track record. Look at past projects, technical capabilities, and how they’ve overcome challenges before. A team of former dog trainers and back line cooks have no business trying to acquire funding for a Web3 application. A team’s merit must match its funding goals or stand higher than the sought after amount in funding. These teams must be verified and fully doxed to be applicable. • Assess the Market and Business Model: Understand the potential market impact and revenue model. Confirm that the project addresses a real need or gap in the market. We don’t need 20 of the same types of Web3 applications just because everyone wants to take their shot at being competitive. Innovation should take priority over reinventing the same wheels.

  1. Structure Funding in Stages (Milestone-Based Funding) • Break the Investment into Tranches: Instead of a lump-sum investment, divide the total funding into several tranches that correspond to specific, pre-agreed milestones. For example: o Phase 1: Prototype or Minimum Viable Product (MVP) o Phase 2: Beta launch with user feedback o Phase 3: Full-scale product launch and initial market traction • Define Clear, Measurable Milestones: Each milestone should include specific deliverables (e.g., a functioning MVP, user growth metrics, completed technical benchmarks) that can be objectively verified. • Set Key Performance Indicators (KPIs): Establish KPIs for technical performance, market validation, and operational efficiency. These metrics will serve as benchmarks to unlock subsequent funding rounds.

  1. Negotiate a Detailed Term Sheet and Legal Agreements • Outline Funding Conditions: Clearly document in the term sheet how much will be invested, under what conditions, and what the consequences are if milestones aren’t met. • Include Performance Clauses: o Clawback Provisions: Allow you to reclaim funds or adjust the equity stake if the team fails to meet key milestones. o Vesting Schedules: Tie a portion of the founders’ or key team members’ equity to the successful achievement of specific goals. • Consider Escrow Arrangements: Place a portion of the funds in escrow, to be released only once verified milestones are achieved. This further aligns the team’s performance with funding disbursement.

  1. Implement Robust Monitoring and Reporting Mechanisms • Regular Reporting: Require periodic (e.g., monthly or quarterly) progress reports that detail: o Achievements relative to the milestones o Updated timelines and any shifts in strategy o Financial expenditures and projections • Scheduled Check-Ins and Reviews: Set up regular meetings (or board updates) to review progress, discuss challenges, and make decisions about the release of subsequent funding tranches. • Independent Audits or Third-Party Reviews: In cases where technical or financial progress is complex, consider hiring external experts to verify that milestones are met as claimed.

  1. Incorporate Convertible Instruments When Appropriate • Convertible Notes or SAFE Agreements: For early-stage projects where valuations are still evolving, these instruments allow the investment to convert into equity upon achieving certain benchmarks. They often come with discount rates or valuation caps that reward the investor for early support. • Tie Conversion Terms to Milestones: You can structure these agreements so that better performance (or the achievement of certain KPIs) results in more favorable conversion terms for the team—and vice versa.

  1. Risk Mitigation and Accountability Mechanisms • Pre-Agreed Contingency Plans: Define what happens if milestones are delayed or not met. This might include: o Revisiting the project roadmap with input from both sides o Reallocating funds for remedial measures o Holding additional funds in reserve until the issues are resolved • Direct Oversight: Negotiate a seat on the board or an advisory role so you can stay involved in key decisions. This ensures you have a direct line to the project’s progress and can intervene if necessary. • Performance-Based Incentives: Consider incorporating bonuses for the team upon exceeding milestones or penalties if deliverables fall short. This aligns the team’s incentives with project success.

  2. Equity Ownership placed in a DAO or other instrument. • Funding through the Cardano Treasury is an investment and as such should be viewed as such, not a charity or grant program to be squandered. • Approved Funding should require a percentage of equity in the funded companies with proceeds going towards the growth of the management division. • Projects seeking capital to complete a project with an already established MVP would merit lower equity requirements.

  3. Collateral • If a seemingly unqualified team believes enough in their ability to complete their proposed project as proposed, they could provide adequate collateral to obtain the funding required for their venture. Due to them taking on more risk themselves to obtain the funding, the overall equity interest in their venture would also be reduced accordingly.

  4. Funding Value and Time Of Market • There will be many projects looking to submit proposals for funding quoting a need for funds at the current value of ADA while counting on ADA’s value rising and pocketing the difference in value. • Funding projects must be monitored to ensure examples as follows establish a common structure:

  5. Project requires $200,000 in ADA at a value of $1 each to complete a project.

  6. The project lays out a 4 months dev cycle from inception to launch with each month being a funding cycle.

  7. Month 1, project receives $50,000 in ADA valued at $1 each (or 50,000 ADA.

  8. Month 2, ADA’s value has double to $2 and is due another $50,000 worth of ADA yet has 10,000 ADA now valued at $2 each left over from the previous month. They receive $30,000 worth of ADA valued at $2 each totally $50,000 for the month.

  9. Month 3, same as Month 2, etc. All of the spending from the project would be handled on chain with complete transparency to show how funds are being used and when.

  10. Managing Body • We need to establish divisions within the Cardano Treasury body to ensure proper management of the approved projects. The size of the team will depend on the number of on going projects being funded at a time. Companies in the traditional finance world are held accountable at their expense, whether through directly hiring the proper staff such as compliance officers, or through fines and penalties for negative actions. • Monthly reports should be released by the management body to update the public in detail related to the projects progress across the board and relevant changes to teams, time frames, demonstrations, interviews with CEO’s and more. • The managing body should be initially funded through the Treasury and grow according to the number of projects being managed. An operating staff as follows should be sufficient with employees fulfilling multiple roles until new positions are established and filled accordingly:

Justificativa

Chief Operating Officer (COO) $180,000 • Role: Oversee day-to-day operations, operational strategy, and internal processes. • Qualifications: o Experience in running business operations, possibly in finance, startups, or fund management. o Familiarity with compliance, human resources, and administrative requirements of a regulated business environment. Chief Financial Officer (CFO) $220,000 • Role: Manage financial operations, including fund accounting, budgeting, audits, and LP relations regarding fund performance. • Qualifications: o Strong finance and accounting background, ideally with prior VC or PE fund accounting experience. o Knowledge of crypto accounting standards and reporting for digital assets (if the fund invests directly in tokens). Marketing & Communications Manager • Typical Range: $75,000 • Notes: Compensation depends on scope (e.g., purely social media, broad strategic marketing, brand-building) and prior experience in crypto communities.


Investment & Research Team Investment Director(s) / Principal(s) $180,000 • Role: lead due diligence, structure deals, and manage portfolio companies post-investment. • Qualifications: o Background in venture capital, private equity, or investment banking. o Understanding of blockchain technology and token economics. Analysts & Associates $75,000 • Role: Conduct market research, perform due diligence on proposed projects and verifications, analyze tokenomics, evaluate the competitive landscape, and support portfolio monitoring. • Qualifications: o Strong analytical and research skills, preferably with a background in finance, economics, computer science, or blockchain/cryptocurrencies. o Ability to evaluate both technical and financial aspects of a blockchain project. Technical Advisors / Blockchain Experts $100,000 • Role: Provide in-depth technical analysis of blockchain protocols, review smart contracts, assess network architecture, and advise on potential technical risks. • Qualifications: o Software development or cryptography background. o Experience working with various blockchain platforms (e.g., Ethereum, Solana, Polkadot) and familiarity with smart contract development and security. o Capability to perform or interpret smart contract audits and security assessments. Legal & Compliance General Counsel $200,000 • Notes: Attorneys specializing in securities law and crypto regulation are in short supply. Larger firms or those with complex international structures pay top of range or higher. Chief Compliance Officer (CCO) / Compliance Officer $130,000 • Notes: Salary depends on prior experience in financial compliance, plus expertise in AML/KYC for crypto. Strong knowledge of international regulatory frameworks often commands a premium.

Base of operations in Florida – No State Income Taxes

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Comentários (8)

25 de abr. de 2025, 07:25 UTC

While I like the concept, I don't see this as practical or appropriate for the Cardano ecosystem for the following reasons:

  1. Essentially duplicates the core role of Intersect and Catalyst with a smaller body less influenced by the community.
  2. This is an attempt to add another layer of bureaucracy to the existing systems. While I appreciate (and agree with the reasons) the implementation doesn't make sense to me in this environment.
  3. There is little likelihood of easy resolution of conflicting analysis of projects between this organization and Catalyst/Intersect.

I would prefer this proposal to simply be an info action for submission as overriding processes/values for both Catalyst and Intersect which they can be held accountable for, as opposed to justification of salaries for the authors to be a self-appointed bureaucratic layer.

preeb
12 de abr. de 2025, 13:04 UTC

Here are some thoughts on the points made.

  1. Perform Rigorous Due Diligence - I think this leans too heavily on rewarding those who have already "made it." A person or team that has a ton of past experience likely already has enough success to push through to build the project they're trying to build. I agree that we shouldn't throw money at people with no intention of building a good project. However we are not looking to limit those with drive, but rather to encourage them.
  2. Funding in stages could work as long as it's not a blanket division of time. Cash flow is not a mathmatical equation where you simply need the same amount of money each month.
  3. Projects hit roadblocks and difficult problems that might defer milestone dates. They shouldn't be punished for that, but rather given the ability to push through. If what they want to accomplish was easy, then they wouldn't need funding. With the escrow idea, I'm not sure it makes sense for a project receiving 200k ada to have to front 1000 ada, for example. This doesn't protect anyone as they could take 199k ada and run away. It is a nice idea that they could have their 1k ada back after success of the project, but the project needs funds, so taking funds to give funds just doesn't make sense.
  4. This gets heavy into oversight. This would mean hiring a lot of "managers" to go and poke and prod projects and is usually totally subjective to the manager's point of view. We should not hire anyone to do this, but maybe a better approach is let the community judge. Maybe in order to get the next dispersement of funds there needs to be a certain amount of votes from the community.
  5. I would love to know more about your thoughts here. If I understand correctly, a simplified version of what you're saying is that whatever is produced from the project they would give something back. Is that right?
  6. Again, too much oversight requiring too much from the treasury. It would cost more to fund the oversight than would be lost on the project. I think crowd/community monitoring would be more effective.
  7. Funding through the Cardano Treasury is an investment ... not a ... grant program to be squandered. Actually, it is a grant, though it shouldn't be squandered. This is the most dangerous part of this proposal in the fact that it essentially creates a growing mass of wealth that is centralized. I completely disagree here.
  8. This is not a loan. We are specifically trying to fund projects. Many more thoughts, no space.
8 de abr. de 2025, 09:41 UTC

The proposal highlights a crucial need for stronger due diligence and funding scrutiny. Catalyst's history shows a trend of poorly vetted projects depleting treasury resources, enabling opportunists while stifling meaningful innovation. Without a stricter evaluation framework, the current approach risks undermining the integrity of our ecosystem and wasting resources on short-sighted initiatives.

Overreliance on developers without incorporating financial, strategic, and marketing expertise creates inefficiencies in governance. A balanced management team, selected through transparent and merit-based processes, is essential for ensuring that resources are deployed strategically and sustainably. This would empower developers to focus on innovation while securing broader, long-term ecosystem goals.

I urge DReps to champion a governance model that emphasizes accountability, rigorous project evaluation, and strategic alignment. By safeguarding the treasury from unworthy initiatives and prioritizing impactful projects, we can ensure Cardano’s growth and uphold the principles of sustainability and innovation. It’s time to protect Cardano's future with decisive, disciplined governance.

pyro
17 de fev. de 2025, 03:42 UTC

Overall Goal: The proposal seeks to prevent low-quality projects from draining the Cardano Treasury while ensuring that strong, innovative projects receive structured, milestone-based funding with clear oversight and accountability. They are asking for Cardano Treasury funds to set up a dedicated investment management team to prevent grifters from misusing funds, implement stricter funding criteria, introduce investment mechanisms (equity/collateral), and ensure accountability through audits and structured funding releases. My question is who do you think is qualified for what you are asking and how do we vet that?

paulb
16 de fev. de 2025, 18:55 UTC

I like where your thoughts are on the accountability and legal agreements. I think most organizations developing a project will already have some funding (At least they should) before starting a project. The Cardano funding is an assistance to their organization to help bring new projects to market. I like the responsible approach to providing realistic goals for funding (Including a clawback option.)

nonirox
12 de fev. de 2025, 02:48 UTC

How will this team members be payed for their work? With which money? I can understand the concern of wasting Treasury funds for cashgrabing Project and that their should be some control or at least the funding should be payed step by step to check if the Project is worth it, or the rest of the funding pot can be rejected and put back into treasury. Combined with eventual, some fine one has to pay for misleading the project. But if we get many projects looking for funding, there must be also many people in this Team and also reliable, trustful people. Then i am afraid that the people from the Team consume more money, then project funds can be given. Is this not something that could also be done, with a automated system, where we haven't to choose a Team and every Project will be guided through a process wich is equal for every one with no danger of symphatising one?

galaxy42
11 de fev. de 2025, 23:48 UTC

This is a cogent proposal for managing capital allocated to approved projects. I agree with initail funding provided by the Treasury. Successful projects initially funded by the Treasury should allocate a portion of their profits to fund the future of the managing body (pass it on)... such that eventually the managing body will be fully funded by the Cardano ecosystem.

wilbsd2
11 de fev. de 2025, 20:41 UTC

This is incredibly thoughtful, and I hope it's implemented in some some way - I'm sure it needs tweaked/outlined in more detail before any vote takes place, but I'll be first in-line to throw my hat in the ring for CFO/other Finance and accounting role depending on the backgrounds of others who might be interested. I look forward to hearing more about this proposal as others have the chance to weigh in.

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