Future Funding of mStable

Summary

From its inception, mStable was designed as a decentralised protocol and DAO governed my Meta token holders. Our initial venture investors purchased Meta tokens very early in the protocol’s lifecycle; many of these investors now actively govern the protocol. Until this point, mStable core operations and contributors have been funded by their investments, which totalled c. US$1.5 million. mStable’s core contributor salaries and every other related fiat expense has been funded from this pool of funding (legal, accounting, security audits, etc.)

The pool of funding from venture investors is almost used up and in order for the current contributors to continue building and growing mStable, funding is required. The intention of this forum post is to begin a discussion with Meta Governors to:

  • Begin the exploration of a new, more decentralised method of funding mStable core contributors via the mStableDAO
  • Create a new sub-DAO within the mStableDAO, that is responsible for authorising payments to core contributors on behalf of Meta Governors along with other funding requests to other destinations (such as the new GrantsDAO). The sub-DAO would have the following characteristics:
    • 2/3 signer structure
    • Made up of existing signers of the mStableDAO
    • Elected by the current signers of the mStableDAO
    • Funding amount approved by Meta Governors
    • Commitment to transparency reporting. We propose this to take place quarterly.
  • Seek Meta Govenor authorisation to fund this sub-DAO with a 12 month runway for core-contributors and critical operations such as smart contract audits

The current core contributors are as excited as ever to serve Meta Governors to ultimately build an enduring pilar of decentralised finance infrastructure.

Funding breakdown and destinations

@jwpe as head of operations and project co-lead has calculated a projected burn rate for the next 12 months of mStable’s operations with a fully built out team that factors for:

  • New hires across engineering, BD, Marketing, Community management, and DAO operations
  • Salaries in line with DeFi market expectations to retain talent
  • Funding set aside for future security audits
  • A “buffer” to manage uncertainty for the next 12 months of funding.

In total, the projected annual burn rate is approximately 2.08m USD, with the vast majority of this going toward salaries, and includes buffers for unforeseen expenses. Broken down, this includes:

  • Current contributor salaries - 997,000 USD
  • Budget for future hires - 610,000 USD
  • Office space, legal, accounting, other operational expenses via operational entities - 274,600 USD
  • Security audits - 200,000 USD

Funding request broken down by area of responsibility

Screenshot_2021-07-08_at_9.25.06_PM

Funding request broken down by current vs. future hires

Screenshot_2021-07-08_at_9.25.11_PM

We are aware that this is a material request to make of the mStableDAO and Meta Governors. Should this funding request be granted, there will be a commitment to retrospective quarterly transparency reporting so that all stakeholders in the mStable ecosystem can scrutinise how funding is spent and allocated by core contributors. Projects like Yearn have led the way in this style of reporting, and we will seek to emulate their level of transparency.

Should this request be approved and the sub-DAO be funded, funds will initially be distributed to up to four destinations:

  • D44 Ventures UG, a Berlin-based software development company founded by three mStable core contributors. It is currently contributing to mStable’s core development. The entity hires software engineers and soon will be hiring business development professionals to help scale mStable. Importantly, D44 doesn’t own these areas but rather is a core contributor to them. More granular information about D44’s function can be found here.

  • Gordian GmbH - a Swiss based software development and business consulting company that is currently being set up by an mStable core contributor. The entity plans to contract software engineers and business professionals to the mStableDAO.

  • Barnem Ltd, an operational and services company. It is responsible for handling mStable’s fiat operating expenses, fiat invoicing, organising core contributor work processes, and assisting with community growth and culture. More granular information about Barnem’s function can be found here.

  • Directly to core contributors via Sablier stream. Core contributors have been given the option to opt-into receiving their compensation directly via Sablier stream from the DAO. Those who opt into receiving a stream will not be compensated for their work from either entity listed above.

We thank all mStable stakeholders far for their continued support, and hope that this funding request presents a clear sense of the core contributors’ ambition and commitment to mStable’s future. We hope that we are trusted by the mStable ecosystem to deliver on the vision of making mStable a piece of public financial infrastructure fit for the world.

Note on Previous Swiss Association funding commitment

Please note that we are requesting that this proposal supersede the USD funding request for the Swiss-based mStable Association, approved here. This is because the non-action letter from FINMA has not yet been approved, meaning it is not able to fund contributors through grants from the Association as of yet. Given this, and the need to continue to fund mStable’s development, we are proposing that the Association’s funding would need to be subject to another Meta vote following the possible FINMA non-action letter should Meta Governors and the community feel it is necessary. The above structure is designed to be effective without the mStable Association.

9 Likes

Supportive of this.

Quick top level question -

  • How do you intend to acquire the 2.08M USD? does it come from liquidating a portion of treasury?
2 Likes

Great question. We should have been clearer about this.

This proposal is not proposing the mStableDAO liquidates any MTA from the treasury. There was an open auction where users bootstrapped the mStableDAO with c. 5m mUSD in return for MTA governance tokens. The money would come from this mUSD allocation.

@jwpe may be helpful for you to comment a snap shot of the DAO’s USD position.

2 Likes

Correct, the assumption is that this would be a disbursement of some the DAO’s existing USD held treasury. Given the amount being requested, it probably makes sense to denominate the funding completely in mUSD.

Balance sheet snapshot is below.

2 Likes

To confirm this isn’t everything in the mStable DAO treasury? More USD and BAL, for example

The BAL still needs to be moved from the Aragon entity which is below. Annoyingly the Aragon UI doesnt surface these BAL tokens even though they are there, so getting them transferred out is taking longer than hoped.

The remaining USD I think you are referring to is in the Uniswap LP position, which is an NFT also in the DAO’s custody.
https://app.uniswap.org/#/pool/57642

1 Like

Thanks JE! Good to know

There is also about $50k on development accounts fyi

1 Like

It seems reasonable that DAO funds should go to core devs working on mStable in the years ahead (in addition to other funding such as GrantsDAO). While more detail on what ‘entities’ mean and number of current devs and future devs would be helpful this looks like a step in the right direction in terms of decentralisation (see eg DAO First Capital Formation) and something I def is in support of.

1 Like

Strongly support this - I think that the case put forward for funding mStable is sound and I like the commitment to transparency.

Decentralized governance is all about balancing effectiveness with efficiency so I feel that this proposal fits perfectly into achieving that for mStable.

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Fully in support of this. I also especially appreciate the addition of quarterly reports re: how on track we are with our projected run rate. Thanks for putting this together and for choosing to allow MTA holders to participate in this decision. :rocket:

1 Like

All seems reasonable and I like the clear breakdown. I think I follow, but could you give a TL,DR on the reasoning behind creating entities rather than just the streams to CCs directly?

1 Like

I second this. More details on the current and future contributor salaries would be useful. Salaries constitute almost 80% of the funding so I’d assume it’s fair to expect a bit more transparency on this :slight_smile:

I totally agree this proposal and I think the whole funding budget is well thought out。

I have a question:
Will mStable funding budget plan be updated or adjusted annually? :thinking:
What is the frequency?

Definitely in favor of this, and good to be able to project on costs on a 12-month timeline. Do we already have a process in place on how future funding will be communicated?

Would be good to be able to compare these requests year-to-year to check on our own growth, as well as opportunities to perhaps start paying some of these salaries via constant yield-farming opportunities that are safe to deploy, like Alchemix or other self-repaying mechanisms.

This is a good step. mStable core team needs funding to continue to develop this protocol. Transparency is key and highly appreciated!

1 Like

Reading through everyone’s notes, I feel that this request is reasonable and should be supported - Back of the envelope accounting suggests that ~2m is roughly 5-6% of treasury which is sensible (and can be covered back over the next 12months through protocol fees or yield farming).

For this proposal, I am keen to learn more about the salary breakdown from @jwpe :

In particular, any 12mth stretch goals and employee’s performance bonus that are tied to protocol performance or financial metrics. This is slightly different from what is in the request, which is “just reporting” of market performance.

By earmarking perf against metrics, I feel that this will better align the ops team with the wider DAO community. And more importantly give the team a reason to build stronger dashboards and DeFi measurements to justify their compensation and also showcase their current good work/ progress.
Hopefully, this will kickstart a feedback loop which could be used for justification in future fundraise or compensation requests and also for the community to rally on.

Also, given that a huge chunk of the 2m goes to salary, perhaps a portion of it could be taken as MTA tokens to align interest and incentivise employees and stakeholders. In James’ original request, the full 2m is funded by mUSD.

1 Like

Supportive of this. Funding is needed to continue all the great developments from the mstable team.

Hi everyone,

Many thanks for the feedback and input provided. Super excited to see so many interested parties involved in this discussion, and I’m aware that some questions are still open, but we’re already quite late with this, so I have taken the liberty to move this proposal forward to our Snapshot.

The voting period is set to 7 days and will end next Thursday, so please do continue to voice your opinions and queries here, as all of your input is extremely valuable to us and will improve and help shape this and future funding requests and their associated processes.

Looking forward to working together with you all in making the next 12 months on board the mStable as exciting as the previous ones! :rocket:

I fully support this initiative and appreciate the transparency and hard work put into it.

Keep up the great work!