Thanks to @mZeroNine and many others for their work on this RFC.
This RFC would like to gather feedback regarding a proposal to restructure the mStableDAO in order to improve flexibility, efficiency, and effectiveness of the DAO, creating a scalable model that will enable mStable to focus on becoming a leader in ERC-4626 vaults.
The key actions prosed include:
- Introduce a new set of expectations and responsibilities for ProtocolDAO and TreasuryDAO signers.
- Suggest a fair compensation structure for all signers and a simple system for compensating individual signers for additional responsibilities.
- Create a standardized election process for signers of the ProtocolDAO and TreasuryDAO and pave the way for the first round of signer elections to be held immediately following resolution of this proposal.
- Merge the Asset Management subDAO with the TreasuryDAO and absorb primary funding functions of the Funding subDAO back into the TreasuryDAO.
- Suggest creation of a new “Product subDAO” and consolidation of the GrantsDAO and Community subDAO into an “Ecosystem subDAO”. Futher details and initial funding requests for these entities would be presented in separate RFCs following the successful resolution of this proposal.
Note that the names of the ProtocolDAO, TreasuryDAO, Product subDAO and Ecosystem subDAO are subject to change and discussion is welcome on appropriate names for these entities, considering their proposed functions.
The mStableDAO is made up of all MTA Governors and contributors, and represents a collective organization of entities rather than a specific multi-sig.
The role of the mStableDAO is to govern, operate, and fund the growth and development of the mStable protocol and ecosystem. High-level functions of the mStableDAO include:
- Hold governance votes to gain consensus on key decisions around protocol changes, treasury utilization, and signer structure.
- Ensure that all approved governance votes are executed to implement changes to the protocol or to disburse Treasury funds accordingly.
- Facilitate discretionary decision-making through elected signer groups within powers granted by MTA governors.
- Perform critical tasks required to sustain the ongoing operation of the protocol, such that the protocol can operate indefinitely, independent from the ongoing contribution of subDAOs.
- Facilitate multiple methods of compensating contributors, through funding of subDAOs, direct compensation of contributors, and supporting the use of decentralized tools such as Dework and Parcel.
It is suggested that this should be a 4/6 or 4/7 multisig with an elected signer group.
The function of the Protocol DAO is to execute the will of MTA Governors around changes to the mStable Protocol and ensure the smooth long-term operation of the protocol.
- Execute protocol changes approved by governance by creating and executing necessary transactions in a timely manner. Note that this function could be brought on-chain in the future, reducing the scope and power of the ProtocolDAO.
- Make decisions in line with discretionary powers granted through governance, such whitelisting smart contract addresses for MTA staking. A complete record of discretionary powers should be created as part of this restructure.
- Handle operational tasks directly related to the ongoing function of the mStable protocol, including making requests to the TreasuryDAO to fund protocol gas costs.
It is suggested that this should be a 4/6 or 4/7 multisig with an elected signer group.
The function of the TreasuryDAO is to execute the will of MTA Governors around custody, management, and disbursement of the assets of mStableDAO.
- Disburse funds to subDAOs or other entities in line with governance decisions by creating and executing necessary transactions in a timely manner. Note that this function could be brought on-chain in the future, reducing the scope and power of the TreasuryDAO.
- Make discretionary decisions in allocating capital assets in line with discretionary powers granted through governance, including allocating treasury assets in whitelisted protocols up to a defined value to build a productive treasury, and approving funding for pre-approved DAO expenses. A complete record of discretionary powers should be created as part of this restructure.
- Handle operational tasks directly related to the ongoing function of the mStable protocol, including payment of DAO signers and Catherders, funding of protocol gas costs, and payment of tools and subscriptions.
Consolidating the Asset Management subDAO back into the TreasuryDAO
As part of creating the new proposed structure, the role of the current Asset Management subDAO would be absorbed back into the TreasuryDAO. With active and engaged signers, we believe that treasury management and funding transactions can be executed in a timely manner with this larger signer structure, while significantly improving the security of treasury assets.
So as to minimize the workload caused by this transition, it is proposed that once the new TreasuryDAO signers are elected, the current AM subDAO signers are replaced with the new TreasuryDAO signer group. This would allow the AM subDAO to remain as simply a separate account in the short term, to give time to migrate assets without compromising on security.
It is proposed that an open nomination process be held in the mStable Forum or Discord, allowing current contributors and community members to nominate themselves as signers for the ProtocolDAO or TreasuryDAO. There would then be a governance vote to decide the signers for each DAO. It is suggested that signer elections take place every 6 months.
All DAO signers would be expected to be regularly available to verify and confirm transactions, as well as being available for scheduled meetings. There would also be expectations around active participation in governance discussions in the mStable forum and Discord. Specific requirements and exact compensation will need to be laid out as part of the election process. It is suggested that each signer is paid a monthly stipend in MTA, perhaps targeting US$1000 per month with quarterly reviews to adjust the MTA amount based on MTA price. Signers who take on extra operational responsibilities should be compensated additionally. Discussion of details is welcomed here.
In addition to DAO signers, it is proposed that a Cat Herder or Governance Coordinator is compensated directly by the mStableDAO to facilitate governance processes.
Historically, subDAOs have been considered to be under management by the mStableDAO. This RFC suggests that subDAOs be granted full discretion around spending and decision making as their own work committees, and be only indirectly accountable to MTA holders through their funding agreements with the mStableDAO.
The proposed DAO structure allows for the creation and funding of future subDAOs by governance proposal. Any subDAO should have the freedom to propose its own signer structure, decision-making processes, and goals.
Each subDAO funding proposal should include clear deliverables and funding should be disbursed by the TreasuryDAO either at regular intervals or even through an ongoing stream if practical. This provides an opportunity for evaluation of the performance and the ability for MTA governors to halt funding if expectations are not being met.
This RFC suggests two subDAOs, mirroring mStable’s key operating functions: Product & Ecosystem. Further proposals will be required to lay out detailed funding requests for these subDAOs.
It is proposed that the current Funding subDAO multisig wallet be repurposed to create a Product subDAO. The signer group would be changed to create a 2/3 multisig consisting of full-time contributors. Specific details would be outlined in an initial funding request following the successful resolution of this proposal.
The product subDAO is responsible for designing, proposing and delivering new products or improvements to the current mStable products.
- Recruit and manage contributors
- Create governance proposals for product changes or deployment of new products
- Manage public documentation
It is proposed that the former community subDAO and GrantsDAO be combined to create an Ecosystem subDAO. The proposed signer structure would be outlined in the initial funding request for this new entity.
The purpose of the Ecosystem subDAO would be to grow and engage the community of people and projects using and building on top of mStable.
- Create community-driven content
- Fund initiatives in the ecosystem through grants
- Support the Metanaut program and Coordinape
- Manage community calls and events and post recordings.
- Moderate discord and handle support requests
- Disburse MTA to active contributors for Discord tipping
mStable is transitioning toward a new vision of becoming a leader in 4626 vaults and an efficient DAO structure is critical in making this vision a reality.
Since its inception, the mStableDAO has gone through several iterations in an attempt to improve its efficiency. Examples include improvements to the ProtocolDAO structure, the creation of the Asset Management subDAO and creation of the Funding subDAO.
Fundamentally, the ProtocolDAO and TreasuryDAO have proven to serve their purpose in executing the will of the Meta Governors. However, we have learned that slow execution in multisigs has not always been resolved by reducing the size of the signer group and that in fact, 2/3 multisigs may be more susceptible to delays than larger structures such as 4/7 multisigs. This is evidenced by the efficiency of the current ProtocolDAO, and the delays that have been experienced in smaller signer structures within the Asset Management and Funding subDAOs. Instead, delays tend to be caused by a lack of clarity in the responsibilities of signers and a lack of availability and engagement, as well as time zone differences in some cases.
Inefficiencies that have been identified in the current DAO structure include:
- The complexity of the current DAO structure and a lack of clarity around the responsibilities and purpose of each entity
- A number of disengaged signers on the TreasuryDAO, leading to long delays in transaction execution
- Lack of thorough review and verification of transactions due to low involvement in the governance or decision-making process
- Compromised security in the Asset Management subDAO, which now custodies around $3.5m in assets, without significant gains in efficiency
- Growth of off-chain entity operations and associated costs, leading to more centralization and complexity
- A disconnect between the way the core team works together and the structure of the DAO
- A lack of clear purpose and deliverables for entities funded by the mStableDAO
This proposal aims to address the inefficiencies outlined above through simplification of DAO structure and clarification of the purpose, responsibilities, and decision-making processes within each entity.
Aside from aligning with a new vision and focus for mStable, the timing of this review also coincides with a number of key dates that would have already required individual governance processes.
- Community signer re-elections (these were due to occur in late May)
- The end of the 1-year review period for the GrantsDAO (end of June)
- The end of the previous round of project funding approved by governance (end of June)
- Enabling mStable to move fast and work effectively to build a significant new product and become a leader in vaults
- Establish a responsive and informed signer group that is actively engaged in Meta Governance and aligned with mStable’s new product direction
- Facilitate quick execution of governance decisions and benefit from the efficiency of more agile decision-making processes at the subDAO level.
- Create a clear separation of responsibilities within the DAO structure and increase decentralization.
- Create a system that can be further decentralized in the future and scaled with the addition of subDAOs as required
- Improve pathways for individuals to contribute to the mStableDAO and engage more community members in active roles.
- The additional workload in implementing these changes and migrating the Asset Management subDAO back into the TreasuryDAO
- Compensation models for some contributors could be more complex if they contribute to multiple entities.
It is suggested that the community comment on this RFC prior to the 20th of June to help inform the creation of a formal draft proposal on Github to be used for review.
Meta Governors are encouraged to provide as much feedback as possible on this proposal.