[DAO Discussion] Implement Treasury Management Proposals

Governance DAO Discussion
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[DAO Discussion] Implement Treasury Management Proposals

Crypto is a fast moving environment and Wonderland’s current governance framework does not allow us to move with much swiftness. With the recent discussion aimed at providing guidelines for the Treasury Manager and increasing the DAO’s “control” on how the treasury is being managed, I believe it is a good opportunity to implement a better structure around these decisions.

Introducing [TMP] - Treasury Management Proposal

A Treasury Management Proposal (TMP), similar to a Wonderland Improvement Proposal (WIP), is to be voted on by the DAO through Snapshot. However, unlike a WIP, the TMP would not need to go through a DAO Discussion and a Request for Comment as outlined in the current governance process.

A TMP would be posted by the Treasury Manager ™, or a delegate team member (core or non-core) explaining the reason for the TMP and the options proposed to the DAO.

When should a TMP be used ?

The former proposal on governance over treasury actions and strategy had good examples of use cases for a TMP:

  1. Voting delegation. When the time for a vote comes, the TM (or a delegate) could post a TMP with the different voting options (either all or the ones recommended by the TM) and have the DAO vote on their preferred option.
  2. Risk limits. If risk limits were imposed with some margin, a TMP could be used to modify the limit imposed within the voted margin (e.g. increase seed investment allocation from a predefined amount).

A TMP should only be used for actions that fall under existing treasury management guidelines.

When should a TMP NOT be used ?

Due to a TMP bypassing the regular governance process, there needs to be certain limits to prevent the mismanagement of the treasury funds by rushing the process.

A TMP should not be used to modify terms of previously voted WIP that are not directly related to treasury management or does not allow that flexibility (e.g.liquid staking, redemption, $SIFU investment, etc).

A TMP should not be used for seed investments or buying specific tokens. The TM has the discretion to do these kinds of investments on their own. If, for any reason, the TM should need a vote from the DAO (e.g. conflict of interest), it should go through the regular governance process to ensure due diligence is done.

If it is unclear whether a certain treasury management situation can be dealt with using a TMP, the guidelines should be clarified and the regular governance process used.

Additional details up for discussion

How long should a TMP vote be posted for ?

  • I believe a TMP should be up for 48h minimum. A TMP is not meant to be used in case of emergency and should, in theory, be fairly simple in nature. The voting period could be longer if desired by the TM depending on the nature of the vote (e.g. plenty of time before the outcome of the vote is required).

Should there be a delay between the vote and the TMP being posted ?

  • The current governance process requires a WIP to be up 4 days before voting is available. I don’t believe such a delay is required for a TMP. That being said, the snapshot vote should not be live before the TMP post.

Should the vote include a status quo/no change option ?

  • Having a no change option might be more obvious in situations like changing the risk limits, but it may not be as obvious for voting delegation. Should the option to make no change be mandatory even if it is not recommended by the TM depending on the situation ? I believe it should be mandatory to ensure that the DAO has the option to turn down any TMP should it feel the need to.

Should a TMP be approved by a forum moderator before publication ?

  • Just like a WIP, I believe it should be approved by a forum moderator to ensure it has the required information, is clear and concise, and follows the minimum requirement.

Edit: This would also help with the coordination of announcing the proposal. This would also help with the snapshot not being posted before the TMP is approved/published.

Scope of TMP ?

  • Currently no guidelines on treasury management have been voted on. How should we define what future guidelines apply (or not) to TMP ? How far should a TMP be allowed to go (e.g. changing directional asset exposure from 30% to 100%) ? Personally, I believe these should be addressed in the guidelines directly. In the absence of such information, should it fall under the regular governance process until the guideline is properly updated ?
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I will add my thoughts here, and remove this scope from my DAO Discussion.

Treasury Action WIP

As per WIP 14, there would from time to time fast decisions or approvals from the DAO for Treasury Actions. Here, also there needs a fast track to WIP, and those authorized to action a fast track. Inclusive of WIP 15, I would propose that those who can request (and have it duly accepted) for a Treasury WIP would be:

  1. The Current TM duly voted in by DAO
  2. The Current TO(s) duly voted in by DAO
  3. Any former TM that had a TM term or term extension duly voted in by the DAO (This currently includes BOTH Sifu and Myself)
  4. Any former TO(s) duly voted in by the DAO.

Again, such fast track power can be removed by individual relinquishment or a DAO vote to strip such powers.

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I would have concerns about having former positions being able to just being able to force a community vote on the treasury.

They may have left in bad terms (which obviously should exclude them), but if they are no longer part of managing the treasury they shouldn’t have the power to do so that easily. If their idea is a good one, it could go through the governance process or those that have the power to make these TMPs.

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Then vote in those who can make accelerated WIP proposals outside of the Treasury team, and can be limited to risk mitigation proposals. I’m agnostic as to who it is, just as long as someone is there.

Treasury Managers themselves may come to have conflict of interest, so the community needs some empowerment over that too.

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I’m trying to square what instances a fast tracked governance process for treasury actions would be necessary. I can’t think of too many situations that TMs or TOs should need to get governance approval, although there are a couple I can see coming up.

I can imagine it would be useful if a TM or TO wanted to sell liquid assets from previous DAO approved investments - eg. Unlocked SifuVision tokens or a similar arrangement in the future, if it appears to be in the best interests of the protocol to do so in an expedited fashion.

Personally, I think it would be useful to establish DAO approved Treasury Allocation Parameters, to help manage expectations in the community and give guidelines to TMs and TOs in various market conditions. If we have something like that, a TMP could be useful if TMs or TOs want to significantly alter those treasury allocation parameters, leading to increased risk. eg. If 30% Directional allocation is currently in effect and TM feels it’s time to increase this threshold, or if we have reached our Seed Investment budget but a TM found another good deal. Articulating the specifics of the deal should not be necessary, nor do I think a TMP would be necessary for decreasing allocation parameters if we begin entering another bear market in the future. If a TM or TO feels it’s time to reduce directional exposure in that circumstance, they should have the discretion to quickly act accordingly and follow that up with a normal governance proposal articulating their reasons for battening down the hatches and begin establishing new allocation parameters for the market conditions they foresee.

I’m also a fan of the fast track method Sky is suggesting. The 3rd and 4th groups which can fast track is difficult for me to accept without further stipulations - like former TMs and TOs that have departed their positions on good terms and receive DAO approval upon departure to maintain this influence and limited authority. If these individuals are not involved with the community for an extended period of time (X weeks or months), that authority would be automatically removed. I don’t think we’d need to make a role for this type of connection, but those who step down on good terms should present this arrangement in an exit WIP. I imagine the exit WIP as a resignation letter with a summary of their performance, terms to their departure, and reasons for leaving - not to ask for permission but to approve terms like extensions until X date, bonuses for on-boarding assistance with their replacement, the ability to keep this fast track authority, etc.

It would be useful to spend some time brainstorming all the various situations a TM or TO might find themselves considering using a TMP, this should help us narrow down what should and shouldn’t use a TMP. What other situations can you think of?

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I think it could be interesting to use them to alter some parameters of a previous WIP as long as it doesn’t change the behavior of it. For example, redemption is saying to use USDC. If an issue would arise with USDC, I believe it would be reasonable to use a TMP to pick a new stable. The TM would obviously still have discretion to change it without a TMP, but it could be a quick and easy way to get the community’s opinion.

In a situation where the trade team might have conflicting recommendations a TMP could be used for the DAO to vote on if the TM and/or the rest of the team believe both strategies have merit. In this case, there might be a need to be warry of front running if applicable.

In the future it could potentially be used to reconfirm things that are more or less automatically renewed. For example, if we had a marketing budget that went through the governance process to be allocated the first time, a TMP could potentially be used to vote to reconfirm the budget for a new year (including the full details of course) or vote on the need to go back to the drawing board if the community believe it is no longer adequate. If marketing would want a raise in allocation, it should probably go through the regular process first to justify the increase.

These could be a few things that I can see where a TMP could have value.

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Yeah, these all seem like good use cases for the TMP.

I know the Farm wasn’t DAO approved in the first place but we could treat it as such. What do you think about Farm changes? Like what Sky did with doubling the BSGG in the the farm, which changed the emissions schedule. I agree with the move and see value in the intent, but I can imagine other instances in the future where it may be useful for a TM or TO to use a TMP to change the farm.

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I was thinking about, but I figured this could fall under the parameters like you mentioned.

My only concern with this who is going to vote to not have more money in the farm ? There could be situation I guess, but overall, it should be pretty clear. However, it could be interesting to decide how the revenue is added.

The current CVX bribes are a good example. Include as is or liquidate and put in as stables. Rather than voting if they should be put in the farm or not.

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I don’t think it would only fall into getting more money, as it may be useful to reduce emissions of some tokens in certain circumstances. Let’s say we get some assets dripped into rev share from a farming strategy, but the TM or TO comes to believe it would be best to maintain the strat but just dump the reward tokens as they come in instead of pushing any of them to rev share. They could post a TMP with their reasoning for that. Also there may be situations where we enter a strategy that generates new assets and some community members want them added to rev share but the TMs and TOs don’t think it’s best to do that. They’d have the option to post a TMP with their reasoning for not putting it in and let the community decide.

Also there can be intent within the change, like with the BSGG doubling. If there is intent behind the change, an ulterior motive, I think that action is ripe for a TMP.

Absolutely. Much like you brought up before with redemption using a specific stablecoin, these situations are perfect for a TMP.

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I realize I hadn’t mentioned yet that I totally support this proposal. I’m just trying to flesh it out with ya. This is a great move.

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I was confused when reading this, because I thought you just didn’t read my whole reply just to realized, I never mentioned it. So I guess we’re on the same page :sweat_smile:

I also wouldn’t want to make a TMP mandatory for all these situations. I don’t think that is what you are suggesting, but we should make it clear that if the TM wants to undo a strategy that was implemented under their discretionary power, a TMP should not be required to do so, but can indeed be used to gather a community decision. e. g. doubling BSGG rewards and then going back to regular amount following a price increase or something like that.

However, if a TMP is used to implement something, should TMP be required to undo it ? I feel like it make sense, but unsure if there are situations where that would be an issue.

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Definitely not. I think governance should be mandatory for some actions, but a TMP would be really useful as a discretionary tool for TMs or TOs. Both for things like renewals as you mentioned before, and also to implement changes they could do without governance, but feel may have pushback from the community. Not having this kind of expedited tool can put TMs and TOs in a position of having to ask themselves, “Yeah, this may get pushback but do I really want to put it through a month’s long WIP just to find out?”. Having a TMP as a discretionary tool could help relieve some of that pressure. I find it important not to hinder the performance of our TMs with too much governance requirements - we put them in their position so they would make decisions for us, ya know.

Im not sure a TMP should be mandatory for anything, personally. It’s a tool that can be used to Expedite governance when governance is required or considered useful. It would be useful to establish which actions require governance, but that governance could be normal WIP process or expedited through TMP. In this case, I think we could establish that if Any governance process has established a position, a governance process (WIP or TMP) is required to alter it.

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Just to debate myself here; this could work against the TMs or TOs, as they may wish to avoid future governance on a position so they don’t post the first TMP that establishes it.

For example, If the TM is not required to get governance approval on something but thinks it might be useful, I suggested in the above comment that they may wish to use a TMP for a quick check-up and avoid a long WIP process. But if they use the TMP, they will know they have to use Another TMP to change that strategy in the future, which may influence them to avoid opening the can of worms in the first place. Does this make sense?

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How about, that for fast track options:

Candidates have to be voted in for example:

Again, this just allows a WIP to go up for TMP.
Second, this can only be for TMP that involves bona-fide risk reduction actions.

Personally, I’ve been helped alot to navigate both positioning and as it relates with community sentiment management from Sifu. In some of the sticker topics, his help has been immense. As an extension of this, I had written this as a way that can help the community to have someone they can call upon if they feel that there is risk that needs to managed.

Again, candidates can be voted upon, and nominated from the community. That may be better.

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So we have no risk protocols in place at present for a WL post SkyHopper?

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WIP 14 initially aimed to set some risk limits, but that section was removed from the proposal in order to simplify it. So no, not really.

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