Proposal

This proposal aims to update the budget originally set in (AIP-40)[https://snapshot.box/#/s:alchemixstakers.eth/proposal/0x946608f1c5b3046fb412cdbb3e3a298a500a30db98694274e30ae559438c9272] and provide a brief update on the Alchemix Association, which has been operating as outlined in (AIP 113)[https://snapshot.box/#/s:alchemixstakers.eth/proposal/0x1af1e8118b989534fe0348553948a25eba8d62171acb8983da9e4a4543c1f702].

Context - Past and Future

Operations are divided between the Alchemix Association and the DAO multisig. While we expect spending to remain within the $450,000 quarterly limit, it may occasionally exceed this limit due to team growth and upcoming audits.

The original AIP technically remains intact for DAO spending only, but does not account for additional DAO funding of the Association. It is necessary to align the budget with the expenses of funding the Association in addition to DAO expenses.

Currently, the DAO funds the Association on an as-needed basis, as defined in AP-113. The DAO has intentionally limited transfer of assets to be more in line with the intended future relationship between the DAO and the Association. With on-chain governance in development alongside v3, future funds sent to the Association will require approval via on-chain governance. This proposal serves as a link between the present (when AIP-40 is somewhat outdated) and the future (when budget execution will solely depend on on-chain governance).

Association Update

To date, the Association has done / is doing the following:

Contractors: The Association has hired 6 contractors: 2 solidity developers, 1 business development lead, and 3 in operations, data analysis, and leadership. All DAO contributors currently on the payroll are expected to transition to the Association before on-chain governance is implemented. ETH and USDC ownership: The Association owns $1.7 million in ETH and $588,000 in USDC that is managed via Gauntlet Aera, optimizing yield through various strategies while keeping custody with the Association. Long term the yield can help reduce (but not eliminate) reliance on the DAO for funding. Utility Assets: The Association owns several utility assets, including veSDT, sdCRV, and sdBAL that are managed in line with the mission of the Association to benefit Alchemix. Legal Agreements: The Association has established various legal agreements for audits, OP grants, and operational activities that the DAO could not undertake.

Current and upcoming spending

The current and upcoming spending breakdown is as follows:

Association $68,666 per month for 6 long-term contractors $8150 per month for contractors associated with grant projects $150,000 upcoming payments for one-time grant projects $50,000 in annual services, including risk monitoring and operations tools Upcoming audit costs for final v3 audit and on-chain governance audits (estimated $200,000) Ongoing Legal Analysis of Alchemix v3 and Association scale up (estimated $100,000 total remaining)

DAO $72,200 per month for 8 long-term contributors 1,000 ALCX/month for community initiatives, such as the newsletter, governance updates, and discord moderators

Total Spending: $1,800,000 Recurring Annual Spend $500,000 of one-time spend associated with the development and deployment of Alchemix v3

Spending has been planned with treasury holdings and annual revenue in mind to avoid overreaching while also focusing on growth, especially with the opportunities presented by Alchemix v3.

The treasury currently holds $3.9 million in liquid ETH and stablecoins, along with $2.3 million in Aera assets, and over $10 million in restricted assets that are not intended for operational costs but are meant to enhance the protocol and generate revenue. Annualized revenue stands at about $3 million, compared to roughly $1 million in ALCX emissions, for a net profit of $2 million.

For the next year, proposed spending is around $2.3 million, exceeding the net profit of $2 million. This is intentional to support Alchemix v3’s potential for significant revenue growth. If Alchemix v3 does not yield the expected growth along with an eventual slowdown of the bull market or future bear market, then spending will need to be revisited.

Updated Framework Until Onchain Governance is Live

This framework is effective until Onchain Governance is established: The DAO multisig will transfer assets to the Association as needed to cover expenses, including those in this proposal. It will not transfer assets in excess of planned expenses. The Association and/or DAO may hire up to one additional long-term contractor or service provider. Any additional hires require an update to this proposal to pass a vote. The DAO can provide up to $750,000 in additional funding to the Association for short-term services (like grants and audits) before on-chain governance starts. Exceeding this amount requires an update to this proposal to pass a vote.

This framework ensures the DAO can support the Association’s operations while maintaining accountability for expenses.

Voting

Voting is simple for/against/abstain on the updated DAO budget framework