dYdX

Simple Summary

Important Notice: This proposal is being sponsored by Wintermute Governance’s DYDX proposal/voting power on behalf of the dYdX Operations Trust.

On behalf of the dYdX Operations Trust (“DOT”), Trustees Joanna and Callen are requesting $6.6M of funding from the dYdX community treasury to be transferred to the DOT’s multi-sig to fund operations of the Operations subDAO for an additional 18-month term (“DOT 2.0”).

Abstract

The dYdX Operations SubDAO is creating this DIP on behalf of the DOT to request $6.6M in funding for the next 18 months.

From our perspective, it is critical for the dYdX DAO, and specifically the OPS subDAO, to take steps before the potential launch of dYdX V4 on mainnet to ensure that the dYdX DAO has the resources, tools, and infrastructure it needs to lead a fully decentralized version of the dYdX protocol.

The funding request will cover the operations and administrative needs of the dYdX Operations subDAO as described in the proposal for 18 months.

The DOT currently has $87,077.50 USDC remaining. After the expiration of the DOT 1.0 term on June 19, 2023, we are proposing to roll over any remaining budget to DOT 2.0.

The Snapshot vote concluded with 303 voters and 17.7M DYDX in agreement (99.95%). The vote results have shown significant support for the next phase of DOT.

Relevant Links: Snapshot Forum Discussion

Motivation

On 15 May 2023, the dYdX Foundation posted, “Exploring the dYdX Operations subDAO’s near future”. We agree that the dYdX ecosystem is approaching a critical juncture with the potential launch of dYdX V4 mainnet and the initial 6-month term of the DOT expiring on June 19, 2023.

To ensure that the dYdX DAO has the resources, tools, and infrastructure it needs to lead a fully decentralized version of the dYdX protocol DOT 2.0 will be responsible for:

Recruiting an Operations Lead, a Technical Project Lead, and a Site Reliability Engineer to scale the Ops subDAO and to provide technical support to prepare the dYdX DAO for the future. Identifying an indexer operator and contribute to deploying an indexer in the potential future version of the dYdX protocol. Contribute to deploying open-source software and the running of a version of the iOS app, Android app, and website (browser) front-ends for the potential future version of the dYdX protocol. Engage a third-party auditor to assess DOT’s finances and performance, as well as increase the number of trustees on DOT’s multisig. The remaining funds at the end of the DOT 2.0 mandate will be sent to a community-controlled wallet at the discretion of the dYdX community.

For a full breakdown of the proposal’s mandate please see the forum post.

Specification

Funding:

To run the DOT for the next 18 months, we are requesting $6,600,000 from the dYdX Community Treasury to cover costs and contributor compensation.

Proposed Budget:

Category	Specifics	Total Funding (18 Months)	Rationale
Contributor compensation	Operations Lead - $100-130,000 USDC / year	$195,000	Hedgey - DAO compensation Maker SES How much does it really cost to run a DAO? (Maker, LIDO, SUSHI)
	Technical Project Lead - $130-160,000 USDC / year	$240,000
	Site Reliability Engineer - $130-160,000 USDC / year	$240,000
Administration	Trustee Compensation - 5 Trustees ($2000 USDC / month each)	$180,000	We believe this is an adequate compensation
	Enforcer Compensation - 1 Enforcer ($1500 USDC / month)	$27,000	We believe this is an adequate compensation
	External Auditor - DAO Auditing / Accounting	$80,000	Non-technical financial audits & potentially other auditing
Technical Contractors	Indexer	$2,000,000	TBC - Estimated on the high side for a total cost, with the addition of consulting services.
	Consulting Services(Dev & Security Services)	$350,000
	User Support	$360,000	5-6 FTE’s at $3-3500 / month each Osmosis Support Lab
Legal & Compliance	Legal Service (legal services of law firms in drafting and negotiating legal documents and providing required regulatory advice)	$360,000	On the high side, but costs may add up. We believe the DAO should be prepared for this.
	Legal Provisions	$1,000,000
Software and IT	Subscriptions for SaaS service providers like: - Google Workspace (drive, email), - Discourse (governance forum), - Workable (HR), - Amplitude (data analytics), - GitHub (code repositories) - This list is non-exhaustive.	$94,000	Cost estimation for the services described and other potential software & IT incurred costs.
Infrastructure	Frontend: - Infrastructure deployment and maintenance costs, - Web and mobile	$360,000	The estimated costs to set up, run and maintain front-end (FE) infrastructure and any other costs
Operating Costs	Translations Bank Fees Gas Fees	$468,500	Translation services, transaction costs and any deployment costs. Upper limit budgets, but costs we don’t feel the Ops subDAO should skimp on
Other Miscellaneous Costs	Buffer	$450,000	Funding buffer to account for a market downturn, inflation/cost increases and/or unforeseen events or expenses.
Total		$6,404,500
Total Requested		$6,600,000	A portion of the additional $195,500 (additional to $6,404,500) will be used for token compensation

Most of this budget is expected to be converted to USDC and/or fiat USD, and the remainder will be reserved for native token compensation.

DYDX Amount: The amount of DYDX to be moved from the community treasury to the Ops Trust Multisig will be determined using a 24h VWAP of the trades executed on the most liquid exchange, namely Binance.com. The previous day’s trades will be used to capture a full 24h window so as to avoid timing constraints. The following data file is used:

https://data.binance.vision/data/spot/daily/trades/DYDXUSDT/DYDXUSDT-trades-2023-06-12.zip

This formula will be used to calculate the price: Σ(Price * Volume) / Σ(Volume).

From the data, we calculate the 24h VWAP price to be: $9,014,897 / $5,881,461 = $1.53

The DYDX Amount to be transferred will be $6,600,000 / $1.53 = 4,314,000 DYDX (rounded up to the nearest thousand for simplicity).

Trustees:

Reverie Reserves, LLC, and George Beall have decided that they will no longer be involved in the DOT as a trustee and the enforcer, respectively, after the expiration of the current term on June 19, 2023. We also recognize that as funding increases, adding additional security measures becomes increasingly important. As such, we have decided to increase the number of trustees to 5 and upgrade the multi-sig to 3-of-5 from a 2-of-3.

If this on-chain vote is passed, the dYdX Operations Trust by the consent of the dYdX community will be amended to reflect the new Trustees and Enforcer listed below:

Trustees:

• Joanna Pope Consulting Pty Ltd
• Callen Van Den Elst
• Chaos Labs, Ltd
• Flipside Cayman, Ltd
• Christoph Sonn

Enforcer:

• Joseph Axisa

Note: Francis Gowen (Fig) will join the Trust as Flipside Cayman, Ltd, and Joanna Pope will join the Trust as Joanna Pope Consulting Pty Ltd. This is slightly different to the structure outlined in the forum post

Rationale

The outlined budget and subsequent mandate have been designed to address the critical needs of the DAO moving into the potential launch of V4. Specifically addressing items that are critical to providing the resources, tools, and infrastructure the DAO needs to lead a fully decentralized version of the dYdX protocol.

Given the large funding request, we have decided to increase the multi-sig to a 3-of-5 from a 2-of-3. This will improve security and bring greater peace of mind and transparency to the community.

Overall, the community has been very supportive of this proposal indicated in both the Snapshot and forum discussion

Voting Options:

Yes:

• Transfer $6.6M of DYDX from the Community Treasury to the DOT multisig (0xa8541f948411b3F95d9e89e8D339a56A9ed3D00b).
• Remove Reverie Reserves, LLC, and George Beall as a trustee and the enforcer, respectively, at the end of the DOT 1.0 term on June 19th.
• Appoint Chaos Labs, Ltd, Flipside Cayman, Ltd, and Christoph Sonn as the 3 new Trustees and Joseph Axisa as the new Enforcer to the dYdX Operations Trust.
• Reflect the Trustee amendment for Joanna Pope to continue being a Trustee under Joanna Pope Consulting Pty Ltd.
• Amend and restate the trust instrument, as necessary, to reflect the DOT 2.0 mandate.

No:

• Reject this proposal.

Copyright

Copyright and related rights waived via CC0.