Gearbox DAO

Summary

The OBRA framework, which stands for Outcomes-Based Resource Allocation, was implemented by Gearbox DAO in February 2023 and has performed well so far. This proposal aims to extend and refine the framework, as well as set the budgets for the upcoming cycles. You can view the initial vote and details here (archived on the Wayback Machine since discussions moved to Discord afterward).

Motivation

Gearbox Protocol has grown to over 15 contributors, with more than 70% being developers, and has established several ongoing processes, including collateral onboarding, security monitoring, marketing efforts, development, and events. To scale more efficiently, there are two options: either implement a hierarchical structure (similar to traditional companies with top-down leadership) or attempt to parallelize processes, making them decentralized.

Since processes like development, deployment, and collateral onboarding don’t need to be synchronized, a leadership overhang is unnecessary. There is no one leader or one group leader.

That is what OBRA aims to achieve.

Specification

General Initiatives Framework

Given the transparent nature of DAOs, the OBRA framework was identified as a better fit in 2023, and it has operated smoothly so far. It is now prudent to solidify its scope and extend its use. By organizing contributors into initiatives rather than fixed roles, various tasks can be carried out in parallel without relying on centralized planning.

Think of it as a foundation that issues grants for various initiatives—research, marketing, events, community support, etc.—none of which depend on each other or a central authority. There is no concept of a central boss or CEO. Anyone can join an initiative, create one, secure a budget, and try to run it. But how do we ensure that funds are not misused? This is where the OBRA framework, outcomes-based resource allocation, comes in:

• Align on Vision and Goals: Not to centralize planning, but to decide on budget allocations through the OBRA vote.
• Open Forum for Initiatives: Allow anyone to propose new initiatives or replace existing ones, with approval by DAO vote.
• Cycle-Based Funding: Split deliverables into quarterly cycles and fund them accordingly.

If the work is completed, the initiative continues. If the work is not done or is unsatisfactory, the DAO can vote to discontinue the initiative. In the worst-case scenario, the DAO incurs no big loss, as it only funds initiatives in tranches, not a year in advance.

This structure eliminates the need for a central boss or leadership, avoiding the pitfalls of centralized company models, which DAOs do not. Instead, it operates with multiple concurrent grants and grantees and periodic grant installments.

Some of the details can be found in Notion, explaining different initiatives and their members. See in Notion.

Initiative Budgets

Each initiative functions independently. It can consist of one person or multiple people. They manage their budgets as they see fit while being accountable and transparent about their financials. It’s up to the initiative members to decide who gets paid and how much. This approach allows developers to determine audit budgets independently by themselves.

Initiative Bonuses

Not all initiatives require bonuses. For one-off service provider grants, bonuses are usually outside the scope but can be considered on a case-by-case basis. During a test period (3 months), no bonuses are awarded. However, if a contributor remains within an initiative beyond the test period, they can receive the bonus retroactively according to the chosen schedule. This ensures there’s no downside for contributors who stay on board.

New Contributors Bonuses

• Option 1: Receive tokens per month based on a 0.5x ratio with USD compensation. The $150M FDV benchmark remains intact. Vesting terms include a 3-month lock followed by 12 months of linear vesting, similar to the current arrangements.

• Option 2: Opt for a 1x token multiplier at a $150M FDV, with no liquidity until +12 months after the start. At that point, a 12-month linear vesting period will commence starting from that date, so 12+18. This option requires a full year of committed contributions before vesting begins, offering a larger reward in exchange for delayed liquidity. If you choose to leave early or fail to meet performance expectations and are laid off, the bonus is reduced to a pro-rata amount, with a multiplier of 0.3x instead.

Old Contributors Bonuses

Old Contributors is every initiative member onboarded before the start of 2024. That means, everyone in the table mentioned except Arkhip, Petr, QADaria, and Ilya desnake. They have been onboarded in 2024. Every new member onboarded also only qualifies for New Bonuses structure.

• Option 1: Receive tokens per month based on a 1x ratio with USD compensation. The $150M FDV benchmark remains intact. Vesting terms include a 3-month lock followed by 12 months of linear vesting.

• Option 2: Opt for a 2x token multiplier at a $150M FDV, with no liquidity until +12 months after the start. At that point, a 18-month linear vesting period will commence starting from that date, so 12+18. This option requires a full year of committed contributions before vesting begins, offering a larger reward in exchange for delayed liquidity. If you choose to leave early or fail to meet performance expectations and are laid off, the bonus is reduced to a pro-rata amount, with a multiplier of 0.4x instead.

The 1.25x bonus option will not exist anymore starting with the new 2025 period. GIP-89 is what is being referenced on the previous changes.

DAO Goals

The general DAO goals can be discussed extensively. For the sake of the proposal, one could abstract them into these concrete goals:

Maintaining the current protocol and products:

• Monitoring tools and upkeeping security practices;
• Interface development and improvement;
• Listing new collaterals and adjusting limits;
• Backend and infrastructure tools; Improving the protocol and adding new features to it:
• Developing new adapters and core protocol improvements. Increasing the brand recognition and user base:
• Community support and activities;
• Cross-community marketing and content creation;
• Online and offline marketing;
• High-level BD and institutional relationships. Legal and operational:
• Legal framework and support;
• Grants operations maintenance.

New Cycle Initiative Budgets

The budgets are tentative, based on the current and approximate forward-looking expenses.

In addition to the above, the Foundation can also perform activities and tap into budgets where applicable, for example, GIP-138. That GIP also clarifies the budget for Chaos Labs, which has a floating rate and is explained in detail in there. Overall, GIP-138 stays intact.

Infrastructure Grant GIP-84 is now mostly done via the GEAR DAO since it is real-world services spending. Crystal is referring to a KYC-AML solution that the Foundation advised to have, its costs are factored into the Legal and E-Services too. Nerd Labs in this context includes Rising Vista FZE LLC and a couple of other contributors under it. The exact spending and the multipliers for each initiative are communicated often in monthly transaction reports. VIBES budgets vary on separate votes, no pre-made budget as such.

You can see that each initiative has a budget comprised of compensations per contributor. The concrete compensations are available on Notion and can be also tracked onchain via recurring installments. There is a surplus in each initiative that the members can utilize to adjust compensations without having to redo a vote fully, based on the opinion of an initiative leader (if one exists). This way, small expenditures on initiative-related matters can be executed. It can also be spent on HR, for example, if such is needed to scale an initiative.

Reporting and Addresses

Monthly spending reports are posted on Notion and can be accessed here. The addresses for each initiative are managed independently by the members within those initiatives.

This also applies to other data, such as a notification about the token payment scheme chosen by the contributors (coefficients from option 1 or 2 and their values).

Future Considerations

The proposal, along with the responsibilities and risk limits of initiatives, could be further enhanced by establishing a formal DAO constitution, similar to the one set up by ENS DAO. This would further solidify the framework and make processes even more transparent and accountable. DAOBOX Inc. is equipped to make it possible and manage those legal matters.

The Authority of the Gearbox Foundation

By this resolution, the DAO confirms that the Gearbox Foundation has the authority to make agreements, take actions, and enter into transactions as they see fit to carry out the decisions made here, as long as it makes sense and is appropriate in the circumstances.

Next steps and timelock

If this framework is approved, the changes will be implemented immediately. Since this proposal was for discussion for an entire month, this is not a new topic. If approved, it will reflect September compensations already. If not, discussions will continue to refine the proposal.