GIP-128 Should GnosisDAO fund Gnosis Ltd with $30m/ year?

[ernst]

Thank you for the trust you have in us! Let me try to address the questions one by one:

@staworth

As @Sam_Trust mentions above, we’d like to know how you see value creation accruing to GNO. Will profits from Gnosis Ltd’s activities flow back to the DAO? Or do the assets generated by Gnosis Ltd’s work belong to or remain held for the benefit of the DAO? Or maybe do you expect that Gnosis Ltd’s activities will lead to future inflows from third parties to the DAO (like how token distributions from spinoffs have previously grown the DAO’s treasury)?

Gnosis Ltd is the company that develops the dapps, but usually they are hosted/ operated by a different entity, depending on the nature of the service and regulatory setup. The metri interface, for instance, is hosted by Gnosis Ecosystem (Cayman) Ltd, Gnosis Pay is based out of the UK and Portugal, etc. How revenue is collected/ funneled into the DAO varies case by case. For instance, fees that metri collects in CRC are passed on to the DAO directly, whereas Gnosis Pay revenue is already part of the 8m budget. Projected revenues for Gnosis Pay are just above 1m, but costs are 9m. That being said, there are no shareholders, or if there are, they cannot extract value. The idea is that all profits are collected in the DAO.

I wouldn’t exclude the possibility that the Ltd undertakes other work (for instance, it has received a grant in the past from the EF for maintaining Open Ethereum, an Eth 1 client). Such revenue would not necessarily flow to the DAO directly, but since there are no shareholders,

@staworth

This fact has a few interesting connotations for the formal relationship between the DAO and Gnosis Ltd:

• Typically, these companies have members but not shareholders. Is the DAO a member of Gnosis Ltd? And can it be disclosed who (if any) the other members of Gnosis Ltd are?

The DAO is not incorporated and thus cannot be a member. DAO members are the previous directors. Let me check whether this is public info, I assume so. I will revert!

@staworth

• Do any of the company’s foundational documents (e.g. articles of association) enshrine a role for the DAO? For instance, the articles could require that any surplus assets upon the unwinding of Gnosis Ltd must be sent to the DAO.
• Where neither of the above questions confirm any formal role for the DAO in Gnosis Ltd, is there anywhere else in the company’s formal arrangements where the DAO is given an explicit role? And if not, then who or what in a legal sense are the ultimate beneficiaries of the company activities?
• Is it possible to publish or share a summary of the company’s foundational documents?

No, the only explicit purpose of Gnosis Ltd is to further the Gnosis ecosystem. This is somewhat broad, but also allows more room for flexibility should anything happen with the DAO for instance. Once again, it’s balancing navigability and trust. Ideally, there would be (and hopefully at some point will be!) several Gnosis Ltd size entities servicing the DAO under different leaderships for different undertakings.
Let me check whether the foundational docs are public. If so, happy to supply them!

@staworth

• Will the DAO be given any insights into Gnosis Ltd’s revenues, profitability or balance sheet?
  • On a first glance, readers might expect that the $30M of funding represents Ltd’s full annual spending. However, it’s possible that further spending (or saving/earnings retention) may be taking place beyond the DAO’s funding, driven by revenues or the existing assets of Ltd. We would love to see the proposed quarterly reports be as comprehensive on the financials of Ltd as you reasonably can be!

The Ltd transferred all transferrable assets to the DAO. There are some illiquid positions, but nothing very significant. The Ltd has no significant other sources of revenue at the moment. We will definitely be reasonably transparent!

@staworth

• Do you have a view of what a “DAO review of outcomes” may look like at the end of this 12-month proposal?
  • In an ideal world, we’d like a review process to be defined at the offset, so that it flows through the funding period. The worst scenario for a review would be if the definition of a process is left to the end of the 12-month period (when more funding is then required in short order), and must then be dealt with hastily.
  • Personally, we’d love to see the DAO elect a small review committee directly after this proposal that would meet with Ltd throughout the year, give feedback on the quarterly reports and ultimately deliver their own annual review report assessing Ltd’s progress against the requested funding.

We will give quarterly updates, and would also be happy to do update calls with significant GNO holders/ representatives!