Though we appreciate the need to push forward promptly here and ensure the hole left by kpk is filled, we would just like to lightly push back on the first version of this RFP, on the basis that it does little to address the problems that the community had with the old structure.
Performance
The proposal says effectively nothing about investment performance, and it definitely does not appear in the “What We’re Looking For”. However, the DAO has repeatedly expressed concerns about poor performance. Here’s one of the strongest examples:
To the extent that many tokenholders are purchasing GNO because of the value proposition of its treasury assets, there is likely going to be firm expectations that those assets should perform well. Avoiding that conversation at this opportune moment will likely lead to more mismatching and disappointment of expectations in the future.
Alternatively, if performance is strictly off the table for this engagement (i.e. it’s operational support, not investing), then we think that should also be clear in the RFP, and made clear to GNO holders as well.
Reporting
The RFP does go into some detail about the outputs of a report process, but does little to set broader expectations about improving standards of reporting. All of the things on the RFP’s list were offered or being developed by kpk, but the problems which led to kpk’s removal are much deeper:
We see this as an opportunity to reset reporting, not reinstate the same formula. We would like to see proper balance sheets of treasury assets, statements on the DAO’s different income streams (including both investment return, revenues from Gnosis products, and special inflows like airdrops from incubated projects). We’d like to see ongoing and active scrutiny of the TM’s work by involved participants of the DAO, not just Gnosis Ltd. We’d also like to see KPIs on incident reporting, that make abundantly clear how long the TM has to report a critical issue.
We’d also hoped that this could be an opportunity to decentralise reporting, having DAO-led reporting with a critical eye that aims to hold Ltd and the treasury manager to account. As is, we’re concerned that the treasury manager won’t even have a direct relationship with the DAO, beyond the selection process (see Fees below).
Though we agree that some level of reporting from a TM is important (as with Ltd), we really feel that TMs have a natural conflict of interest to seek to inflate the figures, and brush the cobwebs under the carpet. We think is the perfect opportunity to change how we think about the DAO’s reporting, and will be disappointed if this function just carries on the same as it always had under a new provider.
Fees
Some of the loudest frustrations with kpk were to do with their fee structure. This moved from expensive to opaque, and the DAO wanted transparency and a stronger alignment of interests. For example:
Though we’re glad to see that this RFP leaves the door open to *“incentive-aligned fee structure”, we feel that a big part of our previous problems were that fees were first set out by the treasury manager and then agreed behind closed doors with Ltd. DAO members wanted a say, and wanted a better deal than they got.
Rather than leaving this entirely open to the treasury managers, we feel that the DAO should have a brief period of consultation, and specify some desirable or necessary elements of the fee structure here, perhaps leaving specific areas (e.g. vesting) open to the managers to propose.
We’re also somewhat concerned to see that the budget is being framed as the last-negotiated kpk proposal. Are we right to think that this $1.5M USD comes from the GIP-128 budget? And in those circumstances, the treasury manager would not be accountable solely to the DAO, but would be tied to Gnosis Ltd’s budget?
Term/Renewal
Finally - and perhaps most importantly - this RFP says nothing about the duration of appointment for any new treasury manager, or how their appointment may be extended. Can this be taken to imply that the TM will have a rolling appointment? Or perhaps that their appointment is subject only to the approval of Gnosis Ltd’s funding?
With kpk having no specific term or renewal expectations, this left them to operate free from the expectation of any defined moments of future scrutiny. Over time, this led to a chasm between the DAO and the treasury manager, which only heightened tensions.
Though fixed terms and renewals often add work or bureaucracy, we feel this is an important lesson to take from the kpk termination. We’d advocate firmly for an initial fixed duration, with an option to extend subject to a mechanism of DAO disapproval.
Final Thoughts
If the breakdown of GnosisDAO’s treasury management over the last year has shown us anything, it’s that the DAO does have strong interests and views on the management of the treasury. Rolling over those expectations quickly and with force seems like a sure way to repeat the same negative outcome. This is an opportunity to change the way that the DAO treasury is managed… we hope the DAO will take it.