GIP-38: Should GnosisDAO fund a Gnosis Chain ecosystem growth initiative?

GIP-38: Should GnosisDAO fund a Gnosis Chain ecosystem growth initiative?

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GIP: 38
title: Should GnosisDAO fund a Gnosis Chain ecosystem growth initiative?
author:@gnostics
status: Phase 2
type: Funding
created: 2022-04-11

Simple Summary

The GnosisDAO should fund a concerted ecosystem development effort to support developers and projects building on the Gnosis Chain with investments, grants, technical supports, business development and marketing.

Abstract

Gnosis DAO will spend at least $268M to accelerate development, adoption, and growth of the Gnosis Chain and Ethereum. In the first three years:

  • At least $168M will be committed into a venture fund to invest in projects or companies building on Gnosis Chain.
  • At least $80M will be allocated to ecosystem grants, business development, PR/marketing, user onboarding, developer experience, etc, with the goal of accelerating Gnosis Chain adoption.
  • Additional 300K GNO will be put aside for team incentives based on future GNO prices, where proposed team and future hires will receive the majority of the incentives when GNO reaches 2,400 in USD and 0.7 ETH.

Motivation

Objectives

  1. Achieve ubiquitous awareness of Gnosis Chain, platform narrative, and value proposition
  2. Expand mindshare and engagement with developer communities
  3. Enhance developer and user onboarding experiences
  4. Grow developer and user adoption through investments, marketing and business development support

Success Metrics

  1. Quantitive
    1. On-Chain
      1. Transaction Volume
      2. Unique active wallets
      3. Total Value Locked
    2. Ecosystem
      1. Number of application
      2. Number of developers
      3. Active Users
  2. Qualitative
    1. Developer Satisfaction
    2. User Satisfaction
    3. Social Media Sentiment

Specification

The fund investment follows a standard term of 2/20 (2% management fees and 20% carry) and the capital calls will be scheduled three times (May 2022, Jan 2023, Jan 2024) for $56M in each along with the management fees.

The development grants will be allocated to infrastructure building blocks, technical research as well as educational initiatives to on-board 3rd-party developers.

Monthly reports will be provided on key metrics, grants, and investments.

More details can be found here: gnosticism-spec.pdf

Rationale

  • Catalyze a vibrant ecosystem of DApps and chain activity: a viable network is created from thousands of DApps built by early stage ventures and attracting foundational projects to deploy on Gnosis Chain.
  • Fund public goods infrastructure: dev tooling, faucets, testnets, education and technical support are needed to achieve chain-wide developer and user adoption.
  • Capture upside in Gnosis Chain startups: $GNO token holders benefit from capturing upside in equity and token holdings that belong to Gnosis DAO.
  • Sufficient firepower to catalyze ecosystem: with a competitive landscape for EVM sidechains, the competition for developers and projects is fierce. Other similar chains have announced over $2B in recent ecosystem funding initiatives.

Implementation

Initiatives

  1. Venture Fund & Studio: Support and incubate projects through funding, governance participation and advisory
  2. Grants Program: Fund public-goods research and open-source development
  3. PR/Marketing: Promote awareness of Gnosis Chain and ecosystem projects
  4. BD and Partnerships: Cultivate value-creation through collaborations and partnerships in the ecosystem
  5. Developer Experience: Enhance the developer experience with better tooling, education and technical support

Strategies

gnosticism-deck.pdf

Budget

Gnosticism will spend approximately $268M over three years to accelerate development, adoption, and growth of the Gnosis Chain and Ethereum:

  • At least $168M will be committed into a venture fund to invest in projects or companies building on Gnosis Chain.
  • At least $30M will be used to establish the Gnosis Ecosystem Grants to provide educational and financial support to new web3 developers, open source contributors, and blockchain researchers.
  • At least $50M budgeted for marketing, business development, developer experience, branding, events, media relationships, and other roles and activities with the goal of accelerating Gnosis Chain adoption.
  • Additional 300K GNO will be put aside for team incentives based on future GNO prices, where proposed team and future hires will receive the majority of the incentives when GNO reaches 2,400 in USD and GNO/ETH reaches 0.7.

Reporting

Reports will be provided on a quarterly basis, as well as some dashboard-style reporting on key metrics.

8 Likes

This is quite a big up-front ask and a significant investment of the GnosisDAO. Why not first start with smaller ambitions and a smaller timescale and then have the GnosisDAO double down in case the community is happy with the results?

At current GNO prizes this would total up to over $400M. Quite frankly, for this I would expect a bit more than a 13-slide purely text-based pitch deck and a short proposal.

17 Likes

Hey, thanks for this proposal.

This seems to be quite the ask without really knowing who is behind this, their experience and possible track record that could be relevant to running a 9 digit operation to help the Gnosis ecosystem.

I would start with questions about the team behind this initiative

  • Do they have a history of successful venture investment? picking founders, incubating projects, assisting in collateral outside of Funds?
  • Do they have a history of running successful grant program, track record in business development, marketing, etc.
11 Likes

I basically have to echo Luka’s and nylon’s concerns. While the basic thoughts are appealing, I would expect a more detailed plan and more information about the team for such an ask to better assess how bullish I am regarding the execution of the strategy.

2 Likes

Thank you for posting the proposal @gnostics team!

I am personally very much in favor of the proposal but I understand the criticism in the replies by @lukas_gnosis @nylon and @xelotpyrc.

This is quite a big up-front ask and a significant investment of the GnosisDAO. Why not first start with smaller ambitions and a smaller timescale and then have the GnosisDAO double down in case the community is happy with the results?

The competition among different L1s is very strong. In order to remain competitive significant resources have to be allocated. The amounts are still relatively small compared to many other funds created for other networks such as Polygon. We have to think big and we have to think about longer timeframes of multiple years. The reason why I support the proposal is not the concrete current specification but the team behind this proposal, which I think is very well positioned to execute this ambitious plan very successfully.

We could also explore leveraging capital from other sources as LPs. If the setup allows, we could allow others to participate in the venture activities, which would reduce the exposure GnosisDAO has.

This seems to be quite the ask without really knowing who is behind this, their experience and possible track record that could be relevant to running a 9 digit operation to help the Gnosis ecosystem.

We know the team for several years and know their track record of successful operations. I see it as a unique opportunity for GnosisDAO to complement the very strong technical team driving Gnosis Chain currently with business and venture expertise.

I hope the identity of the team can be revealed soon. For now, they are anonymous for different reasons but will obviously be known once the operations start.

6 Likes

The questions posed are all quite reasonable for an unsolicited proposal from an unknown team. There are valid reasons why a team might value discretion during this tentative period, much as a candidate for a position might not want to post their c.v. in a public forum.

We should update the proposal to reflect that many DAO members could be counted as co-authors or instigators, and that we’ve been working with the DAO and some of the community for a few months now.

Those with good ideas for small bets over short spans should share them here, send us a message, or, if this proposal passes, reach out for funding. But we will also invest in longer-term and more ambitious ideas. Likewise, there are many great talents that we could welcome to the frontier but are not yet used to the idea of making a living through a series of online forum proposals. If this proposal passes, there will be an entity with a few years of funding that can bring some of those people into the fold.

But $400M? There exists an embarassment of nine-figure ecosystem funds that might lead one to wonder how is it that so many projects have such large funds, and what about this ecosystem? Another comparison could be the many proposals to burn millions of tokens. Is it outrageous to spend a tenth part of the burn on building?

4 Likes

The thoughts on competition with other L1s and the scale of ecosystem funding are absolutely understandable and desirable. However, it is problematic that $400M in funding is supposed to go to a centralized team whose track record seems to be known only to Gnosis management. It is debatable to what extent this is compatible with the concept of a DAO and whether the problem of identity disclosure should be addressed as a fundamental governance problem:

  • Why should all ecosystem funding go to one team, instead of separate teams of experts taking care of ecosystem development in their respective subject areas?

  • Should all communication within the GnosisDAO be completely transparent or should part of the communication only be visible to GNO token holders, so that contributors can talk more openly about sensitive information?

3 Likes

From a treasury perspective, the expenses requested are <$20MM for the first year as the rest of the funds are investments with a positive expected impact for the treasury.
There are several ways of financing these expenses without selling ETH or GNO and keeping risks low so the funding part is solvable.

I understand the team has experience running high-profile, successful projects in the past and the initiatives proposed are really needed to realise the GC’s vision, so I support this proposal.

1 Like

I am sure that the team is thoroughly vetted by the GC core team and that there has been many more in-depth discussions behind the scenes that are not apparent by this proposal. I also fully trust in the judgement of Stefan and Martin. I also very much agree with the rational / problem statement behind this proposal.

Yet the way this proposal is made is just not very elegant. As I am not sure what is actually expected from the community here.

1) Community should just trust the core GC team. Given that there are public approvals by core team members, voters mainly just vote in terms of their confidence in the team making a solid decision with the additional insights those members have.

→ This seems to conflict with the idea of decentralised governance, where there is no need to trust in a central management team required for decisions of this magnitude. It also doesn’t feel particularly empowering. I’d wonder if this is actually necessary and whether we might come to a similar outcome while embracing more transparency, diversify the responsibility to multiple teams, or involve the community more in navigating the solution space.

2) Community should use the information provided in this proposal to form an opinion whether this endeavour is worthwhile.

→ For this I would wonder how the author(s) could think that the information provided above would actually be enough to make an educated decision. This makes me feel that if this team puts the same level of effort into the execution of the project like they did into this proposal, then this is destined to fail. Just from the public information provided in the proposal, I have no indication that this is in any way money well spent or a competent team. In fact, given that there is no hint on who’s behind this, it might as well be a scam/money grab. Again, this is assuming only being limited to the information put forth in the proposal, not in any way implying this is the case.

10 Likes

In mean it was several times mentioned that this proposal doesn’t seem to follow a real DAO where the members should decide on a proposal while knowing all the details.

The question I have to your comment is why we don’t have multiple proposals, where the first proposal proposal is for the first 20 million and then there are more proposals in the future for the follow up. (@lukas_gnosis proposed this too in his initial comment)

Is there a way to build trust in the investment team before the vote will happen?

In my opinion a vote, without more information, which is primarily driven by a couple big GNO holders, would harm the DAO quite a lot as it would open up the question about how decentralized this organization really is.

2 Likes

Ofcourse its better to spend 10% on building rather than to burn, but the question remains if it really is used for building. Also yes, there are L1s that have more budget than this proposal. But what I like from GNO is that the focus is more on quality and infra instead of on marketing (like Polygon and Solana).
So, as some mentioned its hard to see what the exact plans are and maybe it would be better to share some more insights on how you are going to complement the Gnosis team for this kind of investment. For example we as GNO holders dont even know how big your team is.

2 Likes

A large gap between an ideal future and what can be done today can be discouraging, or, as we hope, it can motivate progress.

Safe, Cow, and Karpatkey are teams that, in a sense, all started under the same roof but are now more independent. We see this proposal as similar in spirit, where a spark from the DAO gives life to another group that brings incremental diversity to the ecosystem.

Projects or ideas that now have the existing options of submitting a proposal to the forum and various other sources will still have all those options in addition to new funding options that follow from this proposal. Some comments suggest this proposal somehow reduces or limits others, but it should only lead to more opportunities for ecosystem funding than exist today.

A transparent market process is usually preferable, but there are many situations where no such market exists and what benefits the DAO requires a negotiated agreement. In those cases, even if the results of a negotiation will be public, it can be impossible to get very far if all intermediate discussions also have to be in public.

This proposal snapshot will be running while the burn proposal snapshot is also live. Here’s to growth.

I really like the overall idea and the proposal in general, I think an investment fund can be really succesful for the chain. If you look at something like Tendermint from Cosmos, they kickstarted a lot of the popular projects with their investment fund. With the rising competition you need to attract the builders.

1 Like

$720,000,000.00 for the GNO team/future hires or for the anonymous team and their future hires?

What is the “majority of incentive’s”?

$450,000,000.00?

$500,000,000.00?

$680,000,000.00?

2 Likes

So, this proposal sounds great for me, maybe a little too abstract.
The only problem for me, is that I don’t understand where will go the 300k GNO. they will go directly to an anonymous team, without any vesting period? This is at least a little strange for me.

2 Likes

This PDF gives more clarity: https://ipfs.io/ipfs/bafybeig3s6wjw2z5f4oihusd2ac5ymehme2uxd32wh7ak7gg2thvupbxke/gnosticism-spec.pdf

2 Likes

For how long and on which exchanges/oracles will these price targets have to be met for the incentives to be paid out?

For a period of 30 days using the most liquid exchanges (today it would be Uniswap and Balancer).

1 Like