GIP-92: Should Gnosis DAO spin-off karpatkey DAO and deploy the KPK Token?
- In Favour
- Against
GIP: 92
title: karpatkey DAO spin-off and KPK token launch
author: <karpatkey>, info@karpatkey.com, https://github.com/karpatkey
created: 2024-02-15
Abstract
karpatkey has led the active DAO treasury management space after becoming GnosisDAO’s treasury manager in GIP-20 and GIP-58. Following the tradition of the sister projects CowDAO and SafeDAO, karpatkey will launch a DAO spin-off and a governance token (KPK), from the GnosisDAO.
This proposal directs karpatkey to deploy the KPK token and allocate 5% of its airdrop to GnosisDAO, bringing GnosisDAO’s total stake in KPK to 7.5% of the fully diluted supply.
Introduction
karpatkey’s 2022, 2023, and 2024 contributions to the GnosisDAO have been essential in developing the Gnosis Chain and GnosisDAO’s treasury, improving GNO’s long-term value.
karpatkey has become the leader in active DAO treasury management and on-chain, non-custodial asset management. karpatkey has established a strong network of DAO treasuries with dedicated finance working groups for GnosisDAO, Balancer, dYdX, ENS, CoW, Lido, and Aave. They’ve also contributed to Uniswap, Spark/MakerDAO, Safe, and Arbitrum by establishing delegate platforms and conducting paid research.
karpatkey has been working in the most adversarial blockchain environment—where any vulnerability is bound to be exploited—and has been exposed to multiple market volatility cycles. They’ve persisted mostly because of a prudent, rigorous risk management approach and long-term sustainable strategies.
karpatkey has executed +7000 DeFi interactions with zero funds lost or hacked and actively protected their treasuries for +$900m. They’ve improved the risk management infrastructure and tooling for their asset managers, building the foundation for their alpha.
karpatkey’s past activity has ultimately generated objective knowledge across the Ethereum ecosystem and DeFi protocols, which they’ve used to contribute to the development of roadmaps and build and maintain structural tooling for non-custodial on-chain treasury, management, and risk management infrastructure to secure institutional investment-grade funds.
Having validated their market-fit, it’s time to take karpatkey to the next level.
Like COW DAO and Safe DAO, they intend to launch their DAO spinoff from the GnosisDAO and issue a governance token.
karpatkey’s Mission
As traditional finance embraces digital assets and onboards assets on-chain, it is imperative that DeFi protocols manage financial resources to maximise token holder value and ensure the capital necessary to maintain a sound, resilient, and innovative ecosystem. Everybody in our industry talks about banking the unbanked. However, nobody talks about banking DeFi protocols.
Banking DeFi is what karpatkey does. They provide financial services to the leaders in each DeFi category, creating network effects and robustness for their users, and the DeFi ecosystem as a whole.
karpatkey’s Values
karpatkey has inherited Gnosis’ commitment to core values like decentralisation, open-source collaboration, and ethically sound contributions to the Ethereum ecosystem.
The following are the principles that guide the way karpatkey behaves as a community member and shape karpatkey’s decision-making process:
- Simplicity: We operate in highly complex and unpredictable environments, so we think first principles and execute at the right abstraction level to reach the shortest path to the solution.
- Focus: We live by the Pareto Principle, so we pragmatically prioritise tasks for maximum short-term output. This means we mindfully choose continuous improvement over delayed perfection.
- Altruism: We cultivate long-lasting, value-based relationships. This requires us to put in the effort without expecting any short-term ROI. It involves shifting the focus from diminished self to collective compounded returns.
- Ownership: We trust each other to do and be more, encouraging and valuing personal initiative. We decentralise decision-making, equipping team members with the information, agency, and confidence to make good decisions for the organisation on their own.
- Collaboration: We care for each other and explore new ways to continually grow our business through teamwork. We learn from and challenge one another, sharpening existing skills and learning new ones. We believe cognitive diversity generates better decisions.
- Curiosity: Status quo is not an acceptable argument—we question concepts and processes to improve. We understand that exploring the possibilities is the only path leading to progress.
- Adaptability: We thrive in uncertain environments by avoiding overfitting and adjusting to short, iterative execution cycles. We assess and experiment rapidly, frequently, and economically, embracing every failure as a learning opportunity.
- Selflessness: The community is above the individual, so when debating internally, we leave our egos outside and let the best idea win.
- Rigour: We acknowledge that our job has greater consequences, so we perform at the highest level of quality, care, and professionalism.
KPK Token
Utility and Supply
The goal of the KPK token is to align the parties actively contributing to the delivery of karpatkey’s mission. Tokenholders can vote on key decisions, such as treasury management, budget allocations, and strategic initiatives like buybacks or M&A activities, to ensure alignment with thier mission and long-term sustainability. The token’s utility is focused on facilitating community-driven decision-making and fostering an active, engaged ecosystem.
How does GnosisDAO benefit from this proposal?
GNO token holders benefit from substantial ownership in karpatkey thanks to GnosisDAO’s investment, a future airdrop proportional to the GIP-20 and GIP-58 expenditures, and by being a leader in the ecosystem within which they’re building their DeFi treasury network.
Disclaimer
The plans outlined in this proposal are for discussion purposes only and can be subject to further changes. They may also need to be (re)structured to account for legal, regulatory, or technical developments and governance considerations. This document should not be construed as an offering of securities, taken as the basis for making investment decisions, nor be construed as a recommendation to engage in any transactions. You are solely responsible for your own investment decisions and transactions.
The decision to spin out karpatkey and to launch a KPK token lies solely with the GnosisDAO. Consequently, this document only describes the token launch process and its technical implementation as currently envisaged.
The term “banking DeFi”, as used within karpatkey’s organisation’s proposals and materials, refers to decentralised finance (“DeFi”) protocols and platforms that offer services akin to traditional banking functions in a decentralised manner. However, it is crucial to note that in the context of Decentralised Finance, the term “banking” does not carry the same connotations, regulatory oversight, or institutional framework as it does in Traditional Finance.
Users and stakeholders need to understand that “banking DeFi” platforms operate within the decentralised, permissionless, and often experimental nature of blockchain technology, which presents risks such as smart contract vulnerabilities, regulatory uncertainties, and market volatility.
They encourage users to seek independent financial advice and to assess their risk tolerance before participating in any decentralised finance activities.
Specification
This proposal directs karpatkey to deploy the KPK token and allocate 5% of its airdrop to GnosisDAO, bringing GnosisDAO’s total stake in KPK to 7.5% of the fully diluted supply.
Following the passing of this proposal:
- The KPK token will be deployed by the karpatkey team, thereby establishing vesting plans for the 2.5% KPK allocation from GIP-20 (2y, already vested) and creating additional vesting plans for the 5% KPK allocation to Gnosis DAO (1y cliff + 2y vesting), equal to the terms applicable to the participants in karpatkey’s 2024 investment round.
Additionally, and to address funding requirements, this proposal recommends that:
- GnosisDAO defers investment in karpatkey’s last funding round in exchange for prioritising the funding of Gnosis Chain and Gnosis Pay. The GnosisDAO should continue to participate in future rounds, and karpatkey’s GNO purchases should resume after future funding rounds.
Proposal Update History
Update September 2024 - Modifications to GIP-92 phase-2
The initial proposal called for GnosisDAO to invest $5M in karpatkey through a $2.5M stablecoin investment and a $2.5M GNO-KPK token swap.
However, given the current market conditions and the undervaluation of GNO, we propose replacing the token swap with a $2.5M USDC investment. To reinforce our commitment to GNO, karpatkey will allocate 10% of its total revenue over the next 12 months to purchasing GNO in the open market, which we estimate will add +$2M GNO to our treasury. Purchases will be made at our discretion and included in monthly reports to maintain transparency.
The final GIP-92 structure consists of a $5M investment for 2.5% ownership at a $200M valuation, with an additional 5% ownership through an airdrop, totalling 7.5%. The total ownership of the Gnosisdao will amount to 10%.
Update December 2024 - Modifications to GIP-92 phase-2
- To address funding requirements for Gnosis Chain and Gnosis Pay, we recommend that GnosisDAO prioritise funding these projects, defer investing in karpatkey’s 1Q 2024 funding round, and participate in future rounds. karpatkey’s GNO purchases will commence after future funding rounds.
- GIP-92 proposes deploying KPK, establishing vesting plans for the 2.5% KPK allocation from GIP-20, and creating additional vesting plans for 5% ownership starting at TTE or one year after the execution of GIP-92, whichever comes first.
Update February 2025 - Modifications to GIP-92 phase-2
- Proposal Specification updated to reflect updates communicated December 2024.
- Disclaimer Language Updated.
