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.
We also put forward a $2.5 million investment proposal to GnosisDAO. In exchange for this investment, GnosisDAO would receive 1.25% of KPK full supply, valued at $200 million. *A 1.25% GNO-KPK token swap would also be arranged at the same $200 million valuation, with a 5-year vesting period for the tokens.
karpatkey will allocate 5% of its airdrop to GnosisDAO, bringing GnosisDAO’s total stake in KPK to 10% of the fully diluted supply.
Introduction
We’re ending the first three years of karpatkey with many validated learnings and an exciting roadmap.
Our 2022 and 2023 contributions to the GnosisDAO have been essential in developing the Gnosis Chain and GnosisDAO’s treasury, improving the long-term value of GNO.
We’ve become the leaders 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, ENS, CoW, Lido, and Aave. We’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. We have resisted mostly because of our prudent, rigorous risk management approach and long-term sustainable strategies.
We’ve executed +7000 DeFi interactions with zero funds lost or hacked and actively protected our treasuries for +$900m. We’ve improved the risk management infrastructure and tooling for our asset managers, building the foundation for our alpha.
Our past activity has ultimately generated objective knowledge across the Ethereum ecosystem and DeFi protocols, which we’ve used to contribute to the development of roadmaps and building and maintaining structural tooling for non-custodial on-chain treasury and asset management, and risk management infrastructure to secure institutional investment-grade funds.
Having validated our market-fit, it’s time to take karpatkey to the next level.
Like COW DAO and Safe DAO, we intend to launch our DAO spinoff from the GnosisDAO and issue our governance token.
Our 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. We 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.
Our Values
We’ve 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 we behave as a community and help shape karpatkey’s decision-making process:
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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.
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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.
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Altruism: We cultivate long-lasting and 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.
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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.
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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.
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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.
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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.
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Selflessness: The community is above the individual, so when debating internally, we leave our egos outside and let the best idea win.
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Rigour: We acknowledge that our job has greater consequences, so we perform at the highest level of quality, care, and professionalism.
KPK Token
Utility & Supply
The goal of the KPK token is to align the parties actively contributing to the delivery of karpatkey’s mission. KPK will be a governance token to define karpatkey treasury parameters, budgets, OTC deals, buybacks, and M&A deals.
The full supply will be 1 million KPK and non-transferable for the foreseeable future.
Distribution
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Founders/Early Contributors: Initial full-time contributors who invested at a $20 million valuation.
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GnosisDAO Early Investment: $1 million investment at a $50 million valuation in GIP-20.
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Team: 37% of the total Team’s projection has already been allocated to team members (currently under a vesting schedule), and the rest will be distributed to the future team.
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Future Fundraising: Allocated to strategic investors.
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Airdrops: Incentives used to boost the adoption of karpatkey and increase TVL for our future funds.
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Treasury Core Units: Teams working with our Finance Working Groups, not included in the Team’s budget.
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Partners: Organisations contributing to our vision.
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M&A allocation:
- Token swaps with our DeFi protocol treasuries;
- Equity or token swaps for strategic projects building Risk Management tooling, Asset Management infrastructure, and DeFi financial services; and
- Convertible Collateral to source DeFi assets from treasuries for market-making and bootstrapping ETF-like products.
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Treasury Reserve: Used as collateral and liquidity for various purposes.
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 DeFi treasury network we’re building.
GnosisDAO’s Investment and Token Swap
GnosisDAO acquired 2.5% of karpatkey in January 2022 with the passing of GIP-20 at a $50 million valuation. We propose to increment +2.5% ownership through:
- A $2.5 million investment for 1.25% ownership at a $200 million valuation; and
- *A $2.5 million GNO-KPK token swap for 1.25% ownership at a $200 million valuation, with a 5-year vesting period.
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 DeFi treasury network we’re building.
Additionally, GnosisDAO will be allocated 5% of KPK tokens through the karpatkey airdrop. Bringing GnosisDAO’s total KPK stake to 10% of the fully diluted supply.
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 as well as 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 Gnosis DAO. Consequently, this document only describes the token launch process and its technical implementation as currently envisaged.
*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%.
