We appreciate this update memo and the modifications put forward. karpatkey has had an exceptional year with more and more wins coming each month, and we believe it’s fantastic for GnosisDAO that another incubated project is thriving and delivering value back to this community.
Critical Feedback
Further to @gno-investor 's critical feedback above, our feeling is that the basic 10% allocated to karpatkey is reasonable, in view of (i) the amount invested in karpatkey to date; (ii) the success that karpatkey’s had from its engagements both with Gnosis, Gnosis ecosystem projects and other large DAOs across the industry; and (iii) karpatkey’s rapidly improving financial position.
So we took on all the risk from the beginning and have very little upside
With respect, it’s hard to agree that the karpatkey team didn’t take on any risk here. They threw their entire livelihood at supporting GnosisDAO at a time where it was not clear how that would turn out. Now that they’ve had enormous success, it’s easy to say that the risk profile was obvious in hindsight. In reality, we believe the vast majority of karpatkey’s success comes from the work of its teams.
This critical feedback also seems to ignore a few of the other benefits that can be gleaned from karpatkey’s update here:
The token swap element is good for GNO and increases karpatkey’s “skin in the game” in GnosisDAO, meaning more alignment between the two;
karpatkey have amended the proposal to adjust for GNO price decreases, ensuring that the same USD value is reflected in the investment, avoiding a decrease in the value of their investment that would have occurred otherwise;
karpatkey have committed to devoting 10% of revenue to purchasing GNO tokens, again increasing alignment between the two;
the new $200m valuation announced in this post reflects a significant increase on the original value of Gnosis’ investment in GIP-20 of $50m. That’s a 3x return, or >63% CAGR on the initial investment. Clearly GnosisDAO has done well out of this investment.
For us, the real point of this proposal is that GnosisDAO has an opportunity to expand its share of karpatkey’s success at a decent valuation. If karpatkey’s trajectory continues as it has, the addition $5m investment may prove even more successful than the initial $1m has done to date. We strongly support these plans and look forward to further updates.
Hi gno-Investor,
I want to provide some critical context around the inception of karpatkey and the timeline of GnosisDAO investments that your response has not considered. Unlike Safe and COW, GNO token-holders took no risk or financial burden to bootstrap karpatkey.
At its beginnings, karpatkey was entirely self-bootstrapped by its members, and I was the largest angel investor. Because we believed in GnosisDAO, we willingly assumed large financial risk by hiring contributors even before we had revenue. During the early stages of GnosisDAO’s creation, karpatkey operated without income for several months. GIP-20 (3% performance fee) didn’t cover costs for many months, and we endured losses during the last 2022 bear market.
GnosisDAO’s investment came only after karpatkey had already become profitable with a team of six. It’s important to note that Gnosis didn’t contribute to our hiring, provide technical resources, or offer financial expertise—our core business. Additionally, karpatkey assumed regulatory risks that Gnosis was not prepared to take.
That said, we remain deeply grateful to Martin, Stefan, and Friederike for their early endorsement and guidance, which were instrumental in helping karpatkey build relationships with other DAOs and grow into the largest treasury manager in the DeFi space. I believe karpatkey owes much to them. However, since they won’t personally receive an airdrop or team KPK tokens, we’ve extended highly favourable conditions to GnosisDAO to honour their contributions.
Lastly, the team will not control the allocations. I assure you that only 25% of the total allocation will go to the team. This is a public commitment we take seriously. If any additional tokens are to be considered for the team, they will be subject to a DAO proposal for approval.
Gnosis Guild is in full support of this proposal and the recent updates. We look forward to this exciting milestone and the continued growth of karpatkey!
What Karpatkey has done from the outset, in his individual career but also with his strong links with Gnosis and its ecosysteme, is remarkable and must be underlined.
This proposal update is a strong testimony to this, I support this approach and look forward to hearing more about it.
Thank you all. This is Majed from Forteus Asset Management, a holder of GNO tokens.
Just so that everyone is on the same page, GnosisDAO owns 10% of Karpatkey at an average valuation of X. This was obtained by :
$1m investment in KPK at 20% discount of $50m FDV, i.e. $40m. This is now worth $5m at latest seed valuation of $200m. = 2.5%
$5m investment at $200m FDV. =2.5%
5% airdrop to GNO = 5%.
Thus we own 10% of the KPK for $6m implying a cost base of $60m FDV. This seems reasonably generous.
Some questions I have include:
What is the divestment approach for GNO if any? I believe SAFE has set a precedent here ensuring that GNO should only control <7% circulating supply of any incubated project.
It is great to see monthly revenue numbers clearly trending upwards, what does the expense/cost base side of the equation look like? This is important given the 10% commitment will clearly occur after operation expenses (overheads /salaries etc). Or should this actually be thought of as monthly profits?
What does traction look like for the new funding round? And where do you think it’ll price at?
Overall, think this is a very well structured proposal. The DAO receives:
A front-seat in the private rounds for their capital at a $60m FDV
As a token of good faith GNO will also receive 10% of monthly revenues which the team implies at $1.6m / month in the form of buybacks
This proposal has undergone ten revisions before being abruptly pushed to Snapshot. Which of these eleven versions aligns with the forum poll?
The structural changes appear significant, yet the last meaningful discussion took place in October 2024 – nearly six months ago.
Will the token be listed on any centralized exchange upon deployment? Additionally, will there be liquidity provisioned on Gnosis Chain?
The proposed $2 million in GNO buybacks represents less than one-third of the fees you charge GnosisDAO. Would it not be more prudent to simply forgo these fees and allow the DAO to determine the optimal allocation of its resources? Moreover, given that you are also conducting GNO buybacks, how do you reconcile purchasing GNO for yourselves while simultaneously executing buybacks on behalf of the DAO? This presents a clear conflict of interest IMO.
The token will not be transferrable at TGE, therefore not immediately listed on centralized exchanges.
Liquidity provisioning will be a topic discussed by the karpatkey DAO nearer to the time of token transferability. It’s worth noting that the token will be deployed on mainnet, but we expect that our long-standing relationship and commitment to Gnosis Chain be reflected in decisions where the chain would benefit.
It’s important to clarify that the specification of this proposal does not mandate a buyback program. The “historical updates” were included for continuity and record. The September update mentioning investments and buybacks in relation to this proposal should be considered superceded, removed from the main body and are no longer terms of this proposal.
We want to draw attention to the specification of this proposal, which signals that GnosisDAO should receive a combined total of 7.5% ownership of karpatkey DAO. Voting in favour of this proposal helps ensure that Gnosis is allocated an additional 5% on top of the 2.5% ownership specified in GIP-20.
Anything outside of that specification, previously discussed or otherwise, is not a part of this proposal.
I am not voting on this proposal. Not even abstaining as it merely fails to follow the typical governance structure.
Can we, in general, not just for this proposal, agree that proposals, when revised, should be subject to the proposal guidelines and properly discussed before moving them to the snapshot?
People voted on the forum voted based on previous iterations of the same issue. Hence, the current version does not warrant sufficient approval necessary to move it to snapshot for token voting.
Or we can just go on and treat Gnosis governance as a joke like most of the recent proposals.
I have to say, this entire process is quite confusing. You haven’t clarified which version of the proposal the forum poll is based on—I assume it’s the first, before undergoing ten revisions?
More importantly, what is the actual purpose of this proposal if GnosisDAO isn’t investing, conducting a token swap, or taking any other action? You’re unilaterally deploying the token on mainnet and establishing vesting plans. So why does this require a GIP?
If the GIP fails, does that mean the token deployment won’t proceed? Or is this just a symbolic step with no real impact?
Just to be clear, I believe 7.5% for a DAO that has likely represented over 90% of your lifetime revenue is absurd.
hey mert - agree with your feedback that there should be more discussion after a GIP is revised this many times but republishing revised proposals as new Phase 2 GIPs is not a requirement. The governance tutorial actually describes making edits to the original post as the standard process.
Instead of letting the proposal fail and revising it once again, GIP-92 was moderated from Snapshot. We invite the proposer to re-issue a GIP that more clearly defines the outcome of the proposal. The governance process requires including version history and proposal changes in the original post and discussion of the GIP. The Snapshot proposal was published with a link to GIP-92 on the forum.
I think this makes sense, to avoid noise, but the issue seems to be what happens with the forum poll. Proposals cannot pass to phase-3 without a majority forum poll support (this disagrees, but I assume it’s superseded by this). But the processes don’t seem to cover the case where proposals are edited after the forum poll closes with support.
Intuitively, it seems like edited proposals are new proposals from an approval standpoint. Therefore any edits after that time should occur in the same forum thread but a new poll should be created each time. But currently that’s not specified.
Of course the simplest and most robust (from a governance perspective) process is that edits can only be made during Phase 1. What passes to Phases 2 and 3 is then voted on without further edits. But I appreciate reality requires something more dynamic than that.
yes, totally agree. after GIP-92, the HQ proposal and many other ‘redo’ GIPs, proposals that are revised need a fresh new GIP # and post so that we can address the point you’ve brought up.
to that end, a revision to GIP-92 was just published as GIP-121. Please check it out and cast your vote in the poll!
