Should GnosisDAO invest in Hydra Ventures DAO?

Governance
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Hi Gnosis community, my name is Shawn and I’m a founding core team member of Hydra Ventures DAO.

Hydra Ventures DAO is the world’s first fund of funds investment DAO and we are seeking a $1M capital contribution & investment from GnosisDAO. Hydra will invest in and incubate top-performing investment DAOs, and grow the entire investment & service DAO ecosystem. See our whitepaper and deck for more details.

Who is the Hydra core team and are initial capital contributors?

Our core team includes pet3rpan, Victor Rortvedt, Larry Florio, Danny Carpio, Shawn Dimantha and Ben Middleton. Our team spans the web3 ecosystem with members hailing from 1kx, MetaCartel Ventures (MCV), Thing3, and Gitcoin / Kernel. Our anchor capital contributors are 1kx, Wicklow Capital and Collab+Currency.

Why invest?

A large part of the story of Gnosis is the growth of DAOs, decentralized protocols and their use of Gnosis Safe as a multisig wallet solution. Investment DAOs are the sub-sector of DAOs that have achieved the greatest product/market fit and thousands have been formed just this year. However, very few investment DAOs have the expertise on how to successfully run an investment DAO.

The founding members of MCV are also core team members of Hydra. They have years of experience running the first legal entity on-chain venture DAO in MetaCartel Ventures with many hard-earned lessons. Founding core team members Larry Florio and Danny Carpio are core team mebers of Thing3, a legal/financial/tax service DAO with cryptonative lawyers and accountants. Hydra members will coach portfolio investment DAOs to improve their investment performance, coordinate operations, and provide connections to service DAOs like Thing3 so that these investment DAOs can focus on what matters most: making the best investments.

If GNO holders believe in investment DAOs as an asset class that can match and even surpass traditional venture capital in scale, and want access to an index of the best-performing investment DAOs, then a partnership with Hydra is a no-brainer.

Investment period, legal structures, smart contract architecture

We intend on implementing a three-year fixed investment lifetime period in which Hydra Ventures DAO is able to make investments. After the three-year investment period, investments will no longer be possible and there will be a fund admin that distributes profits to DAO members after this period. This fixed investment period helps set expectations for the DAO’s capital deployment schedule.

Hydra is currently expected to include a Delaware Limited Liability Company (DE LLC) and a Cayman Islands Limited Liability Corporation (LLC). Similar to MCV, the Hydra operating agreement(s) will enable Hydra’s governance to become tightly coupled with its on-chain smart contracts.

We will be looking to deploy Hydra as the first deployment of Moloch v3 aka ‘Baal’, a smart contract architecture that leverages Gnosis Safe as an asset management primitive.

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Maybe it’s because I am not educated enough in investing but I don’t catch what we will get for the funds: is it a certain percentage of the Hydra Ventures DAO (like a buy in) or do you just look for capital to invest for us? If the former is correct I would like to have some details about the percentage we acquire and how decision making will work (do we have a say on decisions, who else might participate?). If the latter holds true some numbers to expect would be fine, although I am quite satisfied with Karpatkeys work and don’t see a need for another entity to participate in fund management.

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Hi @refri great question and thanks for asking! It is the former, a % share of the DAO. Since we are raising a maximum of $10M, this would represent a ~10% share*. The $10M would be used to invest in other investment DAOs, and as the value of Hydra’s share in these investment DAOs grows so does the underlying value of the GnosisDAO allocated Hydra DAO shares. GnosisDAO would have a say in investments weighted by their share (10%). There is a minimum active participation expectation to maintain the share and not be diluted down, this active participation can include being involved with governance / voting, coordination, sourcing investments, diligencing, marketing / ecosystem growth and/or incubation activities.

Hope that makes sense and happy to answer and further questions, though much of the details are in the linked whitepaper.

*the investment takes on some dilution for contributors: 23% that is awarded based on minimum active participation (that can be earned back for active participation in the DAO) and 8% that is awarded to Thing3, vesting over 5 years upon completion of legal/tax service obligations.

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Hey everyone, Christopher from 1kx here.

I just quickly wanted to drop my notes on why we at 1kx are excited about Hydra Ventures DAO and why we think this would be a great opportunity for Gnosischain (in which we are also invested) as well.

When Metacartel and Metacartel Ventures were born, the crypto ecosystem was in a deep bear market. Most investors only wanted to invest in layer 1 chains or refocussed themselves on CeFi infrastructure. During that time Metacartel was among the only entities that funded the application and middleware layer on Ethereum. It is possible to imagine that a Zapper (DeFi Zap back then), Andre Cronje (before Yearn), Gelato, KnownOrigin or Collab.land would’ve had a hard time to continue without early funding from Metacartel.
This continued with Metacartel Ventures, which invested at the earliest stages into Reflexer, Pocket Network, xDAI, The Defiant or Rarible when almost no VC wanted to invest.
I don’t think I have to emphasise what value this brings to an ecosystem that is even more nascent than Ethereum was back than…

It takes a group of outsiders that have the courage to fund other outsiders with ideas that seem crazy at the time.

Supporting Hydra with a strategic investment here drastically increases the chances of investment DAOs launching on Gnosischain and Hydra will be there to support them.

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Thanks @HeyChristopher for the support! Per some private feedback from GnosisDAO members we are open to revising the requested investment to an amount more in line with community expectations like $500K. We want see GnosisDAO as an incredibly important strategic partner in our work to grow the investment & service DAO ecosystem, and would love to make this partnership happen.

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