Thoughts on funding, side projects, and Diamond DAO contributions

Diamond DAO
#1

The topic of how to balance work for Diamond DAO and side projects came up during our 8/15 call, and I want to propose a system to handle distribution of funds for now.

To reflect, the main point was how much funds Diamond DAO members should contribute to the treasury for work completed on side projects?

My view at this stage in Diamond DAO is to present a guiding principle that requires trust of the member to consider a few questions:

  1. How much did your affiliation with Diamond DAO help in winning the contract?
  2. How much of the work you completed has tangential/network value to Diamond DAO?
  3. What is your personal situation, and how much can you afford to contribute to the treasury vs. keep so that you can live the life you want?

At this stage of web3 development the process of social connecting and network building holds high future potential value, and so I want to reduce the friction for our members to work on projects and build a network. Additionally I recognize that everyone has their own financial situation to evaluate and make choices about. I want to respect that.

In the spirit of self-organization and freedom I recommend we set a target percentage amount to contribute back to the Diamond DAO treasury if the work came about, or was related to work you’ve done for Diamond DAO. Then allow the flexibility for the member’s personal financial situation to come into play.

We should be open to revisiting the policy if we detect abuse, greed, poor incentives, but I don’t expect that problem to arise yet. This requires trust, but is the easiest system to administer at this stage, and I believe works well for now.

If others agree with this general approach, the consensus we need is what is a fair target percentage to set?

#2

Agreed with the three factors that lemp.eth outlined above, and agreed we need to set a target percentage. I think the failure-mode here is a system that is either too subjective (making it hard to discern how much to contribute = annoying, confusing) or too punitive to contributors (requesting too high payment = disincentivizing contributing / working with the DAO).

There are two broad categories to consider: (1) product offering and (2) professional services.

Product Offering

Product offering I’ll define as using Chainverse or other Diamond products as part of a sale. In cases of product sales, Diamond should be keeping the overwhelming majority of the earnings, as without Diamond and its products, there would be nothing for the individual to sell. The individual’s contribution should be viewed akin to a finder’s fee.

My proposal here would be a finder’s fee of 10%, which is either capped at a maximum amount, or gradually declines (sort of like a progressive tax scheme. For example, one way this could manifest is: the finder keeps 10% up to n-ETH, 5% of the next n-ETH, and 0.1% of anything beyond that).

Professional Services

Professional services I’ll define as work involving members of the DAO who receive funding from the DAO treasury, but are not selling DAO products. What adds complication here is that individuals will request different amounts of money from the treasury for different projects. Thus, asking for them to contribute a flat % of their earnings doesn’t make sense, since it incentivizes taking as much from the DAO treasury as possible (or in other words, it disincentivizes taking small amounts if you have to repay a fixed % of your earnings).

Here I propose that if an individual takes n-DAI from the DAO Treasury, they should repay the DAO 10% of their earnings, capped at 3n. This allows the treasury to grow, aligns incentives between the DAO and the individual receiving funding from the treasury, but does not abuse the individual by requesting a disproportionate amount of payment in return.

I have not included a repayment floor here, however – hypothetically, an individual requesting from the treasury could earn nothing from their project, and thus not owe anything to the DAO. This is deliberate and allows members of the DAO to evaluate funding proposals that may be charitable in nature.

#3

I think this makes sense. If people want to contribute more they can. If not, 10% is reasonable, especially when it’s capped. @Feralchain suggested that we include a fixed “platform fee” in addition to funds taken from the Treasury. The platform fee would be intended to compensate the DAO for the use of its resources (i.e. our data assets, any licenses we purchase access to (i.e. Dune Analytics), etc. The platform fee would be passed along to the customer.

I think we could revisit the platform fee when Diamond DAO has data/software assets that folks leverage. Right now, we don’t.

#4

For which scenario would the platform fee apply? (product or professional services? or both?)

#5

Just professional services.