Tangle Community Treasury Grant Committee - Exhibit - V2 (Phase I Discussion)

Deep_Sea · August 28, 2023, 12:05pm

The current Shimmer Community Treasury Grant Committee and governance community proposes to revise the current grant committee framework from Exhibit C - V1 to Exhibit C - V2.

Yes - Approve proposed framework revision
No - Do not approve proposed framework revision

0 voters

Simple Summary

The Shimmer Community Treasury Grant Committee committee was established by the Governance Votes SGP-005, the committee members were selected in SGP - 001 and SGP - 002 by the Shimmer Token holders. The current Shimmer Community Grant Committee framework can be found at, “Exhibit C - V1”.

In the months since its inception in April 2023, the community-elected Shimmer Community Grant Committee has demonstrated the needed skills and trustworthiness to fulfill the critical task of safekeeping and allocating a Budget of Tokens in the best interest of the ecosystem and the community by showing the below.

The committee has stablished an effective Grant proposal system and already submitted further improvements to the initial design.
Shown tremendous transparency in their actions, Funding allocations, and accounting, clearly showing that they are acting in the best interest of the community.
Has become proactive and creative to find innovative ways of supporting the project and the Builders in our space.

The treasury committee and the weekly governance community proposes to revise the grant committee management framework in which we aim to improve the specification with the lessons learned collected by the grant committee during the firts five months of oepration and additionally, to allow the IOTA Community treasury tokens from the Build vs. Burn vote conducted on June 2022 (Build vs. Burn) to manage a small portion under the established Tangle DAO LLC.

For a TLDR and a concise summary of each of the 25 revisions, please use this document to Revision Summary. This document links to the revision comparison document, which expands and shows side-by-side each proposed revision. Additionally, below is a more detailed explanation and the specification itself, which is lengthy.

The above diagram shows a high level overview of the sctructure of the Tangle DAO LLC and associated community DAOs.

The specification below is the proposed revised legal, operational document in which the Tangle Community Treasury grant committee and Tangle DAO LLC members shall follow to manage and operate any assets the IOTA and/or the Shimmer community allocates through a purpose-bound governance vote. This includes grant committee funding and/or future bound funding each community may choose to approve.

A Github committ is also proposed and can be viewed here showing the comparison of the two frameworks Update Exhibit C - V2.

Abstract

Through a governance vote 15% of the Shimmer Community Funds approved by the vote SGP-005 which then allocated to the elected committe to use the funds for a committee led grant program. After successfully operating this approved initiative for five months, the committee and community proposes to revise the current framework with small revisions, and also update the framework to inlcude a portion of the IOTA community treasury and allocate them to the current and future IOTA elected committee.

As EVM goes live and the future of IOTA Mainnet starts to become a reality, it is important to have a grant funding system in place for both networks. The most important part of any grant committee is trust, protection of community funds, and transparency. The current framework and proposed revisions maintains these foundational principles.

Motivation

The current Shimmer Community Treasury Grant Committee framework which was developed over two years and did an amazing job of guiding the committee operations while protecting the community allocated funds. As Mike Tyson once said, “Everyone has a plan until they get punched in the mouth”. The point is, no matter how much planning goes into an operation, nothing can be accounted for until it is implemented.

The current grant committee conducted a lessons learend and assessed the current framework. We looked at what may cause inefficiency, communication that my cause confusion, or limitations. As well, through weekly governance votes which the committee, community, and IF; through collaboration we proposed to use the current framework for the IOTA community funds allocating the committee to manage 10 Ti for grant funding.

Rather then creating a new entity, multiplying costs, the governance group proposed to use the current grant system framework for the IOTA community tokens as well. Such revisions were made to the current framework which would allow distinction of how both communities manage their committees and their cummunity funds. The below specification is the revised proposed framework.

Specification

Exhibit C - V2 (Rev. E)

The Tangle Community Treasury Grant Committee Specification

This is the full specification for all operational processes and ordinary and usual decisions concerning the business affairs of the Tangle DAO LLC while operating the Tangle Community Treasury grant committee. Detailed rules and procedures are defined here.

1.0 Introduction Tangle Community Treasury Grant Committee - Operation Specification

The specification below is the legal, operational document in which the Tangle Community Treasury grant committee and Tangle DAO LLC members shall manage and operate any assets the IOTA and/or the Shimmer community allocates through a purpose-bound governance vote.

2.0 Definitions

In this Agreement:

“Committee Members” The elected members act as program lead, co-lead, and reviewers of the community treasuries grant program. Each community (e.g., the IOTA or Shimmer community) elects members to represent them to manage the funding allocated to the Tangle Community Treasuries for grant funding. Committee members can represent both communities if both communities elect them.

“IOTA Community” Within the context of this document the IOTA Community encompassess individuals that have voting power through holding IOTA tokens and whom which can take part in community governance votes.

“IOTA Community Treasury” The IOTA Community Treasury consists of 54,896,344 MIOTA (54,89 Ti), which was voted on by the community to “Build” with and create a community treasury to be managed by and for the IOTA Community. The medium article Burn vs. Build explains the history and final results of the IOTA community vote.

“Purpose Bound or Purpose Bound Allocation” means that the community may decide to form new DAOs or support funding arrangements above and beyond the Tangle Community Treasury grant program activities and committees. Some decisions may require a legal entity to sign contracts, issue funding, or other unknown reasons. Such a decision by the community would only be completed through a community governance vote, upon which such IOTA and or Shimmer Community funds would be transferred to the Tangle DAO LLC. These funds would be transferred with a specific purpose bound, such as managing a treasury through a committee-led program. However, it can be any legal purpose bound by the communities. The committee, which manages the Tangle DAO LLC, shall govern the assets allocated by the community only for the purpose declared by the governance vote.

“Shimmer Community” Within the context of this document the Shimmer Community encompassess individuals that have voting power through holding Shimmer tokens and whom which can take part in community governance votes.

“Shimmer Community Treasury” means all currently not yet purpose-bound and therefore unallocated Assets that remain from the initially created 10% supply (181,362,051 SMR) that belong to the Shimmer Token holders (reference: 181,362,051 SMR).

“Tangle Community“ Within this document, the Tangle Community encompasses individuals with voting power through holding Shimmer and IOTA tokens which take part in community governance votes. These are communities members that follow or are involved in both the IOTA and Shimmer communities.

“Tangle Community Treasury” means assets to include $SMR, $IOTA, or other assets allocated by the IOTA & Shimmer community to be managed by the Tangle DAO LLC.

“Tangle Community Treasury Grant Committee” means the grant committee members elected by the IOTA & Shimmer community through a governance vote to manage the Tangle Community Treasury assets. Specific members may be designated to oversee specific treasuries only or both (e.g., the IOTA Community Treasury funds or the Shimmer Community Treasury funds)

“Tangle DAO LLC” means the legal entity formed in The Republic of the Marshall Islands, which offers liability protection to the Tangle Community Treasury grant committee and community. The initial formation of the LLC entity is focused on managing the Tangle Community Treasury grant committee. However, it is not limited to and can act as an entity to manage community assets through purpose-bound allocations.

3.0 Specification

Mission of the Tangle Community Treasury Grant Committee:

A community-led and committee-based grant program to support the Shimmer and IOTA network while empowering the ecosystems

3.1 The Committee

The committee will be set up with five members to manage all assests allocated to them by the Shimmer and IOTA community.

3.1.1 One of the committee members is the Program Lead, which, besides reviewing funding requests, takes care of all administrative tasks and reporting and coordinates the committee member’s work for the IOTA and Shimmer community treasury funds.

3.1.1.1 Program leads tasks and responsibilities specific to the operations of the Tangle DAO LLC

Ensure that Tangle DAO LLC always maintains an operational legal status.
Ensure any binding governance votes by the community do not task the Tangle DAO LLC to conduct illegal activities or could lead to lose its non-profit status. Any community governance proposal that would incite the LLC to lose its registration or non-profit status will be declined in the initial proposal process. The program lead will be responsible for getting a legal statement from the LLC legal representative and presenting it to the community in case of an dispute about the decline.
The lead will ensure that all payments invoiced or requests to the Tangle DAO LLC are paid out in a timely manner and accounted for publicly.
The program lead will ensure that the LLC’s legal documents in the GitHub Tangle DAO LLC Documentation are up-to-date. The lead will also liaise with the LLC legal representative if new legal documents are required.
The program lead will maintain the www.TangleTreasury.org website and ensure the domain stays active while correcting any process errors promptly.
The program lead will ensure all committee members and/or consultant hours are tracked seperately between the two community treasuries (IOTA and Shimmer) and shown in the public accounting ledger.
The program lead act as the signing agent for the Tangle DAO LLC in case the community approves the LLC to bind a contract(s).

3.1.1.2 Program leads tasks and responsibilities specific to the operations of the Tangle Community Treasury grant committees

The Lead will promote the program, identify directions for funding, and has a thought leadership role in guaranteeing the program’s success.
The Lead is directly involved in grant reviews and allocates suitable reviewers to work on proposals based on their qualifications and experience.
Further, an important part is the ongoing coordination with the second ecosystem funding program run by the Tangle Ecosystem Association and the initiatives of Shimmer Growth Committee to ensure effective alignment in the goals and directions of the community grants program.
The Lead will organize bi-weekly treasury working meetings for the committees elected by the IOTA and Shimmer communities. Each week, the program lead will schedule a treasury meeting. Each Treasury will share the hours incurred if committee members represent the IOTA and Shimmer community.
The Lead will promptly and transparently complete all financial and asset accountings while maintaining independent ledgers between the Shimmer and IOTA committees.
The Lead will complete quarterly transparent reports for each community on how the community funds were used.
The Lead will act as the first public contact for anyone that wants to approach the committee besides funding requests.
The Program Lead will be contracted by Marshal Island DAO LLC, which acts as the legal entity of the program and offers limited liability and the needed legal structure to ensure a safe operation.
To establish this contract, the Program Lead shall have a legal entity (company, LLC, GmbH, etc.) set up in its home jurisdiction to engage in agreements and manage the Tangle DAO LLC.
The Lead will be compensated for his time at USD 70 per hour.
The Tangle DAO LLC will compensate the program lead for a maximum of 40-hours-per-week as a sum of both community treasury committee activities, and both parties will sign a 12-month service provider contract. Compensation will be paid from the respective “Shimmer Committee USDT budget” and “IOTA Committee USDT budget” based on the submitted hours per committee.

3.1.2 The Grant Reviewers

The grant reviewers are tasked to work on assess and review subnmitted proposals for grant payouts. They do this on the basis of a part-time service provider contract with the Tangle DAO LLC.
Each set of committee members (IOTA and Shimmer) operates a 3 of 5 Gnosis multi-signature wallet respective to the community treasury they manage, with a required 3 out of 5 signatures for any operation (like spending funds or adding or removing members).
The Lead will assign reviewers to work on proposals based on their qualifications, experience, and availability.
Grant reviewers will operate on a service provider contract with the Tangle DAO LLC.
The grant reviewers will be compensated for their time at USD 50 per hour. Compensation will be paid from the respective “Shimmer Committee USDT budget” and “IOTA Committee USDT budget” based on the submitted hours per committee.
The Tangle DAO LLC will compensate the grant reviewers based on providing a maximum of 10 hours per week, and they will sign a 12-month service provider contract.
The committee members will select one of the four reviewers as the Co-Lead. The Co-Lead acts on behalf of the Committee Lead in cases of sickness, holidays, or leaving. If the lead resigns, the Co-Lead continues the operation and organizes an election of a new Lead through a community vote.
If the Programm Lead is unavailable/sick/on leave and the Co-Lead needs to fill this position, the Co-Lead will be compensated for this extra time at the same rate the program lead receives at $70 per hour and can invoice up to 40 hrs per week during his time filling in for the program lead.

3.2 The Tangle Community Treasury Grant Committee Term

3.2.1 The communities will approve the grant committee through a governance vote annually for 12 months. The term of the approved current or new committee members will start on April 1st, 2024, the day after the current committees term ends. Upon completion of the Phase III governance vote, the committee members elected by their communities will be publicly announced. Each year before the end of the approved operating period (Currently March 2024), the below bullet points describe how decisions shall be made through community governance votes.

The Shimmer and IOTA shall conduct community votes to renew their respective committees for another year and must include include the request for a new budget allocation from the respective community treasuries so that the program can stay operational. These governance votes shall be initiated a minimum of 6 weeks before the end of the approved periods the committees are authorized to operate.
The Shimmer and IOTA communities will decide annually to continue or end the Tangle DAO LLC. Only with community independent majority votes between the two communities can the Tangle DAO LLC be closed down or governance decisions be implemented. If both communities do not vote in favor of a change, then the proposal does not pass and is not implemented.
If both communities decide not to continue the Tangle Community Treasury grant committee or Tangle DAO LLC, the program and/or co-lead will work together to enable a graceful shutdown of operations and transfer all assets back to the community-controlled wallet addresses. If a specific community (e.g., IOTA or Shimmer) wants to discontinue its committee management, it can do so through its community governance vote.
Further, the program and co-lead will ensure all legal obligations, including documentation, forms signed, and any registration fees or required taxes, are paid, and no legal obligations remain with the Marshall Islands. The Tangle Community Treasury and/or Tangle DAO LLC shall meet any legally bound contractual obligations and outstanding payments, while outstanding approved grants shall be funded by the respective community treasury that has approved that grant. The Tangle DAO LLC shall secure all costs for an operational shutdown before transferring all assets back to the community-controlled address or addresses. Suppose there are non-tokenized assets such as real tangible assets or fiat under Tangle DAO LLC control or bank accounts. In that case, such investments will be transferred back to the community as approved by a community governance vote.
If the community decides via a governance vote to continue the Tangle Community Treasury and/or Tangle DAO LLC, the program and/or co-lead will support a smooth transition with the current or newly elected committee members.”

3.2.2 The community may replace members during the program’s period through a governance vote following the process described in the Shimmer Governance Framework and [IOTA Governance Framework](to be inputted later her).

Need for replacements may occur if committee members cannot dedicate sufficient time to the program. If they ask for a replacement for personal reasons, or if the community has valid concerns about the motivation and professionality of a member or has any proof of fraud, betrayal, or violation of terms.
Grant reviewers are free to leave the position based on the terms stated in their contract. The grant receiver shall give a 4-week notice to the program lead in written form before leaving the committee.
In case of serious violation of terms of the contract, like a breach of NDA, insider trading, or not disclosed conflict of interest, reviewers will be immediately discarded from the committee position by the program or co-lead and removed as signers of the multi-sig wallet.
Replacement positions will be offered to the runner-up candidates of the committee selection process (Phase 3 results).

3.3 Requirements for Committee Members:

All committee members will do KYC to reveal and verify their identity and sign a legally binding service provider contract with the Tangle DAO LLC.
All committee members must reveal potential conflicts of interest before becoming a committee member. They need to indicate if they currently are or have been in the past part of a team in a DLT project or have other connections or affiliations to projects or groups that could cause a conflict of interest. A conflict of interest policy needs to be accepted and signed.
To ensure a committee structure that provides different views and makes decisions as unbiased as possible, the maximum number of committee members from a Project Team is limited to one member per team. In this sense, a Project Team is defined as any organization that causes a conflict of interest by being affiliated as a team member or earning a salary, payment for services, or commission from the project.
A committee member cannot be involved in evaluating any proposal that would cause a conflict of interest. Other grant reviewers will handle such cases without involving the member that has the conflict. Conflicts of interest are not exclusion criteria for committee members in general; those conflicts need to be disclosed to the Committee Lead. The Program Lead will then exclude the reviewer from the decision-making process for specific grants that would cause a conflict of interest.
The Programm Lead is prohibited from holding any other paid position within a Crypto project.
All members will sign NDAs and Insider Trading disclosures.
All Committee members are required to operate the Gnosis Multi-Signature Wallet with a Ledger Nano or similar device.

3.4 Selection process for committee members and the Program Lead:

Each year to be finalized before March 31st, each community shall have elections and vote for the committee members to represent their community treasury. Acting committee members will choose to submit their nominations or decline the election process for the next year. The election process will follow each communities specifications.

The selection process specification

3.5 Committee Right to Request For Proposal

When time passes in which the committee lacks receiving grant proposals for specific areas that support the positive growth of the ecosystem, the committees may issue an RFP (Request For Proposal). The below guidelines shall be followed when submitting RFPs.

The committee can post an RFP (Request for Proposal) on the Tangle Community Treasury website.
The committee shall promote the RFP through its Twitter account and the IOTA/Shimmer Discord and other community communication channels.
The committee can consult and involve the community to develop RFPs.
The RFP must be open and public for a minimum of 30 days.
The committee will post all proposals under review that are submitted to the RFP transparently on the website.
The committee must review all proposals submitted from the RFP fairly and unbiasedly.

4.0 Guiding principles for funding decisions:

A proposal must be relevant to the Shimmer and/or IOTA network and its ecosystem.
A proposal shall not segregate individuals, organizations, or communities based on sex, race, color, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority or majority, property, birth, disability, age or sexual orientation.
The committee will prioritize projects with the highest potential and positive impact on the ecosystem compared to the received funding.
The proposer or team must be capable of delivering the proposed project. Evaluating this is the responsibility of the committee.
All funded projects must be open source (under MIT, GNU or Apache 2.0 license). Projects in development must allow the grant committee to access any private repos for review. These projects will only receive 50% of the grant payment until they fully open-sourced their code.
The requested budget must match industry standards for comparable tasks. If a proposal requests way above fair market value, the committee will dialogue with the team to request adjustments. The committee may reject the proposal or cut the funding to settle at fair market value.
If a project has already received funding from the Tangle Ecosystem Association or other grant funding programs, it cannot receive funding from the Tangle Community Treasury for the exact scope of work. But, the grant committee can grant additional funding for extensions or further developments of such a project.
A proposal that creates any conflict of interest for committee members must be reported to the committee lead. Committee members with conflicts of interest shall not process, comment, or vote on a proposal.
Any attempts of Bribery or the offer of future payments, token distribution, or compensations/gifts of any form to committee members will immediately cancel a proposal process. Accepted bribes by committee members will lead to the immediate removal of the members from the committee.

5.0 Funding Priorities

5.1 IOTA Community Treasury

5.1.1 Funding objectives:

To increase the IOTA network’s utility and attract new builders.
To promote IOTA and make it more visible and attractive in the DLT space.
To enable projects to establish successful and profitable business models on the IOTA network.

5.1.2 Target areas for grant funding:

Below is a general list of target areas for the IOTA network. If the IOTA Foundation or community evolves the network to grow in a new direction, the committee will support such new development and progress visions.

Applications and integrations, especially in industrial adoption, supply chain, financial applications, and digital identity.
Incentivizing established successful projects from different ecosystems to deploy their application on the IOTA network
Developer tooling
Infrastructure like bridges, oracles, and stable coins.
Open source software development using IOTA technology
Analytics tools and dashboards
Community Education
Marketing and outreach initiatives
Code audits
Events, Community meetups, and hackathons
Bounties

5.2 Shimmer Community Treasury

5.2.1 Funding objectives:

To increase the Shimmer network’s utility and attract new builders.
To promote Shimmer and make it more visible and attractive in the DLT space.
To enable projects to establish successful and profitable business models on the Shimmer network.

5.2.2 Target areas for grant funding:

Below is a general list of target areas for the Shimmer network. If the IOTA Foundation or community evolves the network to grow in a new direction, the committee will support such new development and progress visions.

Applications and integrations (front-ends, Defi, Gaming, and other applications that use the Shimmer protocol on L1 or L2)
Incentivizing established successful projects from different ecosystems to deploy their application on the Shimmer network
Developer tooling
Infrastructure like bridges, oracles, and stable coins.
Open source software development using Shimmer technology
Analytics tools and dashboards
Community Education
Marketing and outreach initiatives
Code audits
Events, Community meetups, and hackathons
Bounties

6.0 Application and approval process:

Easy and quick access to funding is essential to a successful grant program. Numerous examples in the space have shown that this is one of the most critical reasons teams consider when choosing a network.

6.1 Funding Tiers and Requirements:

The funding tiers will be approved through annual community votes. The below tiers shall be followed for the IOTA and Shimmer community funds.

Tier 1 - up to 5.000 USD: Two reviewers handle the proposal and approve or decline it. KYC is required for one member of the project teams (the Grant submitter needs to do KYC and be a signer). The reviewers will decide based on the provided data in the application and especially consider if the submitter has a positive history in our community.
Tier 2 - Regular Tier 5.000 - 50.000 USD: Two reviewers review the proposal. KYC is required for one member of the project teams (the Grant submitter needs to do KYC and be a signer). Projects considered to be approved can be invited to conduct a 1-hour interview with the reviewers of the proposal. A minimum of two milestones will be defined, and payments will happen based on these milestones. After completing the KYC process, the committee can pay up to 50% of the requested funding upfront.
Tier 3: Regular Tier 50.000 - 200.000 USD: Same requirements as the previous tier apply. The Project Team must do KYC (3 members do KYC, including the Grant submitter and Project Team Lead, that will be the signer and the 3rd Person decided by the Grant Committee Lead). Additionally, applications need approval by the entire grant committee. Projects considered to be approved will be invited to present the idea in an extensive live interview with two grant reviewers and the Program Lead. A minimum of three milestones are defined, and payments happen based on these milestones.

If the project is accepted, the Program Lead will assign one of the reviewers as a project steward. The steward is responsible for keeping close contact and doing regular (minimum every two weeks) checks with the project team. Milestones are reviewed by the steward and approved by the committee lead. After completing the KYC process, the program can pay 30% of the requested funding upfront.
Tier 4: Regular Tier 200.000 - 500.000 USD: The entire grants committee will review those applications—same procedure as in Tier 3. The Project Team must do KYC (3 members do KYC, including the Grant submitter and Project Team Lead, that will be the signer and the 3rd Person decided by the Grant Committee Lead). If the project receives funding, the final decision will happen in a vote by all token holders.
- Suppose the grants committee supports that the community shall fund a Tier 4 application; it forwards this application to the community as a proposal in the governance forum and asks for approval by the community in a vote by all Shimmer token holders.
- The committee lead will submit the proposal in the governance forum and includes the project team’s full proposal and a detailed statement by the grant committee on why it recommends funding this proposal. Such a proposal will enter the governance process as a Phase 2 Poll in the Governance Forum.

6.2 Application and scoring process

Grant submitters shall complete the online web form on www.TangleTreasury.org. In addition to the submittal form, grant submitters should also submit the proposal as an attached document. The committee provides a template for any submitters that don’t have a custom form themselves.

Grant evaluation scoring system:

Grant reviewers will use a scoring system to evaluate funding proposals. The below matrix shall be used to assess the grant and its respective community treasury it was submitted to.

Scoring Qualities	Summary	Guiding Questions	Rating
Relevance to the ecosystem	Evaluate how the project aligns with Shimmer and/or IOTA, its commitment to building on the Shimmer and/or IOTA Network, and how it contributes to the ecosystem.	How is the project contributing to developing or growing the IOTA and/or Shimmer ecosystem? Does the project utilize the Shimmer and/or IOTA network, or does it plan to integrate it in the future? Does the project align with Shimmer’s and/or IOTA’s objective of supporting digital autonomy for everyone?	Rating (1 to 4)
Plan and Funding Model	Assesses the project’s potential short-term and long-term effects regarding the Shimmer and/or IOTA ecosystem and the broader crypto and Web3 environment.	What short-term and long-term impact will the project have on the Shimmer and/or IOTA ecosystem? How does the project enhance the value or reputation of Shimmer within the broader crypto and Web3 environment? Does the project plan to measure their impact on the ecosystem, and if so, how?	Rating (1 to 4)
Execution	Analyze the relative expertise, trustworthiness, and suitability of the project team to complete the project successfully. Examine the team’s skill set, expertise, experience, and track record in delivering similar projects.	What is the team’s background, experience, and track record in delivering similar projects? Does the team have the necessary skills and expertise to execute the project successfully? Are the team members verifiable or willing to KYC? Do the team members have a public identity (regardless of being shared or anonymous) known to the community and have developed a positive reputation?	Rating (1 to 4)
Verifiability and Quality of the Team	Considers the practicality of the proposal’s budget, taking into account the project’s goals, deliverables, long-term financial sustainability, and financial management to ensure that the project is not only an initial success but also the long-term viability of the project.	How is the proposed budget allocated across the different project activities? Is the budget justified, considering the project’s deliverables and timeline? Does the team have a realistic understanding of the costs associated with executing the project? Does the project have a plan for financial sustainability after the grant funds are exhausted? How does the project plan to generate revenue or attract further investment? Does the project’s business model demonstrate potential for long-term success? Does the project deliver substantial value in relation to the funding it’s asking for? How does the project balance its costs against its benefits to the Shimmer and/or ecosystem? How does the project ensure efficient use of resources to maximize its impact?	Rating (1 to 4)
Overall Quality & Originality of the Idea	Values the uniqueness of the project and its potential to contribute something new and valuable to the crypto and Web3 ecosystem.	How unique is the project’s idea or solution? Does the project offer a novel approach or solution that can significantly contribute to the crypto and Web3 ecosystem? How does the project differentiate itself from similar initiatives in the ecosystem?	Rating (1 to 4)
			Total: x/20

A project should reach a particular score to be eligible for certain funding Tiers:

Tier 4 (Funding budget 200.000 - 500.000 USD) - required score minimum 17 of 20
Tier 3 (Funding budget 50.000 - 200.000 USD) - required score minimum 15 of 20
Tier 1 & 2 (Funding up to 50.000 USD) - required score minimum 13 of 20

6.3 Possible Extra Scoring Points:

Projects that offer 0,5% of the project’s total token supply to the community Treasury: One extra point can be granted.
Projects that offer 1% of the total token supply to the community Treasury: Two extra points can be granted.
Projects that offer more than 1,5% of the project’s total token supply to the community Treasury: Three extra points can be granted.

This does not imply that automatically such an offer will lead to granting the extra points. Granting these additional points is decided on a case-by-case basis.

The scoring system is a guideline for reviewers. It may only sometimes apply to some kinds of projects.

We reserve the ability to place specific projects into different tiers even if point scoring disagrees. Still, this scoring system should apply to the majority of projects.

6.4 Grant Acceptance Contract Criteria

The committees shall have all grant receivers sign a grant receiver agreement for approved grants before funding. The agreements can be found in the Tangle DAO LLC repository linked in the Tangle Community Treasury DAO Github. The committee and program lead shall make contracts with the legal representative specific to the grant submission. Such grant contractual frameworks may be but are not limited to the following.

Standard grants that do not require repayment.
Temporary loan with terms to projects that do not have access to their liquidity.
Liquidity support in exchange for specifically defined terms.
Grant funding in exchange for equity or other terms defined by the committee.

The above are just examples listed, though the committee and program lead may design grant terms that may benefit the community while supporting the communities treasuries growth. At no time shall grant terms be designed in a way that may commit the Tangle DAO LLC to conduct illegal activities or lose its non-profit status.

6.5 Grant Transparency

All grants will be shown publicly and transparently to the community through the www.TangleTreasury.org website. Grants submission will be visible once they are under review, and the reviewed results will be published once the committee finishes its assessment. All grant receivers and community members are free to contact the committee, particularly the Program lead, with questions or discussions at any time”.

The Tangle DAO LLC will transparently host a database through the www.TangleTreasury.org website. On this or any future website(s), all proposals shall be transparently listed, and it will host a running accounting sheet that can be publicly audited to show the Tangle Community Treasuries assets and value transactions.

7.0 Idle Community Treasury Funds

7.1 Committee Investing Role and Responsibility

The committee shall have a role and responsibility to manage funds that are not paid out in grants. These funds are sitting in the treasury not earning yield or supporting the ecosystems. To support the ecosystem and manage communities treasury funds the below are the guidelines in which each community committee can invest unused assets respective to the community treasury they have been appointed to manage.

7.1.1 Committee Investing Responsibilities - IOTA Committee Specific

The IOTA committee can, if they so choose, manage up to 33% of the year’s allocated assets for grant funding through investing activities. These investing activities should be completed as short-term investments so that the committee can access the funds in a reasonably short time frame and use them for grant funding at any time in case, the need to fund a proposal requires the currently invested assets. The primary purpose of the grant committees budget at any time is to fund ecosystem grants; thus, investment of any unused assets shall be made in the short term. The below requirements must be followed when investing idle assets.

The program and/or co-lead must ensure any investing activities are allowed legally by the Tangle DAO LLC and the Marshall Islands.
Any investing decision must be completed through a majority vote of the committee with the program leads approval.
The program lead can only reject a favorable majority committee vote if the investing activity is not legal or potentially may cause the Tangle DAO LLC to lose its non-profit status.
The program lead will ensure any investing activities that may potentially affect the Tangle DAO LLC to lose its legal non-profit status are reviewed by the LLC’s legal representative.
Any approved investing activity must be shown publicly to the community and expressed in the weekly governance meeting before being actioned.
The program lead will assign an investing manager for each investing activity. The lead can act as the manager themselves.
An investing manager will be similar to a grant manager which is a designated committee member with the below responsibilities.
- Stay up-to-date with the investment and activities.
- Relay updates to the committee during weekly treasury meetings.
- If there is a communication which a project team or representative, the designated manager will be the point of contact.
- The investment manager holds no financial qualification but strictly reports summaries and acts as a liason between the committee and the parties involved with the investment.
Each investing activity will be reviewed bi-weekly during the treasury working meetings.
Each investment must be made in a way it supports the growth of the ecosystem and affects the community in a positive way.
At the time of liquidation or closure of such investments, the committee shall make such actions that do not negatively affect the community treasuries, and secondly, do not afect the project associated with the investment.
Any profits generated from investment activities shall be used to support the mission of the Tangle Community Treasury as stated in the first paragraph of 3.0 Specification of this document.
All investing activities shall be actively and transparently shown on the website and summarized with quarterly reports by the program and/or co-lead.
Investing activities shall only be conducted with IOTA-specific projects or applications.
Any investing activities shall be done so with the intention of a low risk of losing the communities funds. No investment shall be approved without a detailed risk analysis and risk management plan. No committee member is a certified financial professional or analyst. Yet, to the best of their abilities, the committee will support low-risk, short-term investing. As such activities will be public, the committee always seeks discussion and support from the community. Such activities shall only support known community and trusted projects or applications.
Each investment shall be presented to the community during a weekly governance meeting prior to being executed.

7.1.2 Committee Investing Responsibilities - Shimmer Committee Specific

The Shimmer committee can, if they so choose, manage up to 50% of the year’s allocated assets for grant funding through investing activities. These investing activities should be completed as short-term investments so that the committee can access the funds in a reasonably short time frame and use them for grant funding at any time in case the need to fund a proposal requires the currently invested assets. The primary purpose of the grant committees budget at any time is to fund grants; thus, investment of any idle assets shall be made in the short term. The below requirements must be followed when investing idle assets.

The program and/or co-lead must ensure any investing activities are allowed legally by the Tangle DAO LLC and the Marshall Islands.
Any investing decision must be completed through a majority vote of the committee with the program leads approval. A vote is only valid when four members vote, and there is a minimum of three votes in favor of the investment proposal.
The program lead can only reject a favorable majority committee vote if the investing activity is not legal or potentially may cause the Tangle DAO LLC to lose its non-profit status.
The Tangle DAO LLC legal representative must review any approved committee investing activity before being actioned.
Any approved investing activity must be shown publicly to the community and expressed in the weekly governance meeting before implementation.
An investing manager will be similar to a grant manager which is a designated committee member with the below responsibilities.
- Stay up-to-date with the investment and activities.
- Relay updates to the committee during weekly treasury meetings.
- If there is a communication which a project team or representative, the designated manager will be the point of contact.
- The investment manager holds no financial qualification but strictly reports summaries and acts as a liason between the committee and the parties involved with the investment.
Each investing activity will be reviewed bi-weekly during the treasury working meetings.
Each investment must be implemented in a way that supports the growth of the ecosystem and affects the community in a positive way.
At the time of liquidation or closure of such investments, the committee shall make such actions that do not negatively affect the community treasuries, and secondly, do not afect the project associated with the investment.
Any profits generated from investment activities shall be used to support the mission of the Tangle Community Treasury, which is to support the Shimmer network while empowering the ecosystems through grant funding.
All investing activities shall be actively and transparently shown on the website and summarized with quarterly reports by the program and/or co-lead.
Investing activities shall only be conducted with Shimmer-specific projects or applications.
Investing activities should focus on DEFI applications and, if possible, support liquidity pools. Investments shall attempt to maintain a low-risk profile; however, they may be allowed to invest with a medium-risk profile.

8.0 Complaint Process For Grant Submission:

Should a project feel it has been treated unjustly by a decision of the grant committee on their grant submission, it should first contact the Programm Lead and try to resolve the issue. Suppose the project representative needs to reach a successful resolution. In that case, they can open a complaint thread in the Governance forum at www.govern.iota.org and explain the reasons for the complaint while being professional and respectful to the community.
If a Grant Reviewer is also a Governance Forum Moderator, this moderator is excluded from any moderation activities in this specific forum conversation.

9.0 The Budget (IOTA and Shimmer Communities)

9.1 Budget for 12 months of operation

The budget for the IOTA elected committee spending from the time this revision is approved and until the end of the 2024/2025 term on 31 March, 2025 shall be 10.000.000 MIOTA to spend on grants and cover all operational costs.
The Budget for the Shimmer elected committee spending during 12 months of their elected term ending on 31 Mar, 2024 is 15% of the SMR community Treasury tokens currently held in this address. Fifteen percent of this 181.362.051 SMR will be 27.204.307 SMR available for the committee to spend on grants and cover all operational costs.
The new Budget for the IOTA or Shimmer committee spending during the next 12 months of operation shall be decided annually by the individual communities through a governance vote. All disbursements from the community treasuries to the Tangle DAO LLC through individual Governance votes will be listed in a public address and on a financial audit log on the www.TangleTreasury.org website.
The committee will manage the assets provided from the IOTA or Shimmer Community Treasury to the Tangle DAO LLC by a purpose-bound allocation from the community using a MultiSig Wallet with a 3 of 5 signature approval process. Each committee will operate its multi-sig wallets on their respective native chains (e.g., the IOTA EVM or Shimmer EVM)
The committee will pay monthly salaries in USDT or USDC when available. It shall follow the liquidation process. It shall be allowed for the committee to issue other assets as payments if committee members so request it. Such assets shall only be assets the committees are responsible for managing and shall be liquidated following the process. The committee will always record such value transactions publicly on the Tangle Community treasury website.
The committee shall liquidate the IOTA and Shimmer treasury assets into USDT or USDC for grant payouts. The Program Lead will manage the Treasury’s finance forecasting quarterly and bi-annual grant payouts to avoid risks of market volatility so that negative price impacts do not affect grant receivers and the Treasury’s operational costs. During necessary times the program lead can decide to make grant payouts in $SMR or $Miota during exceptional circumstances when $USDT or $USDC can not be accessed. All grant payouts are always paid out with the treasury respective networks assets to which the grants were submitted.
The committee shall liquidate treasury assets to pay for non-salary operational costs such as, but not limited to, the Marshall Islands registration fees, legal fees, KYC fees, and other operating expenses. Such costs specific to the Tangle DAO LLC shall be shared evenly between the IOTA Community assets and the Shimmer community assets. At the end of the committee’s term, the program lead will conduct a financial forecast for the coming year, including an extra $50,000 USDT/USDC for the IOTA and Shimmer committee unknown non-salary operating costs.
The Program or co-lead will promptly create quarterly transparent reports for each community and issue them publicly within 45 days, preferably two weeks.
Any excess assets left in either of the committee’s MultiSig Wallets at the end of the committee’s term shall be determined by and included in the annual governance election vote per community. The program lead shall be tasked to gather a summary of any tax or legal implication on such assets and present them to the community within the annual governance vote. If the IOTA and/or Shimmer community decides not to continue the program, those community’s assets will be sent back to their respective Community Treasury controlled wallet.

10.0 The legal entity

The committee members must have a legal status to be aligned with all regulations and operate safely and legally.

The Program and co-lead will maintain all binding contracts and registration fees to ensure that the Tangle DAO LLC is always in a good and active legal status while the committee or other activities the community has bound to the Tangle DAO LLC to operate.
The Committee Lead and the Grant reviewers will sign Service Provider contracts with the Tangle DAO LLC and receive legal liability protection from the entity based on these service contracts.
All committee members, backups, or consultants that conduct grant reviews for the Treasury will KYC with the treasuries approved KYC provider. All members will be held responsible for misbehavior based on their contractual terms.

11.0 Program success metrics

Measurable criteria:

Growth in the number of grants applications received quarter-over-quarter
Growth in the number of projects, ideas, and events funded
Growth in community engagement (e.g., increased activity on Discord, Forum, Twitter followers, etc.)
Growth in the IOTA and Shimmer market capitalization that is driven by applications/projects funded via grants (e.g., increased TVL in the EVM Chains, increased amount of daily/weekly active users, increase in daily active addresses in the IOTA and Shimmer network and the EVM Chain, increased value transferred due to apps funded by grants)

The committee will provide reports on these metrics every six months.

12.0 Changes to this Framework

12.1 Revision overview

If the community decides to approve the Tangle Community Treasury for another year of operation, the members of the Treasury committee can then begin daily activities. Both committees must be decided through governance votes in the respective network for any proposed revisions that affect both communities.

12.2 Revision by Communities

As this framework comprises a specification that governs both the IOTA and Shimmer treasury committees that reside under a single LLC, portions of this framework are community specific (e.g., Shimmer or IOTA) and others that govern the Tangle DAO LLC. Governance requirements that can make official changes to this framework are listed below.

Changes that affect the Tangle DAO LLC in any way shall require a successfull governance vote in parallel by both communities (IOTA and Shimmer community). If one community votes against the change, then there is no majority.
Changes that affect only the IOTA committee representatives. This may include but is not limited to committee member structure, budget, term, and funding priorities for the IOTA committee and community funds.
Changes that affect only the Shimmer committee representatives. This may include but is not limited to committee member structure, budget, term, and funding priorities for the Shimmer committee and community funds.

12.3 Allowed community changes

The communities, independent of each other or together, can submit a governance vote to the below changes at any time. Both communities must submit governance votes together when a change affects both communities, such as if it affects the Tangle DAO LLC.

Proposal to replace/remove the Programm Lead
Proposal to replace/remove a Grant Reviewer
Proposal to terminate and shutdown the Tangle Community Treasury grant committee
Proposal to terminate and shut down the Tangle DAO LLC and all activities connected to the Tangle DAO LLC.
Proposal to extend the operation period of the Tangle Community Treasury grant committee
Proposal to add additional funding to the budget of the Tangle Community Treasury grant committee throughout the year
Proposal to manage additional assets for the community by a purpose-bound directive given to the Tangle DAO LLC

All changes to other points described under this specification of this document shall be proposed through a community governance public proposal in the IOTA Governance forum following the process laid out in the IOTA and Shimmer Governance Framework if an issue affects both community treasuries or the Tangle DAO LLC, then both communities must vote in parallel and reach a majority.

Deep_Sea · August 28, 2023, 12:06pm

A side-by-side comparison that makes understanding the revisions a bit easier can be found here at: Exhibit C - Specification Comparison. We are looking forward to hear the communities comments on this initiative.

Werner · August 28, 2023, 12:38pm

Great to see all our work is getting close to the finish line now!
Still, curious if the community has any more suggestions to improve it even more

Sissors · August 29, 2023, 2:34pm

Well I can share the same as I put in spec2 to @Deep_Sea . I copied this to Word, it is 22 pages! And thats excluding the revision explanations. If I copy the entire hackmd thing, and to be fair I change everything to Calibri 11 format, it is 42 pages! How many of those who voted do you truly believe read through 42 (!!!) pages, and how many just saw the request to vote in favour and did so?

And @Deep_Sea says the reason to do this is transparancy, but you are burrowing all information in a ton of text. Even that you want to take 10Ti from the IOTA 65Ti or so stash is hidden somewhere in the wall of text.

Do you give grants for making a summarized version? Honestly this needs a maximum two paragraph summary of the changes (which do include details like the 10Ti), but the whole thing does not need to be 22 pages. I am (thank god) not a lawyer, but even EULAs and stuff like that is these days more and more often in human readable format. Does this truly need to contain so many words for not that much information?

Deep_Sea · August 29, 2023, 2:48pm

And this is what Phase I is for. We could be better, but Phase I is the transparent governance step to refine the proposal that supports the community’s wants. Hence, I added the 10 Ti to Motivation.

As to the Hack.md file, as stated in Spec2, if you take just the revision summaries (of which there are 25) and not the exact comparisons of each revision, it is six pages in Word at 12 point font. Whereas a couple of those say, “Formatting change revision.”

As I stated, someone can look at the revision summaries. Then, if they want to dive deeper, they can read through the previous and new versions. Of course, no one has to read each detailed comparison unless they want to.

For example, In the comparison file Exhibit C Specification Comparison - HackMD, it states,

Revision-05

Revision five proposes changes and additions to distinguish the program leads responsibilities between the LLC and the committees themselves. The wording is updated to reflect the multiple networks and the grant committee.

That is it. That is the extent of the revision. Now, if someone wants to dive into how the program leads responsibilities are specific to the LLC and the multiple networks, they can then read the three pages and 875 words. However, if they are satisfied with the 35-word summary, they can skip to the next one.

As previously stated, there is a summary in Summary, Abstract, and Motivation. Then, we must post the proposed specification, which is exceptionally long. The specification represents a legally binding document for the LLC and committees. If committee members, including the Program Lead, go outside these community-bound guidelines, they can be legally prosecuted. Hence, the community has ultimate power and say over the LLC and committee. Due to this, the specification document is very detailed because it has to hold up legally.

Further, this has take the community through weekly meetings for the past two to three months to develope this proposal. The specification itself was revised five times to meet Phylo’s and the communities comments and revisions submissions. A ton has been put into this and can be viewed if anyone wants to watch the communtiy governance videos that are public on Youtube.

Further, this has taken the community through weekly meetings for the past two to three months to develop this proposal. The specification was revised five times to meet Phylo’s and the communities comments and revisions submissions. A ton has been put into this, and it can be viewed if anyone wants to watch the community governance videos that are public on YouTube.

CoreyST · August 29, 2023, 5:47pm

What’s the TLDR, this is a pretty long proposal!

Also, if the committee is investing funds, what is the expected hurdle rate? Because it’s one thing to give grants, it’s another to start making investments.

Finanzgoblin · August 30, 2023, 11:43am

It really depends on what the community wants and the risk level that the community is comfortable with and also the strategic reasoning behind it.

US T-Bills are currently yielding 5,5% APR, when funds are converted into stablecoins, it doesn’t really make sense to hold it as naked stablecoins for 0% if and when the US government is paying you 5,5% for holding T-Bills.

Finanzgoblin · August 30, 2023, 11:45am

First of all, I think it makes formal sense to separate the IOTA and the Shimmer Treasury into different organizational groups. Shimmer and IOTA however, are so closely linked that advancements or issues in one ecosystem directly impacts the other ecosystem, which makes me wonder whether or not it is the right way to do it, just because it “formally makes sense”.

There are many synergies between IOTA and Shimmer that could be explored with a united entity and there are many practical reasons for exploring it

Both IOTA and Shimmer have similar and almost identical stakeholders, why should one go through the motions of separating it, if the target group is almost the same?
IOTA and Shimmer have a largely overlapping vision and objectives - a unified approach will probably be more efficient, since it reduces administrative overhead and allows for unified decision-making and strategic planning.
Combining both entities will probably reduce costs and allow for more flexibility in allocating resources and streamline communication.

Formality should never be the reason on why one organizational structure is chosen over the other, especially when there are economic arguments that stand against it.

If the separated approach is chosen however, we should clarify the separation of duties and roles in a more extensive (and maybe even potentially binding) manner. The different target areas in funding seem like a first good step in that direction.

A clear distinction in competencies by each committee will also reduce intercommittee competition over resources.

Shimmer Community Treasury: “If you benefit from it, the IOTA Community Treasury should pay for it”
IOTA Community Treasury: “But you are also benefitting from it, so if you don’t pay for it, we won’t pay either”

If however the solution is that they just co-fund everything 50/50? Why should one even go through the route of separating it?

schimpi · August 30, 2023, 11:45am

Deep_Sea and team, what you do is temporary. You are not supposed to be investment managers but to fund projects. You fail at the latter because
a) fund worthy projects merely exist
or
b) you don’t find them.

Of course you try to stay a float as long as possible. Instead of getting hands on more funds, what you actually should to do, is, cut costs and adjust to the ecosystem. That would mean shut down most or even all of your operations till your work is needed.

Deep_Sea · August 30, 2023, 12:04pm

The TLDR was in the intro, abstract, and motivation. However, the bullet points below are also an extreme summary of the proposed revisions. It is a very long document, and this is because it is a legally binding document that the LLC and committees must follow. We have also made 25 revisions, many due to integrating the IOTA community.

Update the name of the Treasury to Tangle Community Treasury and organization the structural process where the Tangle DAO LLC under the Marshall Islands gives legal liability protection and community operational governance over the Shimmer and IOTA committees, as well as any other purpose-bound entities the two communities may form.
Distinguish the Program Leads roles and responsibilities specific to the Tangle DAO LLC and then the committees.
Updates the committee’s roles and responsibilities, which adds the IOTA committee members.
Proposes and updates the committee’s terms to account for both network entities and proposes using 10 Ti for an IOTA grant funding committee.
Update the funding tiers to only one instead of Regular and Low.
Revises the grant evaluation matrix.
Proposes to allow the committee to create contract terms if they deem it necessary for specific grants.
Proposes to allow the committee to invest a portion of idle funds bound to the grant committee.
Updates the Budget to include IOTA’s community treasury and allocates 10 Ti to a grant committee.
Proposes how updates to the specification can be conducted.

Ultimately, it would be nice to meet inflation, which is currently 5%-7%, but we wouldn’t invest funds strictly for profits. Instead, we can support the ecosystem while earning yield on the idle assets. The recent Soon Labs is a good example. They have funds; however, the market has no liquidity as EVM hasn’t launched yet. They have done an extraordinary job being the most used Dapp, the only Dapp over the past year in our ecosystem. Whereas they strategically planned for an EVM launch last year that has now been delayed over a year, without that liquidity, they need some financial support. The Treasury was faced with a choice. Either a) not help them because they had already done a funding round and risk potentially stopping their development, or b) help them by being a liquidity buyer, support the only Dapp developing and being used, and support their endeavor to move to be fully open-sourced. We chose (B), where we helped the community members keep the only Dapp in the ecosystem going, and now they are fully open-sourced. Along with that, we have nearly doubled our initial investment. Though, of course, with EVM not live and no access to the actual liquidity markets, who knows what the price will be?

The main focus, though, is the Treasury can be a positive lender / VC in our ecosystem. Where other VCs dump when profit margins are high, take hefty fees to fund their operations, and then take profits out of our ecosystem, the Treasury doesn’t have any of those negatives. We won’t dump on holders unless it is imminent to protect the community funds; we would take a smaller profit margin if it is better for the project and the holders. We don’t charge management fees, and any profits are returned to the ecosystem.

Most importantly, though, it would be done transparently. Whereas investing firms will not publish anything to the community, or if they do, they will be vague quarterly reports. With the Treasury, everything is transparent, and regularly interacts with the community through Thursday governance meetings.

Deep_Sea · August 30, 2023, 12:12pm

The biggest issue here is the voting communities. A community is designated by who can vote per the LLC and the Marshall Islands in our charter. So if we combine the two communities we would have to have some method to distinguish each communities votes. Even if we combined the votes, what would happen if one day one community wanted to leave and independently manage their own community funds? How do they vote? What binding document allows them to do this?

What this document states basically is that each community needs to vote on their committee. Yet, there is nothing that says a committee member can represent both communities. So, if both communities decide through governance votes, they can support one committee to manage both grant funds. This of course is most efficient and cost effective, but it has to be decided through electoral votes.

As to having competing funds and the statement, “If however the solution is that they just co-fund everything 50/50? Why should one even go through the route of separating it?”, why would “everything” be 50/50? The IOTA Foundation has stated that the two networks are two independent networks. Shimmer being DEFI / DeGen focused and IOTA being more corporate, government, and globally adopted focused. There is going to be many times where a grant is specific to the Shimmer network, and other times when grants are specific to the IOTA network. Even in the minority of times where a project may benefit both projects, the question in the grant will be, “what does the code support”. As the code needs to be open-sourced, is the code going to be written for the Shimmer or IOTA network? It will be very easy for the committee to distinguish what network the grant submission focuses on.

Deep_Sea · August 30, 2023, 12:23pm

Thank you for your comment. I do agree we don’t have many grants coming in right now yet this is mostly due to EVM being delayed. We have to deal with such delays as they come though. Shutting down operations unfortunately is not possible. Mainly for the program lead position which is a fulltime position. Myself, I have already given up my previous contracts in my previous career to focus on this. It’s just not realistic to have a Program Lead as a part-time position.

Saying the above, though we have not funded that much this quarter, we have been working for the past two months on liquidity provision grants. We are supporting the top three DEFI projects, and ultimately the entire DEFI / EVM launch. One of the main avenues of success for a DEFI network to launch is to have solid liquidity pools. We will be supporting the liquidity pools with $300,000 worth of Shimmer. Not only will it help the community, the network, but the Treasury will also gain LP tokens which we can add to our asset registry and stake for future passive income.

schimpi · August 30, 2023, 12:56pm

Thanks for the reply. I warned about the lack of projects back in Nov, 22: Shimmer Community Treasury Grant Committee - Version 2 - #7 by schimpi
It is exactly what happened.

So what happened?

Most of your funding was for content creation when there actually was nothing to create content about.

One example would be the funding of Everything Tangle who created a video (https://twitter.com/allthingstangle/status/1663447536265478144)) about the amazing Firefly Wallet, when a few weeks later Firefly mobile was discontinued.

An alarming development that recently came to my attention is the endorsement of Coordinape for content creators (link: https://www.tangletreasury.org/proposal-detailed?recordId=rec63EFEcvAWD6BNP). This initiative has taken an unfortunate turn, leading to a perplexing cycle where only a handful of individuals seem to be rewarding each other with SMR consistently. This situation has resulted in minimal to no actual value being generated for the overall ecosystem, which is already facing stagnation. Compounding the issue is the indiscriminate dumping of SMR tokens onto us, the dedicated hodlers, further eroding the token’s value.
circlejerk

If I wanted to do a proposal, what would be the steps?

Deep_Sea · August 30, 2023, 1:57pm

So I do agree that funding content creation in April/May was a bit pointless when looking in hindsight. Yet, even the IF planned to do the Treasures of Shimmer campaign thinking that EVM was ready and going to launch there after. There was a positive and negative consequence. On the positive the campaign showed a network weakness which was great to find out “before” officially launching EVM. On the down side all the marketing and users that came for the campaign was lost due to the delay and momentum dropping out. Yet this is simply operating in crypto where things change quickly.

Saying the above, we made a decision to more simply give some love to our community content creators that have been creating content for years for free.

Yes, we did create an incentive program for the content creators where anyone can come join. This is also a test to see if the community can govern themselves in Web3. As the IF gives more control to the community it is important that we test different systems as how the community is going to govern, “and”, manage paying themselves. We can not depend on the IF forever, but we also can’t go from A-to-Z over night. These decentralized groups are going to have to find what works and what doesn’t. If this works, this will lead to a moderators group, a dev group, a marketing group, etc. The days of the community just working for free should and can come to an end “if” good processes are established. The Shimmer community treasury has always been a method to test things out to learn what works, what doesn’t, and then can port what works to the IOTA mainnet.

As in cost, this also saves cost for the committee because we aren’t reviewing and declining numerous content creation grant proposals. The committee is under budget and I believe even with the $SMR dropped to this group the operating budget will still be met. I analyzed this when considering funding this grant.

For submitting a proposal, please follow this link How to Create a [Phase I] Discussion Proposal, or you can create a counter proposals The Shimmer Governance Framework (Phase I - Discussion) 4.7 Counter Proposals.

Deep_Sea · August 30, 2023, 2:01pm

Just want to point out, the Incentives Content Creator group has already produced 61 activities, meaning, There have been 61 content posts that are (twitter (X) threads), Youtube videos, Medium articles, etc. So already the cost per content is way cheaper in this group then having content creators apply to the grant committee while saving on grant committee admin costs because the group practice decentralized governance and group management.

After the first three months I will create a report on this. Again, it is a test case so we can learn and grow as a community that governance itself and not depend on the IOTA Foundation.

CoreyST · August 31, 2023, 2:08pm

There is a difference IMO between treasury management (investing in T-bills) and making investments in projects that generate a return.

If the committee is moving in the direction of the latter, I think we should split “grants” from “investments”. What would be useful to understand is how we would plan to do portfolio construction or risk management. Statements like this “We won’t dump on holders unless it is imminent to protect the community funds; we would take a smaller profit margin if it is better for the project and the holders” sound nice, but I’m not sure makes sense. How do we define smaller profit margins? How will you know when to liquidate?

If you look at the best university endowments, there’s a reason that they take performance fees. It aligns the fund manager with the performance of the fund. It works in the best interest of everyone.

Deep_Sea · August 31, 2023, 4:52pm

We can create a structured, rigid, and granular framework for investing idle funds; however, we just found from operating the treasury that having a rigid, structured, and granular framework is inefficient and causes challenges. Does this mean we propose revising the committee framework to be non-transparent and free with no oversight or repercussions? No, it gives a bit of freedom to the committee to work in the changing environment and some flexibility, but always maintains 100% transparency.

Let’s look at managing funds as the incentive of performance. Three Arrows Capital was a hedge fund that provided risk-adjusted returns, and then there is Alameda Research. Both were accredited, trusted, high-end, multi-billion dollar funds that incentivized positive performance. Standard & Poor’s states that nearly 90% of fund managers fail to beat the market. Several research studies have shown mutual funds (which endowment funds often use) regularly lose against index funds and charge exorbitant fees. Index funds match the market and charge about 75% to 95% less management fees than mutual and hedge funds. Yet why are mutual funds and hedge funds used? It’s not from sound financial management and the basis of the individual or endowment; it is because traditional finance is broken. Though these hedge funds and mutual funds regularly do not beat the market or index funds, somehow they make hundreds of $billions of dollars in profits. That’s not from the success of their client’s funds; that is a broken traditional financial system.

Regarding the specific questions of having the committee invest, we could ask the same detailed questions to the committee when it comes to approving grants. How could a grant committee make sound judgments to fund projects they are not experts on? We could also farm our grant committee out to a VC company and pay them hefty fees if we wanted to. Yet, a VC firm would not conduct extensive research within our community or operate transparently.

Yet this is what the community grant committee representatives do. We operate fully transparently and in collaboration with the community. For example, particularly for TCT-12 Identity Wallet by Impierce. No committee member is experienced in Digital Identity, given its niche and specialized market. We didn’t simply make an uninformed and un-analyzed decision, though. Instead, we spent weeks discussing with Identity experts in and out of the IOTA Foundation, small and large global projects that work with digital identity, and also community identity experts and non-experts. We then aggregated all these subject-matter-experts information and community non-expert advice and reviewed all the relevant information to decide. This same collaborative and transparent process seeking experts and non-experts would be the decision-making process.

Another more financially related example is the treasury currently working with DEFI projects to support liquidity pools, specifically, the DEFI space take-off. This venture has been over four months of research, talking with DEFI subject matter experts, project owners, IF and non-IF members, and community members. We asked all these parties what risks could arise with this grant, what positives and negatives may occur, how to mitigate risks, and what is best for the community ecosystem to expand it positively. The results were:

→ Ecosystem Expansion: There are many ways to support DEFI take-off; however, the most important way to support this growth, agreed by nearly everyone, was simply a good liquidity pool.
→ Positive: A focused, safe liquidity pool that will support the DEFI eco-space and expand to a point where it grows organically. The treasury will also gain some yield and additional LP token assets.
→ Negative: The treasuries assets used in these liquidity pools will lose value and or not support the growth of the DEFI ecosystem because the liquidity is not large enough.

→ What Risks Are There:

There is a risk of losing a significant valuation due to impermanent loss.
There are risks of the DEFI platform having no use, being rugged, or the platform’s loss of funds.
Platforms Smart-Contract error that losses liquidity pool funds.
Tether company rumors becoming true and USD backing not being actual as reported, such as the USDT token de-pegging.
→ How to mitigate these Risks:
Hold token pairs that maintain the least risk, which includes ($SMR:USDT/USDC & $IOTA:USDT/USDC), and or, if there is not a USDT/USDC, allocate fewer funds.
Allocate funds to projects with a strong community history, are Dox’ed, and have a solid positive reputation.
Ensure each platform uses SCs that have been audited and tested thoroughly on the Beta, Alpha, and community testnet.
Use USDC as a pair and USDT to mitigate the risk of de-pegging.

Again, the main point is that the committee doesn’t take these decisions lightly or make them independent of the community. We make these decisions openly and transparently.

Look at where the crypto industry is today, precisely due to the lack of transparency and the “trust” that was put into so-called “experts/fund managers” like Celsius, Alameda, FTX, etc. Any of those trad-fi companies, “if” they were transparent, everyone would have seen the corruption and pulled their assets out. The point is that due to transparency, those trade-fi fund managers couldn’t have made those corrupt and irresponsible financial moves with customer funds. It was only because of the lack of transparency that such corruption occurred. Though guaranteed, when markets fall into a bear market, all those fund managers seek customer portfolio increases and thus large bonuses. For that, they took extreme risks and made corrupt decisions.

I enjoyed the old comparisons of a decentralized network to bees. Bees make collective decisions that help them address various challenges and community infrastructure decisions. The adage of two minds is better than one. All these principles work in asset management companies but fail due to the lack of transparency and corruption. The Shimmer and IOTA community has some of the most talented individuals. It collectively can manage their community funds together, or at a bare minimum, should be given a chance to. The days of corrupt hedge and mutual funds should be over, and we have an opportunity to show how.

CoreyST · September 1, 2023, 9:11am

I don’t think I ever suggested that we shouldn’t be transparent. We absolutely should be. I also have no problem with using funds for treasury management.

I think I’m reacting to this part where the Grant Committee wants to start making VC-like investments:

“Funding in exchange for equity or other terms defined by the committee.”

I understand we want to use some of the funds to stimulate and incentivize network activity, which is good. I agree that using the funds to maximize profits doesn’t make sense because we’re not going to try and negotiate deals that benefit LPs but harm the community/businesses that we want to stimulate. It wouldn’t make sense.

The risk-free rate of return is 5.5% (and potentially climbing). Because of the risk associated with equity investing, one used to need to generate 20% +/- in order to justify it. When we start making equity investments, we can’t sell these positions, which will tie up funds. This is also not to say that Committee Members can’t do research and identify whether an individual grant or project is worth backing. As soon as the Committee needs to evaluate whether 10 Identity projects are investable, then portfolio construction and risk management matters because you need to spread the risk.

If the Committee moves in this direction of making equity investments my wish would be:

Bring in an experienced expert to help manage this so we can avoid common pitfalls
Separate the grant funding from the investments (equity, etc.) in its own vehicle so we can have better transparency into the investment portfolio

Finanzgoblin · September 2, 2023, 10:04am

50/50 Co-funding: My intent wasn’t to suggest a strict 50/50 split on all projects but rather to highlight potential inefficiencies if both communities co-fund projects without a clear separation of responsibilities, roles and duties. I fully recognize the distinct nature of both Shimmer and IOTA. However, in the scenarios where interests overlap, clarity in funding responsibilities will be vital. You also stated that IOTA is more focussed on institutional adoption, whereas Shimmer is more DeFi-Degen focussed, so why don’t we clearly separate the roles and responsibilities? I agree that many projects will clearly fall under one network or the other, however we also need to be aware that there are projects that are valuable to both networks, especially when considering stuff like developer tooling etc. There are governance and strategic decisions that affect both, because the stakeholders are almost the same.

Secession: In the hypothetical scenario where one community wishes to secede from the treasury, we should set clear guidelines beforehand that formally defines the secession process. For instance, a supermajority vote could be required for those decisions. By establishing these guidelines from the beginning, we can define a clear exit strategy.

Finanzgoblin · September 3, 2023, 7:57am

In my opinion, the core question hinges on the community’s desired direction. Are we leaning toward the traditional route of focusing solely on ROI, like many equity investment companies? Or do we see ourselves as a public-minded grant committee that just happens to accept a bit of token equity from grateful founders? To me, the Tangle Treasury isn’t about playing Wall Street games. (Even though I like to play them personally too.) It’s more about being a good neighbor and positive sum actor in our ecosystem, lifting up community projects, analyzing gaps in Web 3 and DeFi Legos, that can be found in other ecosystems and chipping in with funding. And if we’re giving out funds, it makes sense we’d need ways to keep our pot full—that’s just smart treasury management.