AIP-121: Transparency Act for Ecosystem Fund Allocation

Proposal Name: Transparency Act for Ecosystem Fund Allocation

Proposal Category: Process

Abstract

This proposal wish to increase the transparency of AIPs involving Ecosystem Fund allocation, enhance the voting process and standardize periodic reporting.
$APE treasury will be better safeguarded with: additional accountability for teams requesting for funds; costs clearly stated in Snapshot for an easier voting experience; monthly public reporting on treasury use.

Motivation

Most of the AIPs concern fund allocations, and this AIP relates solely to AIPs requesting for funds from the Ecosystem Fund. Some of them are well written with every detail needed to take an informed decision, while many others lack of any information regarding team members and even in case of huge fund demands, a voter is supposed to read thru the whole proposal till the end to find out the cost involved.

DAO’s community deserve more transparency, with the following adjustments to AIP drafting, voting process and reporting:

Note: points 1/2 are applicable to only AIPs requesting for funds from Ecosystem Fund

  1. Cost disclosure
    The Overall Cost of the AIP will be put in the Snapshot voting page, just below the Abstract and before Proposal (link to full proposal).
    This allows the voter to see at the first glance the purpose of the proposal AND the cost involved, without the need to open the link of full proposal, and find at the bottom of the full proposal the cost, which is a critical item. It may be that many voters don’t have the time or willingness to read thru several pages to find in the end the cost, as such pinning it in the voting page of Snapshot would make voters’ life easier.

  2. Team members
    It will be compulsory to provide a description of team members (a brief “CV”, previous experiences in Web3). Many AIPs already offer such team description, which is an obvious value added to understand if a project might be successful, others don’t.

  3. Monthly reporting
    Apecoin DAO will issue monthly reporting about funds allocation, containing: total funds committed and payment of funds up to date, with detail for each AIP (number and title).
    The more AIPs with fund allocation are being passed, the more important becomes to give the community visibility of the overall and progressive fund allocation.

Rationale

This proposal is fully aligned with the DAO’s principles of transparency and accountability, providing the community with additional and easy-to-read informations during the act of voting on fund allocations and ensuring a periodical reporting.

Key Terms

Team members: AIP proposer, anyone who will have wallets signatory power or access, anyone who the AIP proposer considers as a Team member in the project.

Specifications

This proposal involves the use of the current platform for AIPs drafting (forum.apecoin.com), the current platform for voting (snapshot.org), the current platform for Apecoin DAO public communication (https://twitter.com/apecoin).

Steps to Implement

The steps to implement are performed by the Ape Foundation and Cartan Group. In particular for:

1 Cost disclosure: APE Foundation / Cartan Group will modify the contents visualized in the Snapshot voting page, adding the Overall Cost.

2 Team members: APE Foundation / Cartan Group will modify the template provided to AIP proposers when drafting Ecosystem Fund Allocation AIPs, mentioning the compulsory nature of Team Members description. Furthermore and more importantly, APE Foundation / Cartan Group will monitor the providing of such informations.

3 Monthly reporting: APE Foundation will publish via Apecoin DAO Twitter’s page, monthly reporting on funds allocation for each approved AIP.

Timeline

The proposed actions are estimated to be concluded within 2 weeks.

Overall Cost

No costs involved.

6 Likes

Be nice to have a self-assessment of risk as part of each proposal, and a comparative of any similar AIPs.

5 Likes

Thank you @giacolmo.eth for putting this together. :slight_smile:

Overall, I definitely appreciate the direction this is going. It can’t “hurt” to have the Total Cost’s included in the AIP’s Snapshot Summary, and standardized reporting on fund allocations. I’m all on board there.

Where I don’t agree, is adding more granular steps for AIP authors in order to make it to voting. For Wallet Management requirements, I don’t think it’s necessary to stipulate that they must explain their rationale or process for securing funds, it’s not as relevant to our DAO as it is to their own security practices.

I don’t think we should be getting involved in telling others how they need to handle their grant once it is approved. This is not to say I don’t agree with you, I’m only saying that by making it a requirement for an AIP to go to voting, we are just making it harder on these teams to propose their idea.

As for your section on Team Members, again I don’t think we need to make these requirements, the voters will decide for themselves if it’s important to them or not. Overall I think adding more requirements for AIP authors just bloats the governance process and makes it harder for anyone to get anything done.

Additionally, I am against KYC and identity verification as a requirement to participate in any form whatsoever, now or in the future. The whole concept of a DAO is that we are decentralized. As soon as DAO workers and participants are all doxxed, they are publicly at the mercy of their countries’ regulations and purview, which may not be in alignment with the goals of the DAO.

There’s an excellent podcast I listened to the other day with Rune Christensen, the founder of MakerDAO, where he talks about this exact scenario. Having a DAO with all doxxed contributors makes it a company or partnership, not a decentralized autonomous organization. While I understand ApeCoin DAO is not critical financial infrastructure for the world like Maker, and therefore it’s not “that big a deal,” I recognize that if we start making KYC our culture early there is no going back. I’ll include a link to the podcast here because I think it’s very relevant to governance and decentralization practices.

Overall I think we should have very generic guidelines to encourage participation full-stop. Having strict “all or nothing” requirements stifles innovation at every level. If KYC is a requirement for AIP Authors, we will have very few AIP’s to vote on. Personally, it has never mattered to me who someone is, it’s more important what they do.

7 Likes

Thanks @Amplify for your comprehensive comments, this is an interesting topic (I will also check the podcast you posted) and I also thought about the pros and cons of KYC - strictly for funds allocation, not for any other AIP. I understand and feel that probably the majority of the community is against KYC, mainly for decentralization ideals. It may be that the history and a well-recognized “.eth” member is enough for trustworthiness. While for unknown newcomers, the voters have the possibility of skepticism.

Therefore, I will wait for other comments by the community then in the final proposal I will consider to delete points 2/3 (wallet and KYC), and just keep points 1/4 which I believe are straighforward.

5 Likes

Agree that in case these risk-assessment are being done, it would be a nice to have to publicize them. I just feel that in this case, someone might doubt the impartiality of AIP moderators.

3 Likes

Thank you! Yeah, it’s not an easy topic or issue. I want to be clear that I agree with you on a fundamental level. It’s also how grant proposals are currently funded by the foundation. AIP Authors who receive a grant must KYC with the ApeCoin Foundation Administrators in order for them to meet their compliance obligations.

So while this is essentially already a requirement, putting it in writing would only serve to bloat governance. :pray:

2 Likes

Appreciated! So you are aware that KYC is already been applied in practice (I didn’t know actually), in such case it even simplify things as not necessary to put in written in the AIP.

4 Likes

Yes, the ApeCoin Foundation Administrators perform KYC for grant recipients as a part of their compliance process. This information is confidential of course. :slight_smile:

4 Likes

Thank you for this. I’m a big believer in making things as transparent as possible.

Regarding 2. It was something that we were going to try and include in the “Establish DAO Communications Team and Processes” proposal, but the problem was it made it too long.

Ideally, I’d like there be a way for anyone to see any information that didn’t need to be kept private (like identity) as well

Also, do you know if people who receive funding have to submit progress reports of some sort to the DAO? If not, think it might be a good idea for accountability, especially for the AIPs where they are planning on coming back for future funding.

4 Likes

I think it’s better to include it if we are committed to transparency as one of the Guiding Values of the DAO, even if it makes the proposal a little longer.

I am all for standardized reporting, what I do want to avoid is rigid reporting requirements. I think the DAO can operate smoother if the roles aren’t 100% defined and there is some room for overlap in responsibilities.

I’m not sure if there are progress report requirements, but for the AIPs that have to meet a benchmark before funding I image there is some follow up.

4 Likes

I don’t know actually if some sort of progress status to the Foundation is compulsory. As mentioned by Amplify, I guess that if the AIP self-commit itself to a payment upon results, then yes; otherwise for payments upfront, not so sure. It would be a good question to make to Cartan’s next Twitter spaces.

5 Likes

I generally agree with @Amplify response above with two-exceptions.

First, major capital deployments should be met with disclosure on safe-guard processes. Worst case scenario: massive $ape hack dumped on market, nothing gets built. We should think about a bright-line test in terms of $request.

Second, for proposals that earn revenue on behalf of the DAO, we should require disclosure on safe-guards, wallet access, specific processes of remittance, and assurances of limited risk until remitted. These risks came up here, lack transparency, and tail on my comments above re: self-assessment. Further, in this scenario, a perpetual one-month float is effectively a permanent cost to the DAO but escapes the current framework tied to requests for funds. For BAYC sales last month, the float is $85k (cryptoslam x 0.25%). We should think about bright-line tests for payment terms that mandate treatment as request for funds in addition to disclosure thresholds. For example, n15.

Going forward, coupling bright-line tests with disclosure requirements is a baseline of transparency we should strive for.

5 Likes

Hi @giacolmo.eth,

Your topic will be automatically closing in less than 24 hours. Are you content with the feedback received, or do you wish to extend community discussion for a further 7 days?

If we do not hear from you within 48 hours after your topic closes, your topic will be moved straight to the AIP Draft process.

We look forward to hearing from you.

-Pearson

1 Like

@Amplify just to clarify when mentioning “better to include it” you meant point 2) on team members description?

2 Likes

Thanks @Marklar for the interesting and professional comments. After read you I believe that rather than requiring a self disclosure for wallet management in the draft AIPs (voters seems better to focus on the “business case” instead than technicalities), would be more proper a professional and specific proposal to define standard rules of safeguards, processes etc. to be always followed (or maybe a range of acceptable habits) - assuming that the Foundation is not already enforcing them.

3 Likes

Hi @Pearson , I am fine with the feedbacks received, thanks.

1 Like

Thank you for your thoughtful proposal. I think clear guidelines and a framework for increasing transparency and accountability would benefit the DAO. I agree with @Marklar that a risk assessment and contingency plan section would be great to have too as part of any AIP that’s available to the community to review. My guess is that the board and Cartan already discuss risk assessment with AIP owners before approving for a vote on snapshot. But would be useful to have it in the template as well.

My question would be, whose role do you see to define such guidelines and framework if DAO votes that we should have this added layer at proposal level.

Thanks again for bringing this up. :raised_hands:

4 Likes

Thanks @Novocrypto . As I hinted in my previous reply, after this discussion I am now of the opinion that wallets security, contingency plans and risk assessments , even if critical and interesting to someone to review in any AIP, would be better to be left out of AIPs as a compulsory component. Otherwise could bar great ideas and put obstacles on creativity.
Rather, it is the Foundation/Cartan role to gate keep and support the non-experts on technicalities. This doesn’t mean that for the most structured teams, as an additional value added they can provide all kind of technical proofs in their AIPs.
Moreover, as I mentioned, if professionals in the field (which I am not), wish to put at vote minimal standards of security and risk assessment to be enforced by Foundation, I think could be useful and would have my endorsement. At the same time I would suggest to get first in contact with Cartan thru their spaces to check for any overlappings.
So to summarize, I will amend my AIP keeping points 1/2/4.

3 Likes

This is a tough question. I’d generally say Special Council as, imo, they have the largest personal risks attributable to DAO activity and have the best grasp on subjective materiality.

I think I’ve derived KYC happens and that alleviates a tremendous amount of concern for me, at least in terms of direct funding.

But there’s nothing stated anywhere that confirms this. Stack on the power of float as free capital, and KYC is an unknown that may not cover all the scenarios it should.

4 Likes

Yeah, Special Council should lead the way. @Novocrypto read this after and concur. For me, there’s also something to self-disclosure without compulsion that at least gives me implicit trust.

My general fear is a lot of NFT natives missed DeFi summer and as these worlds collides we’re starting the trusted v trustless learning curve all over again. If your proposal only goes so far as ‘trust me’, then hopefully there’s enough folks to call that out during draft.

But Yeesh participation and infra for a $5B FDV DAO is bad right now. So much capital to push the space forward. But lots to learn still.

5 Likes