AIP-536: Enhancing Sustainability: Prohibiting New Financial Requests over US $750,000 for one year

Withdrawn AIPs
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PROPOSAL NAME:

Enhancing Sustainability: Prohibiting New Financial Requests over US $750,000 for one year.

TEAM DESCRIPTION:

Furious - DAO believer since March ‘22.
Twitter: @furiousanger

PROPOSAL DESCRIPTION:

After recently funding substantial grants and taking into consideration all other liabilities accrued, (plus ongoing monthly operating costs) the treasury needs time to recover; refilling via monthly native token unlocks, and potentially inflows generated from apechain release.

This AIP proposes that any financial proposal involving spending or allocating more than USD seven hundred and fifty thousand dollars ($750,000) of DAO resources be rejected from our forum for a period of one year.

Working group budgets will be exempt.

BENEFIT TO APECOIN ECOSYSTEM:

Mitigating financial risk by ensuring substantial allocations are not made which may potentially be unsustainable in the short-term, thereby strengthening the prospect of long-term sustainability.

DEFINITIONS:

Financial Proposal: Any ApeCoin DAO AIP requesting the allocation or spending of funds exceeding $750,000 US dollars.

STEPS TO IMPLEMENT:

Proposals requesting more than $750,000 US dollars would not be permitted on the forum for a period of one year starting 1st of January 2025 and ending 31st December 2025.

Proposals with funding requests designated in $APE (or any other non-USD denomination), a USD-value determination must be made during the forum submission period.

REPORTING EXPECTATIONS:

The expectation is that this proposal would be implemented by the DAO’s administrative team. The community should regularly review the impact of this proposal. If accepted, the administration and the community should review the impact of the updates after the 3-month period for conflict ends - particularly if regular revenues are realised from apechain release.

OVERALL COST:

Total amount requested from the ApeCoin Ecosystem Fund = $0

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This would defund ALL the working groups. Are you suggesting that we defund the GwG? I don’t believe that’s the intent here, so perhaps add them as an exclusion?

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3

Hi mate,

Can’t do it I’m afraid. No exclusions; for one year everyone plays by the same rules.

WGs can adapt to living on $600k for the next year, that’s ofc if they manage to pass voting twice.

However, we’ve already seen budget adjustments made due to the $250K 69% threshold - MCWG for example.

There’s also ideas attempting to change the current budget requests system - if successful this would mean WGs could propose up to four budgets a year (due to the three month conflict period), that’s still $1.2m available under my rules (if the idea is successful).

Remember, it’s only for one year as the treasury (and hopefully $ape price) recovers; apechain delivers on revenue promises. Then everyone can go back to 1st class or private jets. :money_mouth_face:

Thanks.

4

not specific to this topic but I think it can be part of it, there is one thing I don’t understand:
why do we keep using $US for requests and budgeting instead of sticking everything to $APE ? wouldn’t make more sense from the DAO perspective?
Whoever request funds knows that come from $APE so the exchange rate risk should be on the receiver.

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5

No - that’s not feasible. If I request 100K APE to build a project and for which the USD amount for the project remains unchanged at around $80K, what am I going to do when by the time the funds are disbursed the token has fallen and that $80K now looks a lot like $60K? Look at what happened with projects, including the BB, which were funded in early July when the token was at $0.8c. It fell as far as $0.40c literally a month after - and is still struggling to reach and hold at $0.80c. This is why when proposals are funded, the smart play is to immediately sell the token and convert to USDC.

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6

But I believe there is always this delay from the request to the transfer. And therefore the risk should be on the receiver that is free to implement the risk management strategy that is willing to take (hedge or taking the risk of devaluation)

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7

Yes - that’s why it makes sense to request funds in USDC.

No - that’s not how that works. If someone asks for funds (grant or investment), they are expecting a specific sum. Them getting anything less puts that project at risk and may never even get built.

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8

Allcity, Machi & boringsecurity - are just some of the authors & projects I recall that have succumbed to the perils of requesting in $ape.

They’ve all been unable to finish their AIP objectives (to the full extent) due to massive price drops and/or ridiculous long waiting times for funds to be released.

Tl;dr - always request in USDC.

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That’s not how business investments work. A smart business operator is going to nail down their costs and price their ask accordingly. It’s not on the person requesting the investment to price in volatility.

If you want the person to price in the volatility for a wide ranging series of events that are 100% outside of their control, including how fast the DAO pays them their funds after winning, you can expect them to massively increase their asks in order to offset the risk.

I wouldn’t price in for anything less than 2x what I needed if I was submitting.

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10

Speaking this @furiousanger’s proposal, it’s not a bad idea to try to plug the leak, but a concern may be that writers with lots of support could put forward multiple successive proposals for $299,999. Maybe add that only a limited number of AIPs could be successively proposed annually?

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I would think that the AIP should be denominated in the local currency where the funds will be spent. Requiring an AIP author to plan for a 50% drop in the price of $APE may be asking too much of them and would artificially inflate the amounts being requested for those AIPs that are required to plan as @chimperton suggests. If everyone was required to asked for twice as much as they need, less AIPs would be proposed and even less would be passed given the current voting rules. Just my 2 $APE.

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12

I have thought about this. I think an AIP should have to state how much of their liabilities to deliver are in USD vs APE.

For example, if you request 100,000 and 50% is to pay third parties in USD then you should request a budget as follows:

USDT/USDC - 50,000

APE - 50,000 USD equivalent at the time of funds being disbursed (based on the closing price of the previous day, data on coingecko)

When they disburse you get directly the both USDC/USDT and APE in their respective amounts.

Also, I think more education is needed about Treasury Management, BEFORE they take custody of their funds.

Since GWG received its funds for AIP-408 at approx. 1 USD = 1 APE, APE has dropped as much as 60% and now down 25%.

At the GWG if we did not pay the majority of our third party vendors immediately after getting funds and convert USD to cover the majority of our USD liabilities, we would NOT have been able to deliver our KPIs. This would have led to sub optimal outcomes for our AIP and then ultimately the DAO.

In retrospect we could have converted more USDT and will have a loss of a few percentage points on the budget. Having the amount to convert agreed in the AIP makes agreement easier, once funds are received. As it isn’t a decision of how much and when to convert, but just a process exercise.

Also converting larger amounts is best done via OTC to avoid any slippage in the exchange (especially relevant for larger amounts, think 100k-1m USD range. Therefore, if part of the request is in USD the Foundation could do this.

The aim is to get the AIPs to deliver on their objectives and create positive outcomes from the grant for the DAO.

Notes
I think Treasury Management for Grant recepients is a topic worthy later of its own thread.

Also a seconda thread about Stewards compensation having a combination of fixed USDT vs APE vesting over 12 months. This reduces the WG USD liabilities. I am only thinking this for elected roles and not for non elected roles, such contractor roles, such as Facilitators, Project Managers, Secretary etc.

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13

I did consider this issue, and limiting AIPs, but felt the three month conflict period would suffice in most instances.

As well, recently BB from GwG has been highlighting the lack of consistency around progress reports for approved AIPs. Resulting in a similar/same question being asked - should AIP authors be obligated to have completed their previous AIP (or at least prove milestones etc were met), before applying for another grant - I’m confident this will mature further and we see best practices enforced.

The other big consideration were the working groups. A change from the current bi-yearly budgets has been proposed and in discussion, so with that in mind (ability to have four budgets a year), limiting seemed unfair unless exemptions were made, (if that idea were to pass), but wanted to maintain a one rule for all stance.

Tl;dr - you raise very valid points and I think they are covered and/or will be more so soon. But certainly open to decreasing or possibly increasing the $300K amount if you have any thoughts around that?

Many thanks.

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14

Thanks. LFG!

$ape prices are at historical lows meaning every AIP we approve is emptying the treasury at a much faster rate than say six months ago when we were at $2.

EXAMPLE:

An AIP of $250K USD would have cost 125K $ape in March.

An AIP of $250K USD today will cost us 350K $ape.

So AIPs are costing us 3x as much compared to six months ago.

I’m no token economics expert but I feel this is pretty basic stuff - let’s take a break from massive $ape outflows and let apechain with 100m $ape to spend, and numerous other related ideas funded, which will hopefully drive/revive interest & perhaps $ape price slowly recovers. (If this were to happen sooner we can revoke the idea anytime after the three month conflict period ends.)

Tl;dr - why keep spending 3x/4x/5x as much $ape when stimulus is imminent. Let’s slow the money printer down a little for now as we wait to see if apechain & the hype delivers. If not we’ve lost nothing; instead saving multiple millions of $ape (and possibly stopping even further $ape price drops), by prohibiting large “drains”; added on additional runway too.

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15

Are you referring to my proposal or something else? AIP-465: Alignment Of Working Group Terms And Budgets

I am curious as to how you came up with the amount? Did you go by some formula or did you just pick a number that seemed to work? Also, did you take into account the $250K /w 69% vote issue into account?

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16

Had a look - it’s exact same topic as yours, only difference is the aim is specific to budget windows and removing them entirely.

On a side note - pushed back on it due to the pitch of “reducing voter fatigue”, when in reality we’d go from eight votes (two every six months for four WGs set in stone by dates), to possibly sixteen (each WG could have four budgets (due to 3 month conflict period) x 4 WGs), and then my thought was what if they don’t pass, resubmissions could bright us up to thirty two votes, then what happens when we add more WGs :person_facepalming: - reducing voting fatigue they say. :grimacing:

No formula unfortunately. Originally I had a $250K cap. This would have made the 69% threshold non-applicable and removed the VETO power a few larger wallets now hold.

Thought that might have been seen as a bit combative and would have detracted from my aim - let the treasury heal and price go up (hopefully) - so 300k is a place holder tbh as i get more input from readers. :pray: Then I’ll go with a figure that’s more agreeable to the many and should pass.

So ngl I was very surprised not to see any comments on the $300k cap until now.

Do you have any thoughts/suggestions mate?

Thanks.

1 Like
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I believe that I already communicated my thoughts (see below) on the proposal. I don’t see how defunding the GwG to this degree helps the treasury. It actually doesn’t. Yes - I did the math.

While I do see that the GwG budget has ballooned ($488,600 to $1,271,900.00) as per their last budget request, it’s not as if they’re engaged in wasteful spending because that excess goes back into the community and fills in the gaps left by ThankApe.

As to the $300K number, I believe that mathematically it’s immaterial because even at $250K /w 69% passing threshold, I don’t expect the voting results to be that much different were it $249K, $300K or $1M. And that is because as this proposal would essentially defund the GwG, if this ever makes it through admin review and ultimately to vote, there’s bound to be a large voting turnout to prevent that from ever happening.

Ref:

AIP-408: Q2/Q3 2024 Governance Working Group Budget
AIP-317: ApeCoin DAO Governance and Operations Budget

18

Few points to remember:

Facilitators’ costs have been axed from GwG budget. Saving $288k pa.

Possibly secretary role about to be axed. Saving $84k pa.

Delegates accelerator at $200k will be ended too.

GwG can live on $1.2m a year for one year.

Thanks.

19

We definitely need to slow down spending. If I was in complete control of the dao I would have a running tally of how much organic buy pressure we have of $ape monthly and make sure the spending pressure was only 20% of what the buy pressure is.

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20

I really would love for people who are concerned about “saving” the treasury to think about the consequences of suggesting such drastic measures

A few thoughts:

  1. As much as I would love to have a crystal ball that predicts the future accurately and correctly, none of us do. We don’t know what $ape will be at come a year from now. Playing the game of speculation in this instance is rather dangerous
  2. What are other streams of income and revenue can this DAO generate to buffer working group costs (bc we need them) and to sustain outgoing funds that support proposals?
  3. What harm incurs when we chop off funding valves and working groups? No activity for a year can certainly be a death nail.
  4. Defunding the GwG is also a death nail. This DAO, like any DAO, needs a core group of people that can drive governance decisions while simultaneously keeping the boat in tact. There are catastrophic consequences in pushing proposals like this thru. Additionally, chopping off non-contractor roles may shift workload to those who are contracted which may lead to fatigue, burn out etc.
  5. I’ve seen similar conversations but no one has suggested clawing back Banana Bill funds or even clawing back the astronomical money that their “advisors” are being paid.
  6. There is an unintended power vacuum that is being created and the victims of this will, no doubt, be the community in this DAO.
    I urge people to utilize more holistic approaches to solving issues that have arise in recent months – some due to market conditions and others due to
  7. If this would pass, I suggest that the ask be a shorter period of time in order to effectively measure both consequences and monitor treasury maintenances and a study be performed in order to gather collective intelligence in data to measure the effectiveness of said proposal. I would like to see suggestions from the OP @furiousanger that are in line with this bullet point. Otherwise, we are enacting said proposals without knowing the outcome and what has occurred which is a disservice to the community at large.
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