DAO restructure

[secengjeff]

PROPOSAL NAME:

DAO restructure

PROPOSAL CATEGORY:

Process

TEAM DESCRIPTION:

Individual holding 81 $APE

ABSTRACT:

This proposal restructures the ApeCoin DAO to efficiently manage the treasury (after operations) and to limit outflows to high impact projects that create new use cases for ApeCoin that are broadly applicable to the community at-large. These changes make investments in ApeCoin focused ventures/venture funds the primary method of treasury distribution and add an expectation of return to protect the longevity of the treasury into future generations.

BENEFIT TO APECOIN ECOSYSTEM:

The premise of this AIP is that the ApeCoin DAO in its current form is without clear direction and is ineffective as a steward of the treasury. Yuga Labs launched ApeCoin as a benefit to BAYC members and as a token to be used as a currency in Yuga games. This author’s anecdotal observation is that $APE flows other than speculation and payments to/from Yuga have been negligible. The token is highly inflationary. Only 15% of tokens were distributed to the community with 47% given to the treasury and 38% held by Yuga or Yuga-affiliated persons or entities. The token has lost 73% of its value in the past one year and may continue to decline as tokens unlock over the next 18 months. The existence of a large treasury that can be accessed for any arbitrary use case, with or without benefit to $APE holders, compounds this risk. Declines in $APE price negatively affect the purchasing power of the ApeCoin treasury.

This AIP introduces the following changes:

• The Special Council (SC) will be directed to adopt a new mission and vision aligned with creating new use cases for ApeCoin that are broadly applicable to the community at-large. The SC will be responsible for developing and applying a litmus test for whether an activity meets this criteria.

• The AIP process will be modified to allow proposals in the following categories: (1) DAO governance (process/structural changes without associated costs) (2) budget allocation for routine operations; (3) allocations for investment; or (4) special proposals. A special proposal has no constraints but requires a majority vote of $APE holders and can be vetoed if motioned and seconded by SC members.

• The SC will be entrusted to minimize the cost of ongoing operations and act as a fiduciary of the ApeCoin treasury by reviewing and approving investment decisions that align with the DAO’s mission and vision. The DAO may act as limited partner (LP) in a purpose-built venture fund closely aligned with the DAO’s mission and vision or the DAO may invest directly in a project.

• The SC will be responsible for architecting and supervising venture funds, conducting searches for venture fund executives, and performing due diligence on direct investments. The SC’s funding decisions will be based on both alignment to mission and vision AND expectation of profit, which may be returned to venture fund executives (as applicable and in alignment with industry norms) and the ApeCoin treasury.

• It will be the goal of the SC to grow the ApeCoin treasury to ensure its sustainability and increasing impact to benefit future generations.

• Investments or other outflows that do not align with the DAO’s mission and vision or do not have a reasonable expectation of profit are permissible via a SC initiated AIP, subject to a vote of $APE holders.

• The SC may take no action if conditions are unfavorable for investment or suitable opportunities are not available or in the best interest of the community.

• The SC will be accountable to community transparency and communication, which will include publication of investment memos with due diligence, development of key performance indicators (KPIs), and quarterly reports that measure both financial performance and delivery in the context of the DAO’s mission and vision.

• The ApeCoin DAO (including any affiliated entities) may not offer securities or engage in any activity that may be perceived as establishing an investment contract with current or prospective $APE holders.

KEY TERMS:

N/A

PLATFORMS & TECHNOLOGIES:

N/A

STEPS TO IMPLEMENT & TIMELINE:

• The SC will avoid posting any new AIPs under the former structure
• The SC will conclude all outstanding ApeCoin DAO business not related or aligned to this AIP within 30 days.
• The SC will draft a new mission and vision and present it as an AIP for community vote within 30 days.
• The SC will update any documentation to reflect new rules and procedures aligned with this AIP within 30 days.

OVERALL COST:

N/A

[BoredApeG]

It’s great to have these thoughts join the much spirited discussions around the organization recently. I will note that the SC together with APE Foundation’s administrators and service providers in Cayman Islands serve critical functions in stewardship and oversight of APE Foundation. It’s certainly a good time for the ecosystem to re-evaluate the entire organization, however, much of what is being described here is completely not in the scope of what the SC is intended to do. Other individuals and/or grant recipients? More than likely better suited. @ssp1111 is someone good to speak with as he’s been having much public discussion about what we could expect to see the SC potentially be in the near-future.

[justzb]

Loving the passion you have for the future of ApeCoin Dao. Mad Respect

[secengjeff]

One bit of feedback I’ve heard on this idea a few times in Discord and now here is along the lines of “that’s not how SC works / what SC does.” I want to acknowledge and reiterate that this is a radical departure from the status quo and the intent is to make major changes. These are changes that some may not think possible.

Only somewhat related to this AIP, I am also running for SC. If I am elected I am prepared to dedicate my time and unique qualifications and to making this and/or other moonshot ideas a reality. I am not constrained by “can’t,” “that’s not what we do” or similar notions.

I also want to be clear that this is not an indictment against the current SC. I believe that the DAO was initially setup for failure and our representatives are put in a tough position. Together with this group we can solve these challenging problems and better structure the DAO for success.

[BoredApeG]

In this case it’s not about whether something is constrained about being “impossible” or potential lack of efforts. The DAO exists and is structured as a legal entity and Foundation for good reason and missing from this proposal is the consideration of regulatory strategies for those experienced with these types of Foundation structures, and particularly Cayman Islands Foundation companies.

You have your opinion about SC, and mine is not about giving these roles executive-like and operational duties. SSP has been preaching to skinny down the role of SC as in was originally intended and structure the changes elsewhere. This is why collaborative discussions are needed in order to have AIP(s) produced which have a reasonable shot at passing.

[secengjeff]

New entities can be created, old entities can be folded, more lawyers can be hired (if absolutely necessary). I’m being a bit hyperbolic here but there are no real constraints other than the ones we create in our heads to justify the status quo.

[Evil]

Very well structured AIP but this will infact, destroy the DAO culture as a whole. Apecoin wont be apecoin anymore without its members. Also there is no guarantee that investing as a VC would increase $ape prices

[secengjeff]

The goal is not to increase $APE prices. That is not a consideration in this proposal. One important part of the proposal is to ensure that investments (1) increase $APE utility for a breadth of members (e.g. most people would find the project useful); and (2) reasonable expectation of return over time.

Nothing is being destroyed. Members still exist and you can submit AIPs if you like, however, the SC should review whether the successful proposals are mission aligned and are a responsible use of treasury.

[secengjeff]

AIPs are somewhat technical documents, so I put together a couple of illustrations to help with story telling. Here is my interpretation of the DAO as it exists today:

Pre-AIP State

Ideas only have to be popular, not “good.” In a worst case scenario someone could write a catastrophically bad AIP, convince (bribe?) large wallet holders to support it, and drain the treasury. In a more likely scenario AIPs with small value and potentially high costs continue to chip away at the treasury, further dilute the float, and in turn drag down the treasury’s overall value. This assumes that most AIPs will involve a large outex of $APE to fiat to actually execute IRL.

Post-AIP State

Better structure is placed around the AIP process where decisions more commonly revolve around funding investment proposals vs. arbitrary free form ideas (though this is still possible through special AIPs). The SC is accountable to (1) decide whether to veto an AIP that is not mission aligned and meeting the litmus test of broadly applicable $APE utility (most people will find it useful); and (2) approving investment recommendations and managing treasury disbursement.

Let’s drill into (2) a bit and talk about what’s happening with the LLCs in this diagram. Rather than say “here is $APE to go build the thing you wanted to build” the DAO is saying “we are allocating X $APE to invest in a particular area.” The DAO would accomplish this in one of a few ways:

• Launch new ventures through LLCs (if it would like, not at all mandatory)
• Create new investment funds through LLCs and hire a Managing Director to own day-to-day execution
• Partner with existing VCs and ask them to build/manage the investments funds that would be funded through the DAO treasury (authorized by AIPs and specific expenditures approved by SC).

FAQ

I’ll address some things that have come up or are likely to come up:

Q: Will SC responsibilities expand?

No, they will change and might even decrease in some ways. DAO officers will manage execution through legal entities led by salaried and/or incentivized MDs who are accountable to returns and financial reporting back to the DAO for their particular funds/ventures.

Q: Will the SC make investment decisions?

Not directly. They will obtain approvals to invest through the AIP process, will decide how to delegate treasury within that AIP’s scope (LLCs etc), and will approve the specific disbursements that the LLCs are looking to make to beneficiaries (entrepreneurs).

Q: But the SC does not have that authority…

The community will grant the SC a limited set of responsiblities to manage execution of budgets authorized by AIP. They are not making independent and arbitrary decisions on treasury expenditures.

Q: Can I still submit AIPs for specific ideas?

Yes, using a special AIP, but the DAO officers will have a responsibility to evaluate whether the idea, however popular it might be, is a responsible and mission aligned use of treasury. If not, they may veto and send the AIP back to the community for revision (if they desire).

Q: I thought we couldn’t accept payments (and a litany of other legal concerns).

We’ll navigate it. This is not fundamentally different from the status quo in terms of treasury disbursement. It is fundamentally different in that at some point the LLCs executing on investments need to return profits to the DAO. If this causes some kind of problem we will navigate it. We will tear down false barriers if we have to.

Q: Why is this better than the status quo?

There will be increased accountability at all levels. Stewardship in the context of the SC will be contextualized as ensuring appropriate use of treasury and holding others accountable to both financial performance and execution of projects that bring $APE utility. In the long run the treasury will grow vs. erode. This creates a flywheel by which the DAO can accomplish more and more over time.

Consider the Harvard Endowment as an example. This is an investment fund that grows over time and pays dividends to the university to progressively scale its execution:

The Harvard endowment (imagine: ApeCoin treasury) is managed by the Harvard Management Corporation (one or more LLCs that we create) and with stewardship responsibilities held by the President and Fellows of Harvard College (our SC). Harvard has been successful over hundreds of years because it was able to grow its endowment while distributing returns that fund Harvard operations. In contrast, we’ve eroded the ApeCoin treasury over the past 18 months and counting without any clear/measurable indicators that $APE has become more useful as a result.

Q: What’s next?

I don’t want to run this AIP for vote without talking 1:1 with larger wallet holders who would ultimately steer a vote following the Equality value (“One APE equals one APE.”)

I plan to run for SC to do my part and ensure this DAO has the ambition and expertise to make meaningful reforms (this AIP or otherwise). Please consider voting for me if you are equally motivated by change, progress, and enhanced stewardship of our treasury.

[me_myself_crypto]

That’s the clearest explanation I’ve seen here! Now, it is all clear to me, fair&square
Thanks!

Totally agree with this idea
Good luck with executing it

[Chris.Admin]

Hi @secengjeff,

The community feedback period for your proposal would be ending in less than 24 hours.

• If you’re content with the feedback received, your next steps are to finalize your proposal using the AIP Draft Template.

• A moderator will reach out to the author to finalize the AIP Draft. Upon receipt of the final Draft, we will review and provide instructions on the next steps.

• Are you ready to proceed to the next phase or do you wish to extend community discussion for another 7 days?

We look forward to hearing from you.

-@Facilitators

[secengjeff]

We can close. I’m still following up on some conversations but I think we’re good as far as the forum is concerned.

[12GAUGE.Admin]

Hi @secengjeff ,

Thank you for your ideas [and the ApeCoin DAO community for the insightful discussions].

A moderator will reach out to the author to finalize the AIP Draft using the appropriate template.

• Once the AIP Draft is confirmed by the author and meets all DAO-approved guidelines, it will receive an AIP ID number and move forward for Draft Analysis Review.
• @secengjeff please see your messages for the next steps.

Follow this Topic as further updates will be posted here in the comments. In accordance with DAO-approved guidelines, if the author does not respond within 30 days, the proposal will be automatically transferred to the Withdrawn category, and the author can re-submit the idea

-@Facilitators

[12GAUGE.Admin]

Hi ApeCoin DAO Community,

This Topic has been rejected based on the DAO-approved guidelines due to no response in the last 30 days. The Topic may be submitted again by any user and upon approval, will be open for 7 days for community discussions.

This Topic will move and remain in the Withdrawn AIPs category.

-@Facilitators