What follows is a draft for a DAO proposal that the pNetwork team is putting up for discussion. If no major points are raised, this will be officially proposed in the DAO in the coming days.
Edit (updated on August 30th, 2022): here is a new revision (rev.2) of the PIP17 Draft Proposal based on feedback shared by community members both in public community channels and in private. Among other things, this contains material provided by the core team showing costs allocation and figures based on historical data, so to make it more accessible for the community to see what it takes to maintain pNetwork strong and healthy.
Slides 3, 9 and 10 are new additions compared to the previous version.
Community discussion: Should the DAO replenish its Treasury by changing the 3rd Year of PNT inflation to 10%?
Summary: This proposal aims to replenish the pNetwork DAO Treasury via a PNT inflation mechanism at an overall 10% rate over the next 12 months. This would enable the pNetwork DAO to fund activities directed at the growth and further development of the protocol and the ecosystem. The entire proposal (rev.1) is available for review here.
Previously applied at a 42% rate and at a 21% rate during DAO Years 1 and 2 respectively, the inflation rate would be halved for Year 3 to reach 10% rather than going directly to 0% as previously planned.
Newly emitted PNT tokens would be directed to the pNetwork DAO Treasury and would be under the control of the DAO. Should this proposal be approved, the pNetwork DAO would be able to manage the Treasury and decide how to allocate funds via dedicated DAO proposals. Specifically, three key areas of focus would be grant programmes, security budget and liquidity mining.
Important note: the newly issued tokens would represent locked tokens (out of circulation) until the DAO decides if, how and when to spend them.
Motivation: Because of the hack that happened in September 2021, PNT tokens coming from the inflation mechanism have been used to compensate those affected along with PNT tokens from the team. Therefore, the pNetwork DAO Treasury is currently empty. This proposal aims to create a strategic reserve for the DAO to fund the further growth of the protocol.
Benefits for pNetwork as a whole:
- Create a strategic reserve that enables to provide for pNetwork’s future and aims at advancing pNetwork as a world’s leading cross-chain protocol
- Decentralize the decision-making on DAO Treasury funding via DAO proposals
- Incentivize new contributors and retain existing contributors for the further development of the protocol
- Add security-oriented practices that benefit users in their decentralized journey
- Grow the ecosystem and incentivise pNetwork active users
Specification: The DAO Treasury is a key element that allows DAOs to grow and to fund future evolutions of their reference project. According to the “State of crypto” report by a16z, DAOs have accumulated $ 10+ Billion in treasury assets under management. A large majority of value held by these DAOs is in the form of the protocol’s native governance token.
According to Banklesshq.com, treasuries help DAOs fund critical development, grow their network, express their values and increase their longevity. The goal of treasury spending is to reward core contributors and attract the right set of new contributors. For example, Uniswap, Compound and Aave have proposed grant programs that aim to fund individuals and teams that contribute to the protocol. Or, projects like Yearn have a decentralized and bottom-up work structure where the core team gets paid from the community treasury via an operational fund.
Creating a pNetwork DAO Treasury is expected to positively impact the project, enabling the DAO to fund activities directed at the growth and further development of the protocol and the ecosystem. Should this proposal be approved, the pNetwork DAO would be able to manage the Treasury and decide how to allocate funds via dedicated DAO proposals. Specifically, three key areas of focus would be grant programmes (for the core team and external teams), security budget and liquidity mining.