pDAO Budget Definition

As others have suggested, it would aid the allocation of pDAO funds to first define a set of budgets.

This achieves these important goals:

  • Helps the community identify key areas to fund
  • Identifies the roles of responsibilities of the core team and pDAO
  • Makes sure each allocation does not dominate other important areas
  • Ensures the treasury remains solvent
  • Attempts to minimise the effect of tragedy of the commons

From a development perspective, the core team will fund our own head-count, attending events, equipment, and most audits.

From a pDAO perspective, the suggested areas of:

  • Marketing (tradeshow, swag, advertising, etc.)
  • Incentives (e.g., LP bonuses)
  • Grants and Bounties (suggested 30%)
  • Reserve Treasury

Areas of discussion:

  • Immunefi Bug Bounty (whether partially or fully funded by core team)

It would be good to hear from the community on what other areas should be budgeted and what those allocations would look like.

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For the sake of discussion, I propose a split as follows:

  • Marketing (tradeshow, swag, advertising, etc.) - 40%
  • Incentives (e.g., LP bonuses) - 10%
  • Grants and Bounties (suggested 30%) - 30%
  • Reserve Treasury - 20%

Currently, the Bankless sponsorship is going to take ~10% of the annual budget or 40% of that single quarter. A yearlong bankless campaign is therefore not compatible with the above budget and I think for good reason - Bankless seems quite expensive. If this quarter proves to be highly valuable, then perhaps increasing the marketing budget may be reasonable.

As a side note, I hope we push for a diversified reserve treasury instead of keeping the entire 20% locked in RPL. Diversification towards ETH/USDC will make the pDAO capable of funding long term regardless of macro market conditions.

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It is my understanding that the communication at ICO suggested that marketing is also supposed to be funded from the RPL tokens retained by Rocket Pool. At what point did that responsibility move to the pDAO and how was that decided?

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the core team will fund our own head-count, attending events, equipment, and most audits.

Can you elaborate on “most audits”?

Langers, are we looking to outline budget values or proportions of the total annual budget, the specific topic areas that the pDAO has authority over, or both?

Is the expectation that the budget allocations and topics would be discussed and updated annually?

I believe that a 40-50% marketing budget is probably where we want to start…with the marketing manager keeping a close eye on ROI and other performance metrics to determine how to adjust accordingly.

The reserve treasury value should be explicitly linked to events or topics areas that carry risk or opportunity. To be clear, we should look at the topic areas, determine what their baseline budget proportions are, and then identify risks for cost growth or opportunities that may require additional expenditure.

These risk/opp budget estimates would then tie into explicit line items in the reserve and be set aside not to be used for anything else until the risk is retired or the opportunity is abandoned.

That portion of reserve would fall into a sub-category called contingency. Then the remainder of the reserve is for unknown unknowns or more ill-defined/nebulous items (should be a minority portion of the total).

Doing this with a comprehensive list of topics will give us a better feel for what portion of the total budget should be in reserve and whether we’ve allocated sufficient budget to the overall list of items.

It is my understanding that the communication at ICO suggested that marketing is also supposed to be funded from the RPL tokens retained by Rocket Pool. At what point did that responsibility move to the pDAO and how was that decided?

i wasn’t aware of that communication. Happy to discuss.

Can you elaborate on “most audits”?

All development undertaken by the core team will be audited and paid for by us. I left the option open for community-funded development that would require its own audits.

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i would say we are looking for budget proportions and we can discuss what areas the pDAO has authority over. Ultimately, yes we would end up with clear lines of responsibility with budget proportion allocations for key topic areas.

I think it makes sense for the budgets to be set and periodically reviewed - annually seems reasonable.

i was pretty much assigning all “reserve” funding in the contingency (unknown unknown) bucket but if it is possible to highlight explicit items then great.

Obviously, where the lines cross I can hopefully provide some clarity but I believe the community should have agency over the budgets. My intent is just to suggest some structure to ensure the goals I outlined. Apart from that I will follow the conversation and stay out of your way.

This might be where some of the disconnect about the “dev wallet” comes from. This article has a graph that shows the “expected use” and cites the Rocket Pool whitepaper. There have been different white paper versions over the years and I can’t find the version that includes this graph. Given that at one point there was budgeting for protocol specific uses, I think it’s understandable that some people think of that wallet more in terms of a protocol treasury than something owned by a company that is completely separate from the protocol.

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Agreed and considering the controversy that has come from this the past week it would be a good idea to do a content refresh after all this is settled (publishing new posts and updating old to reflect the latest state of things).

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I think this is a good distribution moving forward but with a 60% allocation towards kickstarting marketing from the funds up to this point, which would also allow us to extent the Bankless campaign if we’re happy with the results from the first quarter.

Here’s how much each allocation is worth in RPL and USD at various prices

(RPL amount increases in every period so I assumed 10,500 RPL and there are 13x 28 day periods in a year: Rocket Pool Explorer)

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Thanks for doing this analysis! This makes it very clear how anemic the pDAO budget is, especially compared to the dev wallet. Most protocols at our stage of development and TVL have a significantly higher budget. Maybe that’s due to VC funding? Regardless, I can see why there’s controversy here.

Given such heavy restrictions and the effects of RPL sell pressure on future protocol growth, we need to be very, very careful about spending pDAO funds at current market prices.

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Let’s not forget we should still have funds from previous inflation periods (70,230 RPL)

Here’s how much the funds are worth

Seeing a lot of discussion about how much of a huge proportion of the pDAO is spent on marketing. I would like us to think ‘outside of the box’ and the team to think critically about overall inflation allocations in this phase of rocket pool growth.

I submitted a largely ignored proposal around this here: More equitable and effective distribution of RPL inflation - #6 by jort

I would like to, at least temporarily, not see the oDAO placed at equivalence to the pDAO and all its functions. It is disproportionate and means we are unduly limited in the pDAO treasury.

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This is a little off-topic, but I wanted to let you know that your post wasn’t completely ignored! I’m working on an inflation research piece which references this. You definitely laid the groundwork for a larger inflation rework, and hopefully we can get the ball moving on that post-merge.

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This might be where some of the disconnect about the “dev wallet” comes from.

Thank you for raising it. I will confer with Dave as I don’t have that authority.

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Here is a link to the original white paper issued in June 2017. [https://neironix.io/documents/whitepaper/5313/RocketPoolWhitePaper.pdf]. On page 14 it states that 15% of 18 million RPL (2.7 million) will be issued to developers etc. It is silent about what happens to the $4.25 million of ETH raised but the obvious anticipated use is to pay for the development, marketing, legal etc (see Funding Breakdown on page 15). In which case the RPL was more of a reward to the developers than a means of funding the development. Rocket Pool Pty Ltd was not incorporated until May 2018.

This may be out of scope for the current discussion, but I think it would be worthwhile to consider adding funding for the core dev team to the protocol budgeting. While it’s been a bit ambiguous, I think it’s fair to assume that the purpose of the initial RPL allocation for the team was to get the protocol to self-sustaining status. With the upcoming upgrades, we are rapidly approaching that point and I think the team needs to be compensated separately for their continued efforts.

Right now the team receives RPL revenue from their oDAO positions. I’ve seen a bit of debate in different places as to how we should treat the oDAO inflation:

  1. oDAO payments should be exclusively to compensate for their role as an oracle, or
  2. oDAO payments should be a way to also reward people advancing Rocket Pool or public goods in the Ethereum space.

Personally, I’m in favor of the first version - we should keep the scope of the oDAO as limited as possible. This will make it easier phase it out once it becomes technically feasible, and it will also allow us to ensure that their incentives are directly aligned toward securing the protocol.

If we are to continue down the path of option #1, I think it would be worthwhile to consider moving some of the oDAO inflation to the pDAO. We could then use the expanded pDAO to compensate the core team and others that are generally advancing the protocol and aligned public goods.

If we are to continue down the path of option #2, we need to consider greatly expanding the oDAO and removing certain members that are not contributing.

Major protocol changes to the oDAO deserve its own thread of discussion so I’ll end it there.

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I’m in strong agreement with thomas on this one, I believe option 1 would be best for the protocol and also allow us to shift some funds away from odao and have a more sustainable plan for dev funding in place.

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