Hey everyone,
As many of you know, the macro environment has been tough on token valuations. In prior years, protocol funding covered our operating costs comfortably, but that hasn’t been the case since mid-2024. We’ve been drawing on our dev wallet (ICO funds) to bridge the shortfall, which means our runway is shortening. We still have a healthy runway, but we want to reduce burn rate so we can continue delivering at a critical moment for the protocol - and be well positioned to capitalise when conditions improve and adoption accelerates.
We run a lean operation. From day one we’ve been conscious of this industry’s boom-bust cycles, and our priority has always been retaining our talent through the tough periods as much as the good ones. We continue to review our operational expenditure closely.
We have explored generating income from our own protocol assets, which will provide a meaningful supplement over time - though like everyone else we’re in the queue. Realistically, protocol funding remains our primary income source for the foreseeable future.
As per RPIP-81, the split of protocol inflation is the following:
- IMC: 30% (approx 156K RPL or ~$217,000)
- GMC: 40% (approx 208K RPL or $290,000)
- Reserve Treasury: 30% (approx 156K RPL or ~$217,000)
As per RPIP-37 the core team currently receive 5% of inflation drawn from the reserve, which equates to 35% of the Protocol DAO reserve. Concretely, this works out to be ~56K RPL (~$80,000) per year. With operational costs between $1.1mil-$1.5mil (variation due to audits), the magnitude of the shortfall becomes starkly clear.
Our proposal is to change change RPIP-37 to allocate 95% of the reserve to protocol development funding. Consequently the team would receive ~150,000 RPL (~$215,000) per year. As market conditions improve, we are happy for this to be reevaluated.
The need for a truly decentralised staking protocol has never been greater. This proposal ensures we can reduce our burn rate and deliver value at a critical time for the protocol.
Please let me know your thoughts.