LIP-4 Establish DAO Guidelines, Procedure and Team Payment Structure

Could you please elaborate how can 12 months vesting ensure the team work. not that i don’t trust the team, but it would be better if there is some kind of measurement, KPI, floor price or something. The vesting alone is not a guarantee of work, e.g. the team can just hang out and chill for 12 months then get the 75% out.

I already voted ‘for’, just wanted to voice out so everything could be a bit more clearer for the other holders/investors

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  1. I’m referring to the #vault post. It shows the difference of 50% to 15% when I believe it’s better represented by 25% team, 25% marketing, changed to 15% team which does not include marketing. This is still foggy, what is your “salary” description consist of? I learned something new, I thought the team was building the staking contracts and website but it seems not to be apart of the 15%?

  2. That’s awesome, just think more transparency would be great. Those contracts are for what? What protocols? Website I knew and looking forward to! That’s awesome to hear!

  3. I mean a “vault” that grows and is eventually used to onboard more team members. Personally, the vested part is cool but not the biggest factor. What is the 15% going to 3 people for? 1 person spends 1hr a day day testing an unknown contract and is paid $15k that week? Obviously not, I’ve already stated I trust the team but these transparent items would go far.

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I would like to see a more defined “team”. Who is considered part of the team etc. Do all team members receive an equal share or payment? I think the better we can define the fewer awkward situations we could run into in the future (like a team member going completely awol).

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Agree with knowing more about the team and the thinking around how their individual skill sets will push the DAO forward - as well as any gaps that exist and how we will fund those gaps being filled. Otherwise, I think the LIP-4 is well written and look forward to a successful partnership!

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I support the general approach with this LIP. My primary concern is that with a 15% share in all future revenues (not just the lizard sales), I would expect to fund the team payments plus operations costs to run the project. I do not begrudge the team payments whatsoever but for that amount of money, I would expect it to be a mid-sized team doing development, marketing, etc. as the DAO gives the direction for how we scale this out.

Here is the math behind my thinking:
With a $1M treasury, assume we invest in 2 projects that have a moderate 20x each on average that takes a year to mature. A 15% share of that is $3M. If that means that we have $3M that is going to the team which is now 5-10 people building out the EthLizard ecosystem including operations expenses, I think it’s spot on. I’m fully onboard with 15% funding for that and might even suggest we go to 20% to build a larger ecosystem with more marketing, etc. If we’re saying that 15% goes as only payments to 3 team members and additional operating costs are coming out of the treasury, I think the structure isn’t aligned properly.

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I completely agree with this.

If the 15% is aligned with total revenue is assigned to team payments, growth, marketing, building etc. then the structure may even fall short of what is required long term to be able to achieve this and I may personally be in favour of a larger percentage allocated to this. If it is only for the current team, that would mean further proposals must be made to allow the team further funds either on a blanket percentage basis or a proposal-by-proposal basis to continue building the ecosystem. I do not think this is the way that the structure should go. If this was the proposed path I would likely need to reconsider supporting a blanket 15% of overall revenue. I think there needs to be some level of autonomy for the day-to-day running of the project.

It goes without saying that the founders and advisors have my complete support. I have been a believer since I joined this project in December. I think we just need some further clarity on what to expect of those funds going to the team.

I personally think that the team funds would exists separately from DAO governance once it has been allocated in terms of day-to-day management of those funds. I also think that, much like the seed funds raised at Illuvium, when the DAO votes on new proposals that the team funds in reserve would go toward developing in the direction that the DAO has voted on including further funding if required.

I think this is the direction that is envisaged (I could be wrong), but I think that this needs to be addressed directly.

Some thoughts on what this might look like:

  1. Funds go into a central reserve fund managed by the team separately from the DAO
  2. There is stream of payments to the team members according to portfolio and contribution to the direction of the DAO. Much like there is trust in the team at Illuvium to manage and allocate these funds accordingly.
  3. There are a portion of funds reserved for funding new proposals and developments for the DAO.
  4. There are a portion of funds allocated for marketing/legal/human resourcing to achieve the direction the DAO votes on for ecosystem development.
  5. Transparency in the allocation and use of those funds and current reserves - a bit like a quarterly/bi-annual report of expenditure (doesn’t have to be too specific for each - particularly in relation to team payments - rather just looking at overall allocation percentage for use of funds)
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I’m in favour of seeing such quarterly/bi-annual reports of expenditures.

Thanks again KakashiSama for compiling this, and making it easier for us to answer.

Summary of Ethlizards community questions, concerns and engagement on LIP-4

DAO & Proposal Process

  • Can voting be limited for the first 24 hours to allow discussion time before voting happens (is this needed / a good idea?)

The Vote is open for a full 72 hours which we hope will allow ample time for discussion.

We hope that these questions inform the community adequately to make a decision on LIP-4. Anyone can change their vote at any time during this period.

There are some in the community who feel more time is needed, and some that feel we are not moving fast enough. We hope to strike the right balance, with providing a minimum Quorum of 500 Lizards and 72 Hours of open voting…

Council Members

Community Sentiment: In favour of doxxed council members managing the funds and investments. Curious about other responsibilities.

So far we know there will be 5 council members voted in by the DAO. These council members will serve as fund managers and will research, make investments decisions as well as decide when to take profit from investments.

  • Are their responsibilities ONLY investment/treasury related?

Correct. The intention is that the Ethlizards Council Members responsibilities are as you state above. “research, make investments decisions as well as decide when to take profit from investments.”

Outside of this they may choose to be a source for deal flow and/or become an Ambassador for Ethlizards but this is not strictly their responsibility as council members.

  • Will the treasury gnosis safe list only these 5 Council Members on the multi-sig for fund management or others added to multi-sig also?

At this stage these duties are separated. The intention is that the Council will make the decisions and the multi-sig signers enact those decisions.

The current multi-sig signers of the DAO Vault are Sp1cySauce, Dupree, Galaxy Express, Kieran Warwick and Jeff.

  • Any governance related responsibilities, power, etc?

No, they are only investment related. See Above.

Founding / Core Team

Community Sentiment: Overall team has done a good job up until now and community is supportive overall. Most have questions about who is doing what?

  • Who is currently a paid member of the Ethlizard team?
  • What are the roles, responsibilities, and time commitments of each member?
  • Are any roles needed immediately to expand the team?

Currently, the Core/paid team consists of Sp1cySauce, Galaxy Express, and Dupree. We’ve been working hard on Ethlizards since about October last year…

We recently spoke to Kieran, and three founding team members have pledged to give the development of Ethlizards our complete attention, dedication, and are fully committed to working on this project for the years to come (hence the addition of 75% vesting over 12 months).

The wider team and roles are:

Dupree - Strategic Partnerships
Galaxy Express - Art / Creative Director
Sp1cySauce - Developer
Kieran Warwick - Advisor
Jagerman - Advisor
Josh - Front End Developer / Consultant
Izeeyahmon - Infrastructure and Security / Consultant

Moderation Team & Community Outreach
Wandering Crypto Wolf - Community Manager and Lead Moderator
Necronomics - Moderator
Wade | Lizmod - Moderator
Barrybutterhandz - Moderator
Touch/James - Moderator
Afrocena - Moderator
Astral Ape - Community Outreach
Vesty - Marketing and Collaborations

Founding Team’s work since mint

Community Sentiment: Many want to know more about the team’s work. Only those who spend A LOT of time on discord asking questions have a decent idea. The rest are lacking information.

Is it possible to provide a brief summary of works the team has completed since mint? (some of us know bits and pieces. I (Kakashi) think that the community will show even MORE support for the team if they can see a list of just HOW MUCH has been accomplished (I know it’s more being done than most think).

It’s hard to believe, but it has only been about one and a half months since Mint.

The community may recall that the plan before mint, during and at least a significant time afterwards, the roadmap was to hold gaming Tournaments for ethlizard holders.

With that in mind, there has been a COMPLETE and much more ambitious change in direction. As you are well aware the roadmap now looks radically different.

With community support, in less than 2 months we have established the DAO Infrastructure such as

  • Gnosis Vaults
  • Snapshot Voting
  • Governance Forum
  • Process and Procedures

We have now held numerous successful votes. In addition, with the approval of this LIP, we decentralise further. We now have the infrastructure to give Ethlizards holders the means to propose their own LIP’s for voting.

From an outreach perspective you can see the amount of celebrities and large holders regarding ethlizards in high esteem. We have a great alpha group as well partnering with numerous projects for Whitelists for ethlizards. The addition of Ethlizards as part of Galaxy Fight Club is another thing that was only announced yesterday.

Work has already begun on some of the activities outlined in the roadmap, such as a new website and planning for staking etc

In the upcoming week, we want to finalise a new proposal for the remaining Auction Lizards as well.

Alpha Leak Alert - There could be another contract being launched for Honorary Lizards soon………….

What does the 15% commission for the team cover?

Community Sentiment Some discussion over whether 15% is fair – this all depends on exactly WHAT the 15% covers.*

The LIP-4 is intended to provide more clarity than the current arrangement. At present 50% of Commissions are paid to the Core Team/ Founding Team with 50% going to the DAO Vault.

This is certainly in line with something like the Doodle DAO, 50/50, and certainly a LOT better than a number of other DAO’s such as Gray Boys with only 30% going to the DAO.

However, as many in the discord are aware we are advised by Kieran Warwick and (unofficially) Tyler Ward that this structure needed to change in an effort to move towards more transparency and decentralisation.

We (Kieran, Jaegerman, Tyler, and the founding team) agreed that starting from 1000 ETH trading volume on OpenSea, the founding team will be paid 15% of all revenue generated by the Treasury, as opposed to the current 50% of commissions revenue.

For transparency, all other expenses under the new LIP-4 will now be funded by the DAO.

  • Does this include marketing, DAO overhead and operating costs, etc?

For transparency, under the new LIP-4, these will now be funded by the DAO.

  • Does it include hiring and payment of additional team members to run the DAO?

For transparency, under the new LIP-4, these will now be funded by the DAO.

  • If a founding team member stops working or leaves, do they continue to be paid? How much? (It’s not unreasonable to get paid for building a brand, just clarifying)

For the first three years, the Founding Team’s 15% revenue share will be paid as follows: 25% shall be paid immediately and 75% will be vested or streamed linearly over a 12 month period.

This was done for a purpose. If a founding team member stops working or leaves during this three year period then they will only be entitled to the amounts unlocked up until that point, potentially allowing someone else to fill that role.

  • How is this 15% divided amongst the founding team, costs, etc?

15% is allocated to the founding team. For further transparency, under the new LIP-4 all other expenses will now be funded by the DAO.

This is similar to issuing Tokens of a project and allocating the team 15%. However in our case, we do not have any ability to liquidate; meaning, we are here for the long haul.

  • Do advisors get paid from this (or any payment at all)?

No. Advisors are with us because they believe in the vision and the team.

  • Is this 15 % of distributed profit revenue, or 15% of what comes into the treasury directly?

This will be 15% of Profits, for example royalties have no further cost (this was expended pre-mint) so this is now pure profit. However, if Merchandise was developed at some stage at a hypothetical cost of 10 ETH and a Revenue 30ETH then Profit = 20 ETH, so the 15% will be calculated on 20ETH (Profit), NOT the Revenue.

Treasury Profits

Community Sentiment: Is the following correct?

DAO investment profits

  • 5% profits to council members
  • 15% to Ethlizard team
  • 40% reinvested
  • 40% distributed to stakers

It’s not exactly that but it can certainly be used as an approximate estimation.

To be clearer: The council will take a 5% Fee from whatever profits are made. The remaining goes to the vault, of which 15% of profits is distributed to the founding team and 85% of profits then distributed to stakers and reinvestment. At the moment the staker/reinvestment ratio is set at 50/50, but this number can be adjusted via an LIP.

Royalties, merch, future NFT drops, other income
15% team
85% treasury for reinvestment

Similar to the above 15% is distributed to the founding team and 85% then distributed to stakers and reinvestment.

What are the costs for the treasury?

Community Sentiment: Unclear whether the treasury is to be used ONLY for investments or if it also has additional costs.

  • Any overhead or fees paid from treasury, or this is covered by the 15% paid to the team?

The founding team agreed that starting from 1000 ETH trading volume on OpenSea, the founding team will be paid 15% of all revenue generated by the Treasury, as opposed to the current 50% of commissions revenue. For transparency, all other expenses under the new LIP-4 will now be funded by the DAO.

Disagreement between the DAO & the Founding Team

Community Sentiment: How decentralized will this DAO be? Who really has control/power and in which situations?

  • What is the mediation process in case there is difficulty finding and agreement between the team and the DAO?
  • Who has final say in a disagreement?
  • What happens in the case that the DAO/community thinks that a certain team member is causing extreme harm to the DAO – I.e. worst case scenario – how would a team member be removed? (By DAO, or by team on behalf of the DAO, etc).

We’d have to preface this with DAO’s are very new - All of us here are literally spearheading Web 3. There are some DAO’s that have come before and some that have failed spectacularly. We have tried to learn from the DAO’s that have worked and borrowed the best components of those structures. You can see that evident in the process and procedures that have been developed in the LIP right through to the Snapshot Voting and Discourse discussions.

We would hope that the team and community (not everyone, but at least the majority) are in lock-step with the majority of decisions and especially our end goals. However you are correct - we must plan for these eventualities.

You have probably already seen how this plays out, when there is a disagreement with the community and the Team which is partly how LIP-4 came about.

To make it clear, In the case of a dispute we would envisage that our advisor Kieran Warwick, whom is very well respected by the Team and the Community, to play a pivotal role in the mediation process if it were to ever occur.

To answer the last question, in the case of downright malevolent behaviour of any team member - They can, by multi-sig Majority be ejected from the team, removed from multi-sig and no longer have access to remuneration.

  • WHO handles hiring? Only the team hires people for project development?

At this stage the core team with help from our advisor(s) . Not many people know this, but Illuvium’s HR Personnel (Jagerman) has also been assisting the team along with Kieran. If and when there is a need for additional talent, we are more than confident that we have this covered.

  • Can the DAO vote that a role needs to be added? Is there a process for the DAO to hire it’s own representatives or vote on behalf of it’s own needs for a recognized volunteer role/ paid position (think things like governance/community support roles that provide things like reports, advocacy, engagement, etc.

Absolutely. The DAO Funds are for the DAO, and every Ethlizard via LIP-4 will have this ability.

NOTE ON DISAGREEMENTS

This section above about disagreements does not mean to indicate any kind of “us vs them narrative.” It’s actually instead to understand what are the mechanisms we can put into place to keep the founding team, community and DAO in alignment with one and other whenever possible. Additionally, which mechanisms are in place to resolve any disagreement so that some middleground may be reached with minimal drama, delays or disturbances to the protocol.

Agreed, and thank you for bringing this up. I hope this has answered your queries adequately.

Personal Thoughts from KakashiSama:

  • Awesome that we are moving forward as a DAO with quality, speed and community engagement.
  • I LOVE that the governance forum is now up and available so quickly.
  • It’s great to see the founding team pushing this forward and engaging positively in the community
  • Clearly a lot of thought and work has already gone into the creation of LIP-4
  • Many people seem very much in support of the general idea of this proposal, however they have questions about some specifics before placing their vote.
  • In CONTRAST to Illuvium DAO where council main focus is governance, the Ethlizards DAO is only able to vote in council members who serve as fund managers. The team is hand-picked by the team. It should feel very clear WHO actually has final decision making power in terms of governance decisions (Team, Council and/or DAO vote)
  • TBH after seeing so many questions and parts undefined (as we’re literally forming the DAO’s foundation), it could be worth it to temporarily suspend voting for a matter of days until these things can be answered.
  • IMO, MOST of these questions are not so much because the proposal is unclear or people are against it (most seem for it), it’s just that we’re literally forming a DAO and there are A LOT of details that go into it.

My biggest question: How much of this is being taken from existing successful DAOs and how much are we creating because it’s new / different? [sometimes it’s difficult to give an opinion on a new topic, however if we know a certain topic/policy is suggested because it’s used at Illuvium/BarnBridge, etc, then this info is helpful.)

For your biggest question, we’ll re-iterate the answer from above…

“We have tried to learn from the DAO’s that have worked and borrowed the best components of those structures. You can see that evident in the process and procedures that have been developed in the LIP right through to the Snapshot Voting and Discourse discussions.”

Thank you very much for consolidating these questions from the community and some of your very thoughtful comments. We hope this informs the community adequately to have a more informed Vote for LIP-4.

8 Likes

For the first three years, the Founding Team’s 15% revenue share will be paid as follows: 25% shall be paid immediately and 75% will be vested or streamed linearly over a 12 month period.

This was done for a purpose. If a founding team member stops working or leaves during this three year period then they will only be entitled to the amounts unlocked up until that point, potentially allowing someone else to fill that role.

Is the implication here that after the 3 years the 15% will be paid indefinitely even if a team member leaves? Or is the implication there will be a new vote on team payout after 3 years?

Also just want to comment that while overall I think it’s good this payout is contingent on continued work it also does create some weird incentives. With this a team member is highly incentivized to stay on even if they don’t really want to and aren’t devoting much time or energy to the project anymore. Zombie founder situation.

This will be 15% of Profits, for example royalties have no further cost (this was expended pre-mint) so this is now pure profit.

I don’t agree with the characterization that royalties from OpenSea lizard sales are “pure profit”. Revenues should be viewed as revenues regardless of source. Of course some are higher margin than others but this is true of all business operations. Some expenses act as loss leaders while others drive immediate sales.

Specifically with this project could imagine a situation where say some work is done developing a game associated with EthLizards that might not drive any immediate revenue but would increase demand and thus sales of EthLizards themselves. Even though the sale of the lizard is “pure profit” it isn’t really because of other expenses that drive that sale.

I think any model that pays out a fixed % of DAO profits to the team should always be net of all DAO operations and shouldn’t single out certain revenue streams as “pure profit” which have a % taken off the top and others that only take a % off after accounting for expenses.

after listening to the AMA, this seems very reasonable and a genuine attempt at creating the right structure. It does NOT seem off market to me. I am voting for the proposal. NFT industry moves fast and rather have a motivated team and get moving.

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The lizard family YYDS

1 Like