[Phase 0] Transition to the DAO - Temperature Check 
As outlined in The Next Phase of the RadicleDAO post, the project’s next decentralization goal is to have the scaffolding in place to transition Core Teams to the DAO by November 2022 with initial teams transitioned by February 2023. To ensure a smooth and successful transition, it is wise to progressively transition aspects of the project where possible.
This proposal outlines Phase 0 of this transition which transitions Radicle’s development runway and contributor token rewards to the DAO. It requests 2.75M USDC to fund six months of Core Teams operational budgets (until February 2023) and 1M RAD to distribute among Radicle contributors who joined the project post- token launch.
Table of Contents
Background
As stated in The Next Phase of the RadicleDAO post, two major goals of the transition are to:
- Coordinate & fund all project development via the RadicleDAO.
- Decentralize decision-making power and influence away from the Foundation to active contributors and users.
To satisfy these goals, the Radicle Treasury must fund all contributor compensation and contributor incentives.
Contributor Compensation
Currently, The Radicle Foundation — a non-profit entity created to support the development of resilient and humane software infrastructures, such as Radicle — funds and coordinates most of core Radicle development. Core Teams propose yearly budgets and objectives that are reviewed and approved by the Foundation Council. These budgets and objectives are reviewed on a monthly basis (between the Council and respective Core Team), with updates usually being made around the 6-month mark.
Up until now, the Foundation has used its own assets to fund the operational budgets of all Core Teams. These assets were acquired during the initial private sale during the $RAD token launch. A significant portion of these assets are crypto (e.g. USDC, ETH, RAD). Almost all of the stablecoin assets have been used to fund the last year and a half of runway.
While the Foundation could use these assets to fund Core Teams, it could be higher-reward for the Foundation to not sell non-stablecoin crypto assets considering the recent market crash that has bunkering down for another “crypto winter”.
On the other hand, the Radicle Treasury still holds ~20M USDC and ~51M RAD from the network’s liquidity bootstrapping event and launch in February 2021. These assets are entirely controlled by Radicle token holders via on-chain governance. Throughout the last year, funds have been deployed by the community into multiple initiatives such as the Radicle Grants Program (RGP) and the Ecosystem Growth Fund (EGF).
While the current priority is to transition all funding of Radicle core development to the RadicleDAO (see The Path to Increasing Decentralization within Radicle and The Next Phase of the RadicleDAO), it will take time to lay the operational, technical, and social scaffolding required to manage and fund a decentralized development effort effectively. The Org Design Workstream has stated that the goal is to have the scaffolding in place to transition Core Teams to the DAO by November 2022 with initial teams transitioned by February 2023. This leaves around 6 months of runway before Core Teams can receive funding directly via the DAO.
Contributor Incentives
The Distribution of Ownership workstream (@ange @lftherios @abbey) is responsible for helping the RadicleDAO design and implement dynamic strategies for distributing native token rewards among network stakeholders, including contributors, users, and ecosystem partners. In the workstream’s kick-off post, a phased approach to tackling ownership distribution was outlined, highlighting that the perceived priority is to implement a strategy for incentivizing current contributors via the DAO before moving on to other network stakeholders. With this in mind, this temperature check is a proposal for Phase 0, a strategy for distributing token rewards to Radicle contributors who joined the project post- token launch.
As Radicle development transitions to the DAO, it’s important that all of Radicle’s contributors can participate actively in the governance of the RadicleDAO. Therefore, this proposal recommends that all current contributors who have contracts with the Radicle Foundation should be granted a RAD token allocation to ensure more equal and democratic distribution of ownership and a healthy environment for talent acqusition and retention. Once stakeholdership has been rebalanced within Radicle’s current network of contributors, then research into the best way to empower Radicle’s own “control network” with token rewards - via mechanisms like token swaps - can be prioritized.
Proposal
TL:DR; A proposal to have the DAO allocate 2.75M USDC and 1M RAD to reward current Radicle contributors and fund project costs and development through January 2023.
Compensation (USDC)
Instead of using Foundation assets, the Foundation proposes to use 2.75M USDC of the Treasury’s assets to fund the Core Teams’ operational budgets and management by the Foundation for the next six months — or, in other words, up until Core Teams can transition to the DAO.
The proposed amount is calculated from the monthly operational costs of all Core Teams (total ~400k CHF / month) and includes budget for any planned future hires, community initiatives (e.g. sponsorships, offsites), and a management fee (e.g. the costs of managing these services, like legal, accounting, and administration). It also includes a 10% budget buffer to leave a comfortable amount of flexibility around Core Team budgets.
This proposal is beneficial to the project for a couple of reasons:
- The Foundation can hold its non-stablecoin crypto assets and wait to use them until market conditions improve.
- Core Teams can use this six-month period to incrementally adapt to the changes that will come when transitioning budget and strategy management to the DAO.
- The Foundation can transition itself to a DAO-service-provider that needs community approval for allocations of Treasury funds.
Token Rewards (RAD)
Incentivization should be kept simple and straightforward for this batch of current contributors, and leave the creation of a longer-term (more complex) incentivization strategy to the DAO. The priority for this proposal is to use the 1M RAD award contributors who have already been supporting Radicle within the last year but who do not yet have any allocated tokens.
Each qualified contributor will be granted 1.5x their annual estimated fee in RAD, vested over 4 years, with a one year cliff from their contract start date (i.e. if they leave before the end of their first year, they don’t get any RAD). A contributor’s “annual estimated fee” is based on their daily/hourly rate and amount of time spent on Radicle. The reason for basing the token allocation on a contributor’s “annual estimated fee” is that it already takes into consideration their 1) time commitment to Radicle and 2) seniority/experience.
There are ~18 contributors that qualify for this distribution with a total of ~1M RAD to be allocated based on a 2.5USD/RAD conversion rate. This means about 1% of the network will be allocated to current contributors.
Other token-governed projects, such as MakerDAO and Yearn have taken a similar approach to contributor incentivization. For example, the Maker GovAlpha Core Unit used ~1.5x a contributor’s salary, averaged retroactively over an “eligibility period”, to calculate their own team allocations.
Implementation
Foundation Runway (USDC)
The USDC will be transferred directly to the Foundation’s accounts. The Foundation will continue to manage contributor contracts and payments in each contributor’s preferred currency, drawing from the Treasury-funded capital.
Vesting Contracts (RAD)
To ensure these rewards can be allocated by the DAO to current contributors before the transition, the recommended quickest and easiest way forward is to delegate the responsibility for managing the vesting contracts to the Radicle Foundation, with the intention of transferring ownership to the DAO once Core Teams have transitioned.
In practice, this proposal recommends transferring the ~1M RAD for contributor rewards to a multisig controlled by the Foundation Council and an overseer (@lftherios @abbey @cloudhead and/or someone supporting the Foundation’s operations). The vesting contracts will be deployed to this multisig, giving the signers the ability to pause, terminate, and update the vesting contracts.
The Foundation will be responsible for managing these vesting contracts until the transition. Once the infrastructure is in place, ownership of this multisig can be delegated among any number of DAO participants, decentralizing control of the vesting contracts to the DAO itself.
Until the transition, the multisig can take action in the following ways:
- If someone drastically reduces their average time spent on Radicle (over 50%) within the vesting period, then the multisig has the permission to update their vesting contract accordingly.
- If someone leaves the project within the cliff period, the multisig has permission to end or replace (pause) the contract.
- If a contributor leaves the project, the multisig has permission to send the “unvested” tokens back to the Treasury
The vesting contracts should be configured to ensure maximum flexibility for the DAO to upgrade the contracts as it sees fit, as well as create new ones for future contributors.
Next Steps
The next step of this proposal will be to draft a more detailed implementation plan for instantiating the vesting contracts and managing the DAO runway funds.
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