Primary Authors: @iluscavia, Pepperoni Joe
Reviewer: @helmass
A big thank you to @iluscavia for architecting this framework and spending the many hours needed to build out a robust proposal for your consideration.
Summary of Proposal
The Index Coop DAO would benefit from strengthening the role of the Funding Council to ensure a laser-focused strategy, appropriate resourcing, and responsible use of funds.
The challenge
In keeping with the ethos of a DAO, Index Coop’s (Index) current structure is best described as a loose aggregation of disparate working groups (WG).
Each WG is largely self-contained, possessing individual leadership teams and contributing members, and operating independently, albeit with frequent touch points and communication with other WGs.
To date, unfortunately, this increase in complexity has not led to a significantly different approach taken by the WGs. Subtle nuances and divergences are beginning to emerge, especially around the transparency of WGs and in particular about KPIs, budgets,success metrics and contributor compensation
This emerging challenge risks fracturing a strong community and alienating new joiners if there are no clearly stated, and measurable, standards to govern token disbursements in support of DAO-wide objectives.
Our Working Groups are responsible for Index’s current and past successes. However, in their current form this structure does not optimize Index Coop future success and scale. These include:
- Accountability metrics
- Lack of clarity on key KPIs to validate WGs success
- No clearly identified deliverables dates for when key milestones will be achieved
- There is no clear definition of what “success looks like”
- Over-reliance on WG Leaders to provider review and challenge on proposals
- To use their limited time to provide robust feedback on new WG proposals
- To handle operational nuances associated with achieving KPIs
- Weak budgeting
- The diverse background of our Work Group Leads mean they have differing levels of experience producing detailed budgetary forecasts
- This means that budgets may lack specifics or clarity
In a sense, Index is a victim of its own success, and this means that it must do what the crypto ecosystem does best, it must adapt to a changing environment in order to secure its future.
In short, without a group explicitly tasked with maintaining a set of standards and measuring KPIs to hold the WGs’ budgets accountable to the community, the DAO’s hitherto effectiveness is in jeopardy.
Background on Funding Council
As many are aware, the DAO has a very important and central function fulfilled by the Funding Council (FC).
This group has the distinction of being responsible for mission critical elements including:
- Planning, executing, verifying monthly rewards distribution
- Reviewing and settling reward disputes
- Reviewing other proposals that come before the FC
- Improving the FC budgeting process
- Drafting subsequent Funding Council Grants
They have also provided some support in areas including:
- Improving the Working Group structure & process
- Supporting Working Group leaders
- Reviewing Working Group proposals
These tenets have been critical to the creation and implementation of Working Groups v1.1, which aims to increase autonomy and accountability within working groups.
By implementation a “cost centre” model (see the last FC grant request here) we have seen:
- Greater autonomy for WGLs determine contributor rewards for their teams
- Increased efficiency and reduced risk as “payroll” is run centrally through the FC
- Greater transparency and accountability of spend for Working Groups
Recent changes to the Funding Council have meant Working Groups have moved to a “cost centre” model. This means Working Groups have set budgets - and their associated spend (both contributor and otherwise) is tracked and reported.
This means Working Group leads set the reward for individuals completing activity for their areas whilst the Funding Council processes the payment and provides light touch oversight.
While the above are steps in the right direction, we can improve.
Solution
Given the above responsibilities, we propose an expansion of the FC’s remit to focus on:
- KPIs
- Work with and support WGs to establish and measure KPIs in conjunction with the WGLs
- Expansion to Working Group template to include KPIs, deliverables and success metrics
- Budget
- Work with and support WGs developing robust budgets and execution timelines against its stated plan
- Standardize a budget template for community use prior to advancing to IIP stage
- Expansion of contributor reward form to include hours worked and expected reward
- Accountability
- Coordinate WG proposal presentations to provide the community an open forum to ask questions and provide challenges
- Provide detailed analyses, feedback and challenge on WG proposals. Provide an ultimate budgetary rating and recommendation (support/not support) on a particular proposal.
- This recommendation would not prevent WG proposal going to IIP. However, it would provide the community in depth insight into the value of a proposal as assessed by an experienced team.
- This recommendation is made by a group (the finding Council) which they themselves has appointed to ensure rapid growth and prudent financial management in line with our North Stars.
- Rewards
- Introduce new mechanisms to ensure contributor rewards better compensate key coop contributors. This may include:
- Opportunity for non-WGLs to take Index denominated rewards
- Opportunity for non-WGLs to take on fixed rewards
- Opportunity for contributors to choose to forgo their reward now to receive an additional reward % in vested tokens
- Introduce new mechanisms to ensure contributor rewards better compensate key coop contributors. This may include:
Establishing and measuring KPIs, in order to hold the WGs, and the DAO as a whole accountable, are arguably the most significant of these enhancements. This added responsibility includes validating that KPIs are set and met for each round of funding disbursed by the FC. This more robust approach also ensures that the FC will be able to defend funding decisions if questioned or audited, which, in light of increasing demand for existing products, entails more funding decisions.
In short, this proposal seeks to expand and formalize the responsibilities of the FC in order to better serve the mission of the Index DAO.
Implementation
In order to achieve the above, ambitious plan, we recommend these steps:
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Introduce a new WG budget template which clearly outlines KPIs, success criteria and deliverables
- FC and Treasury WG to determine new format
- Recommended enhancements could include:
- Summary description of proposal objectives/goals (150 words max)
- Summary table of measurable KPIs and success criteria
- List of names of the sponsors
- WGL(s)
- FC reviewer(s)
- Detailed list of milestones and key deliverables
- Prioritisation and use of funds
- Table with budgetary flow of funds
- Range of acceptable outcomes
- Conservative, minimum definition of success
- Expected, base assumption definition of success
- Aggressive, unexpected (everything goes better than expected) definition of success
- Risks to budget
- Risks to outcome
- Recommendation (to be completed by FC)
-
Appoint a WG Budget Aid to support WGLs in working through and proposing a detailed budget that complies with new standards
- WG budget-aid to be compensated by provided by the Funding Council - this approach is designed to relieve pressure on the WGLs and support them to adopt best practices quickly and with minimal effort develop a robust budget for their area.
- Recommended compensation of $55/hour/budget proposal.
-
Presently all WGs are approved and funded by the Funding Council, which in turn receive funding via a single IIP (IIP-59: Funding Council Grant #4). In future, WG would each separately take their proposal to IIP so the community could ultimately decide on which WGs to support - using the recommendation of the Funding Council (support/not-support) to inform their decision.
-
In instances where a Working Group proposal does not pass, the Funding Council would take a proactive role in coordinating and funding contributors in the interim whilst a solution is found (as we saw with Language Ops in August).
-
Framework for Funding Council to assign a “rating” for working group proposals.
- Each component of the budget receives a rating on a scale of 0-5
- A score of 0 = missing
- A score of 1 = superficial/cursory completion
- A score of 2 = needs improvement
- A score of 3 = adequate/meets minimum standard
- A score of 4 = provides additional detail to assist analysis
- A score of 5 = exemplary level of detail and clarity
- These ratings will assist in reaching a support/not support recommendation
- At a minimum, sum-total of component scores need to = ## (# components *3)
- Qualitative analysis/assessment can influence aggregate score no more than 3 points positively or negatively (+/- 3 variance)
- Each component of the budget receives a rating on a scale of 0-5
-
Appointment of a direct “payment processing support role” to assist in the treasury rewards process ($1,500 stipend per month)
- This support function is funded by the Funding Council. Responsibilities include:
- Collection and processing of contributor rewards sheet
- Day to day management of contributor rewards process and coordination with stakeholders
- This support function is funded by the Funding Council. Responsibilities include:
-
Appointment of a WG Budget Aid ($1500 base and additional $700 per WG budget produced)
- A job role for a WG Budget Aid is currently being drafted, broad responsibilities will include:
- Developing new budgetary templates and tools
- Directly supporting WGLs to produce a quarterly budget and formal WG proposal
- Reviewing and validating formal Working Group proposals
- A job role for a WG Budget Aid is currently being drafted, broad responsibilities will include:
Conclusion
The Index Coop DAO would benefit from strengthening the role of the Funding Council to ensure a laser-focused strategy, appropriate resourcing, and responsible use of funds.