EIP-10: Protocol Funding


Successful Crypto Projects need resources to pay for many things: salaries for personnel, audits, education/marketing initiatives, etc.

ESD as of now has relied on donations of time and $ (for CertiK audit), but we need to create a path towards sustainable funding for protocol growth


  • One time mint of 500k ESD from the DAO into the treasury to immediately fund initiatives for protocol growth e.g. grants for larger-scale tech specs and implementations, educational content, UI redesign, etc.
  • 2.5% of every expansion reward going into treasury (transitioning to 77.5% DAO, 2.5% treasury)


  • The treasury will be implemented as a Gnosis Safe with 7 signers at the start.
  • Budget proposals will be prepared and proposed on https://fund.emptyset.finance/#/
  • Upon passing, the signers will enact the budget proposal through the multisig process.
  • Treasury signers have no specific executive authority over any of the funds and must purely enact voted budget proposals.
  • All treasury funds will originate from supply expansion rewards, and not from any other sources (e.g. donations).

Thanks for putting this togethe @rewkang!

I agree with the need for speed and efficiency of funding decisions. I believe @lewi will have a Snapshot page up shortly - I would prefer using that to elect multi-sig members rather than Discord poll.

What should the process be for replacing multi-sig members?

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@rewkang. One question and one suggestion.

  1. According to this proposal, the new expansion rewards would be split 77.5% DAO, 2.5% protocol funding, 20% LP. Is this correct?

  2. The SNX Spartan council and the YFI multi-sig are very different.

The YFI multi-sig was not constructed with the plan to make them operational decision makers, this power was later conferred upon them. The multi-sig is mostly made up of people who have different roles in the YFI ecosystem and the treasury allocation role is just “another” responsibility tacked on.

The SNX Spartan council seems to going down the road of a full on electioneering with campaigns and campaign promises, with each candidate giving detailed platforms of what they will be pushing for when on the council. Also spartan council members have a monthly salary, and the expectation seems to be that their primary responsibility in the ecosystem will be that of council member.

My suggestion is to follow the SNX council model including salary. Which would convey a professionalism and formal duty to the community on each member that a volunteer position just wouldn’t have.

The election campaign would also serve as a very good community engagement experience.

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Agreed that Snapshot would be better for electing than discord to reflect weight of ESD holdings

For replacing multisig members, I think new snapshot proposals could be the way to go with say minimum 100,000 ESD to initiate proposal

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  1. Yes that’s the split proposed
  2. A Synthetix council approach would involve a revamp of the entire governance system as well and a shift from the current on chain voting mechanism to upgrade the protocol. I actually think that the Synthetix council system is better, but not sure if the time is right to move towards that system. I think if you want to propose a change to how protocol upgrades are enacted then that should be a different proposal

Context for those not familiar.

Thanks for proposing this @rewkang

I agree it is too early to consider moving to a Spartan Council model or any other delegated governance model.

If I understand correctly, the intention of the multisig is just to execute decisions made via snapshot voting, rather than having the multisig holders actually make decisions. If so, I support this


My understanding from your proposal is that a Synthetix council style multi-sig for ESD will be limited to the spending of ESD community treasury and not for protocol changes, which will still happen through DAO voting for code changes.

Hence the Council can work with the existing DAO governance.

The difference is that it’s a representative democracy rather than a direct democracy.

I think there is disagreement here about whether the multi-sig has operational executive power or merely an executor of community voted on initiatives.

Actually, I am in fact suggesting that multisig signers / council members would be able to make executive decisions with the treasury.

Most of the prospective council members would be well-established crypto & ESD community members that have the best interest of ESD in mind and have much more to lose from a social (and financial via ESD holdings) if acting harmfully.

Sabretooth is accurate in referring to this proposal as a representative democracy.

Something EQ proposed was having a snapshot vote on monthly/quarterly budget vs voting on each expense individually. The rationale being that the budget votes could be favorable in terms of showing decentralization from a regulatory perspective. I’m not sure this is necessary (could use some expert legal opinion here) but I don’t think quarterly budget votes would be that cumbersome.

I’m not against that model, but I think it’s better to start on a pathway towards it than to jump straight to it.

My suggestion is

  • The members would commit to only execute spending which has been approved by snapshot vote
  • To begin with, all spending is required to be approved by snapshot vote.
  • Over time, as it becomes clear where the friction is (i.e. where we are being slowed down by voting), we can vote to give the multisig holders discretionary spending on a monthly/quarterly basis or spending on certain categories and $ amounts.

While this sounds nice in the spirit of maximal decentralization, voting on every single expense will not work in practice.

We don’t need to “test it out” - there’s already a long history of semi-decentralized crypto organizations with much more autonomy having major organizational issues because of the lack of executive decision making ability. There’s no such organization that I know of that makes spending this burdensome and for good reason. It would be akin to a company having a shareholder vote for every spending decision. No company or organization would be able to function at all under this model.

Completely agree that voting on every single expense is not where we want to end up.

But there needs to be some sort of direction from token holders that authorizes spending by the multi-sig members, not just a blank check for $500k and a 2.5% share of the rewards

I think we can go with EQ’s proposal of a quarterly budget here.

Outlining the amount of spend to be earmarked for:

  • Development
  • Marketing/Education/Communications
  • Audits
  • Economic Modeling
  • Ecosystem Grants
  • etc

As a reference, I think Thorchain does a great job with their monthly Treasury reports

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I’ve setup the Snapshot page with the help of EQ. It uses Bonded ESD in the DAO and LP as voting power. You can see it here:

Re Prop:
Looking at the thread I think a good final form would be:

  • 1 time 500k mint to treasury
  • 2.5% of expansion to treasury taken from DAO’s share. 77.5 DAO/2.5 Treasury/20 LP
  • Multi-sig treasury of >5 well known community members executing the outcome of snapshot votes.
  • Snapshot page voting on ecosystem related proposals that have a quarterly timeframe, with a 3 day voting period.
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Hey so I see two different things mentioned for the 2.5%:

  1. “2.5% of every expansion reward going into treasury (taken from DAO rewards)”
  2. “2.5% to treasury on positive expansions”

As we know these are two different cases. What would be the preferred case?

I think I am partial to #2.

I’ve clarified in the post above:

  • 2.5% of expansion to treasury taken from DAO’s share. 77.5 DAO/2.5 Treasury/20 LP

Great work, thanks lewi

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