The MetaGovernance Working Group holds weekly calls. The calls are open to community members and the general public.
The MetaGovernance Working Group calls are led by the lead steward of the working group. The lead steward for Q1/Q2 2023 is @katherine.eth.
Details for the call are the same from week to week. If there is a change to a scheduled call, a comment will be posted in this thread to give notice.
If you have items that you would like to add to the weekly agenda please message any of the MetaGovernance stewards (@katherine.eth, @simona_pop, or @nick.eth) through the messaging feature on this forum.
Q: (Katherine) My first concern here is over the speed of deployment and performance fee. Namely, Karpatkey is proposing to move 100% of the endowment over a three-month period and deploy that all at once.That’s aggressive and not enough time to measure performance. Can we extend the deployment time to, say, 12 months?
A: (elbagococina) The original proposal was for six installments, but after consideration we changed it to three installments.
A: (Nick) My concern was the overhead required for so many DAO votes.
A: (Santi) We want to deploy funds to start earning yield as soon as possible. We are not against a different approach and we can align the proposal to the community’s opinion. In our opinion it is better to start getting yield right away. The funds will always remain under custody of the DAO, and will be deployed in risk-averse strategies. If the community feels differently, we can do every two months instead. This is open to discussion.
Q: (Katherine) I have some additional concerns over the strategy that is being proposed- for example, I’m worried about the lack of hedge for the Stakewise strategy. There was an infamous stEth deg last year, which to me shows that stETH isnt as stable as it seems. What happens if stETH de-pegs again? Any hedge for situations like that?
A: (elbagococina) We can act fast with our tools. We have daily alerts and a tech team that monitors prices in real time. We have a lot of tools we can use to react, including bots and alerts.
Q: (Marcus) Is there a contingency plan?
A: Yes, and we can share it after execution. You can check the actions we have taken in the past.
(Katherine) It would be helpful to have a section to communicate the contingency plan now, rather than later.
Q: (Katherine) Regarding the performance fee- the proposal is for 10% of the yield obtained in the previous week, per week. I would to see better ways to structure your performance fee- for comparion, low risk index funds in the tradfi world charges 0%, or other hedge funds have a benchmark. How do you feel about adjusting the language to indicate it is more performance-based?
A: (Nick) This is intended to be a low-risk fund. We don’t want to use language that may encourage taking higher risks in order to collect a higher performance fee.
A: (Santi) We are market agnostic. We are only trying to get yield on top of the supplied assets. If the market goes down, the endowment will be at a loss, regardless of what we do. In the winning proposal, we suggested the fees as part of the proposal. In the end, Karpatkey won according to the proposed fee structure. 10% per week means 10% of the obtained yield, no matter how often it is collected.
A: (elbagococino) We adopted a different fee structure for each DAO. We designed a fee structure specifically for this type of work for ENS DAO.
Q: (Katherine) What is the cadence of financial reporting? I think monthly would make sense, along with taking performance fee on that monthly basis based on P&L for the month.
A: It was originally proposed as a weekly report. Maybe it makes more sense to do it monthly. This is open to discussion with the community.
Q: In the forum comments under the Karpatkey there was a lot of discussion around the USDC conversion-- naming, how Karpatney plans to ‘time’ the market. Have you though about more creative strategies such as putting ETH into Compound, why can’t we just take USDC from that?
A: (Sebastien) That was not a strategy of Karpatkey/Steakhouse. It was a strategy put forward by ENS.
A: (Santi) The DAO’s exposure to ETH is around 95%. That is too high. What happens if we sell ETH too early? I think the DAO can live with that problem. But what happens if we sell too slowly and the price goes down? Selling too late could be a mistake that might kill the DAO. We can’t predict the price, and we can’t afford to make a mistake. We need ENS DAO to survive for 20 or 50 years. We need to reduce ETH dependence to the greatest possible extent. It is important to make clear that the endowment goal is to take risk-averse strategies and to obtain enough yield to sustain the DAO in the long-term.
A: (elbagococina) The objective of the treasury is to support the DAO. If we hold ETH, it is too risky, so we are going to find the best way to convert the ETH.
A: (Santi) We are not inflexible and we can adapt to what the DAO decides.
Q: (Accessor) When do you think is the most appropriate time to sell ETH as outlined in the proposal?
A: (Santi) The moment we receive ETH, we can sell it. Our original idea was to sell it over the period of one week. We do not want to try to time the market for best price.
Q: (Coltron) If the proposal to sell ETH for USDC were to pass, would that effect the endowment?
A: (Nick) That would function separately from the endowment.
D) Reserved for Open Discussion
Q: (Daylon) Has there been any discussion around accepting stablecoins for registration?
A: (Nick) It is doable, but the high gas cost of accepting ERC-20 payments has turned us off from implementing it thus far.
ENS Delegation for OP + Multisig creation
OP Gnosis multisig is created with the following address Safe - Safe
The current signer is 1/2 of matoken.eth and secretary.coltron.eth to keep it lightweight, but other Meta gov stewards can be added if more signers are required.
This is a separate topic, funds, and part of treasury from the Sell 10K ETH proposal. As we all know this has been a big topic with lots of robust discussions.
Katherine: One of the things I want to continue to flag (as I gathered from the forum post discussion here: Endowment initiation - #27 by nick.eth) are the concerns over deployment pace and risk management.
We are hiring a dedicated team for the endowment. I shared some contacts in the telegram group.
We have a risk management team, tech team, and are hiring more full-time people.
We need to know to deployment timeline because we are creating a team.
Santinomics (Re: deployment pace):
Delaying the decision by the proposed amount of time, we don’t see how it will improve the results. There may be a misconception about the way it works. The endowment is solely owned by the DAO. We are never touching those funds. It is a very simple and risk-averse strategy. The funds are in the control of the DAO at all times and can be withdrawn at any time.
One thing I can see in favor of a longer strategy would be in consideration of the need to activate a contingency plan should something go wrong, for example, a de-peg. My read is that people might feel uncomfortable because we don’t have a contingency management section outlining that plan.
What is your opinion of doing the 6-month timeline?
We can discuss that and we can adapt, but we need to know what the plan is.
We are thinking long-term, so in the end it won’t change a lot. There is an opportunity cost for the DAO if we don’t get started.
[Long discussion over performance fee, namely, delegates having an issue with taking a weekly performance fee (as opposed to a month), or that Karpatney’s performance fee style is not proportionate with the passive management style]
Proposed to possibly hold performance fee for a 6-month trial period, after which time the full fee would be back paid.
I want to see the proposal be in the best condition to pass. We can only talk so much before we need to just make it happen, but a lot of what I would consider a well-formed and good proposal is still missing. Would like to see a revised version/ draft for an executable proposal.
We collected all of the questions and tried to answer them in one file. We are open to answering more questions if there are any.
Next steps from Karpatkey:
Next step is to create an executable proposal.
Started to draft the executable proposal and shared with stewards for first review.
Fees will be accrued once the service is provided.
I still wanted to clarify something from the performance fee. Where does the 10% performance fee that Karpatkey is taking coming from? I do not understand how performance fees come from unrealized gains.
It’s like interest in a savings account. You don’t have to withdraw it to know your realized interest.
Like a dividend fee?
So, taking the 10% of the top of any LP fees.
We will ask for a 50% tranch to kick off endowment. Next tranch will be asked for after six months. We believe this will be the most reasonable tradeoff after our discussion.
We are planning to post the executable proposal later today.
D) Reserved for Open Discussion
CoW Swap was recently exploited. Will this effect our proposal to sell ETH for USDC?
I have reviewed the issue personally and there is no need to worry. The exploit will not effect any users of the platform.
basics.ensdao.org - A new, consolidated resource for ENS information. Feedback is welcomed.
B) Endowment Update (Karpatkey)
Nick has been auditing endowment multisig and zodiac modifiers and has been successful in about 95% of tests. There is one contract that is not represented correctly in the current UI. Found a couple of minor issues, mostly UI. Nothing concerning. All allowances were audited via revoke.cash.
All that is left after the audit is complete it to transfer ownership of the safe to the DAO.
C) Reserved for Open Discussion
We would like to see a refinement of the proposal process. If anyone is interested in working on that, constructive efforts could qualify for grant funding to support the development.
A) General DAO update [new metagov meeting time!!]
Metagov meeting time has changed to 11 AM ET (4PM UTC).
B) Treasury Management
Monthly performance report
After analysing internal structure, we intend to provide weekly reports until we migrate to a live dashboard. However, once per month we will provide a post on the forum with more infomation.
Reports will cover metrics, APR, farming funds, information of interest, endowment highlights, etc.
First report should be available very soon.
Observation/ thoughts after this weekend re: emergencies/ risks
Karparkey closely monitored the USDC situation. Recommendation was to do nothing, but had an emergency plan in place should we need to act.
Part of the endowment strategy is to swap earned ETH to stablecoins. Started last week but have decided to take slowly.
So far have conducted one swap - 1000 ETH to USDC and deposited to Compound.
C) DAO Tooling
Automation of DAO voting processes
Further discussion needs to take place.
What are the things we are trying to solve? What are we trying to automate? Is this something we should start working on now, or can it wait? Will return to this topic next week.
D) Reserved for Open Discussion
Re: refunding delegation and voting costs
ethback.xyz is a tool that allows for refunding vote and delegation fees on chain.
Report contains balance sheet, income statement, endowment assets under management, profit and loss.
The report assumes that all forms of Ether are the same as staked Ether.
Q [Katherine]: Where are you getting the data from?
A: It all comes from Dune, which tracks events occuring on the Ethereum network. It is gathered by using a complex, custom-built query. In the future, we will simplify the structure of the query. We will also have a simpler output available on Dune.
Q: Are figures denominated in USD?
A: The figures are denominated in USDC for stablecoin section, and denominated in Ether for ETH section. The prices we use are at the end of every day.
Following through with regular ETH swaps until the target composition of 40% stablecoins and 60% Ether is reached.
Q: Does the Shanghai update effect the endowment? [withdrawals enabled for staked ETH deposits]
A: We expect that fees may go down and are monitoring the market. We think this will bring more liquidity to the staking positions.
Was mentioned that Karpatkey are building out general balance sheet reporting for ENS, and not just endowment.
Santinomics mentioned that they wish to move compound strategy from v2 to v3. To do this would require tally vote and a larger process of engagement. Suggesting that they have 8-9 other items that they could bundle into proposal to whitelist actions for future.
This approach was supported, with a draft that will go to nick before they put it forward formally.
Further noted that if something is controversial or urgent it is better that it be separated from the bundle.
Delegation week is an ecosystem wide initiative organised by tally + other DAOs + DAO tools. We want delegation week to be an event that takes place periodically, where people check on their delegation, and delagates share campaign for delegation.
Delegates encouraged to update their delegate profiles e.g:
- Who you are
- What you are doing in ENS
- What do you care about / what do you stand for
- What plans you might have
This open inititaive is an opportunity:
to remind other delegates of what is happening
for governance token holders to check on their delegate
for new delegates to share themselves
Metagov has sponsored 5k towards gasless delegation.
If you hold 10 or more $ENS Goverance tokens you are eligible for gasless (i.e. free) delegation on tally.xyz during delegation week (May 22 - May 26). Tally | ENS (Reminder that gasless redelegation continues on https://delegate.ens.domains/ for 50+ Governance token holders.)
4. Open Discussion
ENSify won $2,500 for the ‘Kind Reminder’ bounty for the Aragon DAO Global Hackathon 2023.
“Kind Reminder Bounty: Notifying interested parties about governance proposals or working group meetings can be a tedious task. With the governance community spread across Twitter, email, and Telegram it would be great to give people the option to get reminders where they prefer. Not everyone hangs out in governance forums to stay up to date with notifications”
Alisha will look to implement ENSify IRL with Greg over the next few weeks.
Discussion around stream contracts (e.g. sablier.finance) for use in working groups, to stream steward payments, which are set at the start of the Term in the funding request.
To successfully get onto the ballot for a working group steward election, nominees need to receive 10k votes in support of their nomination between June 6 - 9.
Election period is June 10 -15.
Based on feedback from last term; alisha will create the nomination threads in the forum a week earlier to increase awareness around nominations. This will give more lead time for community members to get involved and campaign for votes with Delegates.
Weekly reports are shared in this same thread, where you can also engage and discuss with the karpatkey team
There was further discussion around a recent enquiry about runway & interest (read here)
@santinomics, @alisha & @nick discussed the intention of the endowment to grow over time. When the endowment was first discussed, the intention was a target of $2m/year in interest to cover basic costs. Endowment revenues are intended as survival mechanism rather than a replacement of all operating expenses from all dao activities.
Proposal for whitelist items related to the endowment.ens.eth wallet has been reviewed and will be posted in coming days. An executable vote on Tally will follow, and if passed, the proposal will be deployed and executed.
Ben shared about ScopeLift - dev shop/engineering team, that has been building on ethereum for 7 years. This includes work with contract development, building for projects, as well as additional Public Goods Works (incl those funded by Ethereum Foundation, MolochDAO)
Has been focused on DAO governance for last year and a half
Developing ‘flexible voting’ integrations for DAOs and working to make this part of key tooling. Already had several merges in openzeppelin repo.
Recently has worked with openzeppelin, gitcoindao, pool together, tally, aave, and more
Aura have a planned migration that will affect the pool used by endowment. While a simple migration, it require updating preset and prompts two community votes.
To avoid doubling efforts, Karpatkey will wait two weeks to combine into a single community vote.
General question about review periods & changing of strategy was asked.
Any change is a joint exercise, with proposed changes to strategy being initiated by either karpatkey or from DAO community. Karpatkey keep to the long term vision of the endowment and continue to monitor market conditions, new trends, etc,
Weekly reports are shared in the same forum thread, where you can also engage and discuss with the karpatkey team
3. Open Discussion
Refunding Gas for Delegations & Governance Votes
MetaGov will be reimbursing gas costs for governance proposals dating back to the beginning of the DAO.
This includes any onchain executable proposal where deelgates have paid gas to vote.