Temperature Check - Should ENS governance contribute funding to the Nomic Foundation?

I’m inclined to agree with @nick.eth in this thread. I think DAOs with large treasuries are often far too stingy with them when it comes to grants because a lot of people haven’t been in positions before where you allocate sums this large on risky things, and so they worry about running out.

Ultimately, if the grant is for something that can help the ecosystem, the theory is the treasury would continue to grow as a result, which means we can give out more grants. If you are too conservative, you risk not helping the ecosystem enough, and the overall value of the DAO and the protocol wanes over time, and then who cares how much is in the treasury at the end of the day?

For what it’s worth, that range may be large for an individual, but isn’t too significant for an organization operating at the scale Hardhat and this proposed non-profit would be.

I think since the $1M amount is effectively 1 month of revenue from the protocol, and how important dev tools are to the continued growth of the Ethereum ecosystem, we should support a grant here. Remember that other VC-backed chains that don’t hold the same values are throwing orders of magnitude more money at improved dev tooling to attract developers.

If DAOs like ENS don’t fund this work, who will?

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I think there is no issue as to the merits of the proposal; it goes without saying that it is a no-brainer. The budget hasn’t yet been disbursed for way smaller grants though. Everyone’s concern is only the timeline.

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Yea I get that, I don’t agree with that line of thinking though. I don’t see why waiting for smaller grants to be executed (which to my knowledge, haven’t been proposed yet) should be a prerequisite before funding a very well established and proven group with a relatively small sum ($1M isn’t a lot today in tech).

Also think of it another way: don’t you think that ENS doling out $1M in it’s first grant proposal to a proven effective group would show potential proposers “hey, ENS DAO means business, bring us your proposals and we’ll actually fund them”?

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I do not think that approving one worthwhile grant means we have to approve other less worthwhile grants. We shouldn’t avoid funding worthy causes because we are concerned about being spammed with low-quality submissions; that will happen regardless.

We don’t get to choose what order we’re presented with requests in. I also think denying a larger grant because of timing - even though it’s intrinsically worthwhile - is a bad idea.

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No tender is ever given out without formal notice and due process. If ENS is willing to fund up to $1m, it should make an open invitation declaring its interest in making such contributions and allow for other proposals to be presented at their own merit. Due process must be respected. This unique (= when the grant size is exceptionally large to merit individual consideration beyond the usual) pipeline of submitting and voting on proposals is considered bad practise in any industry. To anyone here or outside, it simply looks like a proposal has been brought in with disproportionate encouragement from a core team member (disproportionate = misaligning with majority’s opinion) requesting a large sum of money while the DAO is 6 months old with no experience in assessing grants, their success and/or failure rates. I am sure it could wait another six months? The merits of the proposal will not have diffused by then and ENS will have had some experience in handling finances.

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But we do get to choose the order. We can issue a call for grants, specify conditions, threshold amounts.

My little experience with grants was always that the organization giving the money was defining the guidelines under which a request was made.

I may have missed that in the original post, but what’s the urgency to accept this proposal now when ENS DAO is so inexperienced? Nomic seems to have secured enough funds, to begin with, no?

Question: How would such a grant be given anyway? Do we just give them the money and that’s it? Is there a legal contract needed? AML? Taxes involved? Do we give it in one time? Ask for milestones?

There are mechanisms that need to be developed to give 1-4 million, which are not needed for 10K-100K.

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This is the current due process. Temp Check → Draft → Snapshot → On-chain Vote

We don’t have a usual, this is the first grant proposal. How do you know this wouldn’t end up being a small-size grant in the large run? I certainly hope it would as the DAO and protocol grows.

What majority? There’s like 5 people in this thread, I think you are over-extrapolating. I highly suspect that if this proposal was brought to a vote, it would see wide support.

What if we never get any small grants? When do we decide “ok, let’s consider this one first”?

That’s a fair question, and having an actual grant to work with to develop this framework is much more efficient imo than trying to do it in a vacuum.

I also don’t see why the mechanisms would be different for $10k-100k grants vs $1M. A grant is a grant, I don’t think giving out 10 $100k grants with lower standards is better than giving 1 $1M grant to an established org where we can be pretty confident a good result will be achieved.

I think we need to not make the mistake a lot of DAOs make and take a big swing to get things moving. At current rates, we would make this money back into the treasury by the end of this month, we’re not breaking the bank here. Let’s develop the process by considering this proposal, not by pushing it off and developing a process in a vacuum.

If you’ll announce ENS grants up to 100K (let’s say), you’ll get tons of grants or you’ll be the first organization in history offering money with no one to take it.

Because we’re gonna make mistakes, and it’s better to get burned on smaller amounts.

This process is under review at the moment in another thread on the DAO Bylaws. I suspect it will get quite a lot rigorous moving forward.

I agree. I hope so too naturally

I’m not aware of any grant-giving organisation that operates exclusively on a tender basis. We’re not looking for the best person to build a specific thing (at least not in this case); instead, prospective grantees are welcome to apply with requests for funding.

Sure - but only by rejecting perfectly good requests because we don’t like the timing.

Nomic is transitioning to a nonprofit model and seeking funding to secure their first four years of runway.

  1. In my experience with the EF, such grants were usually in tranches, with goals for specific amounts to be released, but this is entirely up to us.
  2. A contract is required if we want the DAO to be bound to deliver certain funding in return for certain deliverables.
  3. I would have to consult a lawyer for AML requirements, if we’re treating this as a grant given by the ENSF.
  4. Taxes are the responsibility of the recipient of the grant.
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There is an issue with this process that I might be able to explain clearly with an example. In Germany, an employer has to fulfil certain obligations before hiring a recruit over a certain contract category (TVöd 12+, I think):

  • they must make an open advertisement for the job for a minimum amount of time (~ some weeks),
  • they must interview every applicant (in the presence of an independent watchdog) and report on the interviews formally for permanent record,
  • if the interviewee is from abroad, there needs to be a clear written justification why such human capital is absent in Germany/EU/EEA first, and what measures were taken to ensure that these checks have passed (this step is intensive; it literally requires formal authorisation from the state)

These are the labor laws. They serve several important functions:

  • they disincentivise back-door hiring and nepotism,
  • they ensure proper and sufficient propagation of information leading to more competition,
  • they ensure a broader spectrum of skillset on offer,
  • they ensure diversity and inclusivity by promoting equal playing field irrespective of origin.

In some places, it is even actively disincentivised to add your picture to the resume – as a code of conduct to erode racial/color bias. There are countless benefits to this process if you take a second to think about it. Now, I know we are not employers but almost all sectors have a similar process for the exact same reasons. ENS should have one too. By now you must have realised having no rules is a very slippery slope and ENS is finding it out the hard way in its own bylaws (or the total lack of it). The current process of having no process is not only full of demerits but is fraught with ethical and legal danger. If ENS was based in US or EU, it’d be facing countless lawsuits; there are so many kinks in ENS’s structure (or again the lack of it) that it is there for the taking. It

  • lacks a formal process to invite & disburse funds,
  • lacks conflict-of-interest clauses that prohibit action in bad faith by majority shareholders;
  • (its articles) lack the very basics of many (leadership) appointments such as their terms, eligibility & liabilities (irrelevant in this context), and
  • lacks a code of conduct (which by the way will explicitly discourage you from lobbying for this proposal since you brought it here with declared interest; this is an anti-lobbying measure adopted in many modern corporate structures).

It is not to say that this is bad because we are in our infancy and it is naturally common to have these issues – which is exactly why we need to set them straight first before attempting bigger things. You don’t paint the ceiling before making sure that your ladder is good to hold.

Calling it ‘bad timing’ is severely misrepresenting the issue. It is in fact a very significant contribution, it lacks precedent, it lacks formal process behind it, and it doesn’t merit the need for urgency. I am still curious that you were ready to disburse even $4m and from what I know even way more than that in the original call; so I want to hear you reason your way out of, say, $10m. It’s absolutely fine to say ‘no’ to something for ‘bad timing’ in any case if you want to insist on seeing it that way.

EF is not a DAO and it is a private entity that can do whatever it wants. ENS is a public entity with hundreds of thousands of shareholders with clear legal exposure significantly larger than EF. ENS will need a different structure to operate under the public legally-compliant umbrella.

Not that we don’t like the timing, but that we’re not ready. It’s not a matter of taste, but of the stage of organizational structure.

Anyway, it’s a temperature check and a place for an initial discussion, so I think I did enough representing the position of “not ready yet”.:slight_smile:

Hope it was all taken in good spirit!

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Hiring employees is totally unlike giving out grants. It’s our money and we’re welcome to grant it to anyone we want on whatever criteria we want to set.

What? I don’t have any material interest in Nomic or Hardhat. They reached out to me before making the request public to solicit feedback, which I provided.

The first grant will, by definition, lack precedent.

There’s no “urgency” per-se, just a desire not to put things off into the indefinite future.

What?

ENS is not a public entity and does not have shareholders.

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Yes, I understand. By providing them feedback outside of the ENS ecosystem as an individual upon solicitation, you have stepped into conflict. Your ideal stance here after recommendations to them should be to declare that you have advised them and then step away from the debate, and leave it to the Stewards. Anyway, this is beyond the point. Just a technical detail that will emerge when we are writing the bylaws and code of conduct. It will come up later.

True, but it easy to step up from $500,000 to $1m than from $50,000 to $1m. There is multiplier of 10 involved. Precedents are built on continuance. $0.5m grant will be a good precedent despite being half the value.

It is equivalent to one. Delegates are equivalent to shareholders representing financial capital. Funds of ENS are under DAO’s control and, DAO == delegates == votes == shares in governance of a financial infrastructure. Anyone can buy into it. It is absolutely a public entity with public shareholders. See here: On the nature of DAOs and their projection on Electoral & Corporate structures. Different subject though, my issue is only lack of due process considering how big the grant is. I’ll leave it at that. If it comes to vote, my objection will only be that it is ‘too much too soon’.

What? This is a ridiculous idea.

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Let’s wait for the bylaws and code of conduct. It’ll be better discussed there. If you see delegates as legislators, there is no conflict. But if you see them as shareholders, there clearly is.

We don’t know what other projects and initiatives need funding from ENS DAO and I think it’s too early to judge if the amount is reasonable.

Would you like to amend your proposal to ~1m? Seems like you weren’t thinking that 4m was reasonable from your response.

PG WG should not only have a process but also open up the applications to both ENS and wider Ethereum ecosystem to give equal opportunities.
At the same time, TNL should pass their budget proposal before Nomic proposal as the core development of ENS protocol will definitely have higher priority than supporting external organisation (especially when Nomic has already secured bigger runway). Optionally Meta governance WG should have clear treasury diversification plan. The current funding ceiling can be lifted if we establish ways to convert sizable ENS tokens to fiat so that we can tap into bigger funding budget.

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yes, I understand the urge to wrap up as soon as possible but I would say that that’s same to every organisation that seeks external funding.

After explaining all the reasons why ENS DAO is not ready to grant such a large amount, do you still think the Nomic foundation should be treated as exception? Provided that there’s no legal constrains, could you give us any other reasons why we should expertise your proposals over anything else?

Just to be clear, I am the user of your product myself and I personally support funding of your organisation in general. I just want to help the funding in the way that won’t hurt our long term relationship between your organisation and ours (but currently the proposal amount and the timing seems a bit too contentious).

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Respectfully, I also think that is not fair and doesn’t make any sense. Individuals/entities will almost always reach out to someone individually first, whether it’s on Twitter, Discord, etc. I’ve handled cases like that via support tickets, where an individual or representative of a group/company would like to make a DAO proposal, but they have no idea where to start. You gotta start somewhere, and obviously we won’t expect someone on the outside to know exactly how our governance process works, where the forums are, what to post, etc. So someone on the core team, or a support mod, or perhaps someone else in the community will give them individual feedback and guidance, and answer any questions they have. Usually to the effect of “here’s our governance docs, here’s the forums, here’s the general format you should use for your post”. Exactly what about that is “stepping into conflict”?

We have this wonderful initiative for individual onboarding: Onboarding Flow: Request for feedback

Maybe a topic like this would be another good thing to add to that “onboarding” flow, for when an individual or representative of a group comes to the community and wants to make a grant proposal.

After reading and considering everything in this thread, I would be for a $1m grant. However, if the main concern by others is the size of the DAO’s first grant, then perhaps it could just be made smaller, like $500k. Some funding is better than no funding, and the DAO can always follow that up with a larger grant later at a time when more people are comfortable with the maturity of the DAO and public goods working group.

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I am glad you asked. The conflict here is not of interest but of ethics. Reaching out to an influential individual in a corporation they work for to gain internal advice about the said corporation with an aim to draw influence and/or tangible monetary benefits from it is called Lobbying. While not illegal, it is frowned upon and many corporations explicitly discourage lobbying via code of conduct. In fact, this is how lobbying began back in the day; it used to be called internal counsel. The author said that ‘they took feedback from the community and asked Nick’, but Nick is not community; community is community and it is here on Discourse. Your example of onboarding applies to individuals and it is part of support, and not actionable financial advice worth millions in treasury – apples and oranges. I am sure if Nomic came to you asking for advice on Discord about a grant in millions, you will redirect them to the community, correct? Nomic is raising millions, they are not individuals with support tickets; asking for link to governance docs and asking for advice on how to get a million dollars are very different questions.

One might then ask that what is the ideal way to do this: such a way would be that the person who is advising (= Nick) the entity (= Nomic) declares that they have advised the entity and then step away from the decision-making process. In a traditional corporate world, the current situation will be akin to someone asking one of the Board of Directors for help in a fund-seeking proposal and then have the said board member push it and also vote on it. This is pretty much outright illegal under most bylaws since it puts the decision-maker (board member) at the risk of potential conflict of interest. In principle, the advisor in this case should refuse to advise in individual capacity in the first place and ask Nomic to consult the community directly. If Nomic had done that, they would have realised pretty quickly that ENS community probably doesn’t agree with Nick and that $1m is perhaps too much at this stage for the DAO.

This is all very technical but class action suits are won and lost on such technicalities. I hope bylaws will elaborate on this more.