PR with Payload

Authored by: @gareth & @Tristan345

Service Provider / Organisation Name & Overview:

Balancer OpCo Limited (or the “Balancer OpCo”) is a wholly-owned operating subsidiary of the Balancer Foundation. It is an integral element of the Balancer Foundation corporate structure supporting the Balancer DAO. It serves two primary functions (1) Administrative and Operational; and (2) Product Development.

This proposal deals with the Product Development element housed in the OpCo. The initial discussion is at draft BIP for year 2 funding and the comments there related to Product should be considered as a part of this proposal. This proposal has been adapted to incorporate feedback from that forum discussion and includes more details around the evolution from Front-end and Design to a more holistic Product model. In particular, a Product Vision section has been added and the Goals section has been updated to align our work more closely with protocol objectives. The proposal period has been reduced from 12 months to 9 months, and the budget has been tightened.

For reference, the Administrative and Operations element of OpCo is dealt with in a separate proposal here.

The revised proposal for Product seeks approval for 723,525 USDC, compared with 1,139,544 USDC for the previous version. The table below shows the bridge between the previous proposal budget and the revised proposal. Reducing the period to 9 months cut the forecast by 316k USDC down to 824k USDC. This also reduces the BAL request from 38,020.83 BAL to 28,958.33 BAL. We have further trimmed the proposal by 100k USDC to a final figure of 724k USDC.

The $100k reduction for the 9-month period comprises:

• Dropping the FX buffer for non-USD payroll from 5% to 3%. Note that I have updated the FX rates from the mid buy/sell on xe.com to the rate used by the payroll provider in June, which moves against us slightly.
• Cutting the allowance for unconfirmed increases in January of up to 5% down to 0%.
• Cutting the payroll buffer for variances from 10% to 1%, which includes cutting staff allowances for phone, internet, co-working, and hardware to zero.
• Cutting the budget for TRM API calls of $20k to $0. The team is working on a lower-cost in-house solution to be implemented ASAP.

Product Development Workstream

This section has been removed from snapshot to adhere to the max. Character limit. Read about the full details on the forum.

Pledge to abide by the DAO’s Code of Conduct 1 1 (or link to your own):

Yes.

Pledge to abide by the Accountability Guidelines 3 1:

Yes.

Length of Engagement & Budget:

Nine months - July 2023 (Q3 FY23) through March 2024 (Q1 FY24) divided into three quarters.

The summary below reflects the proposed budget for these three quarters. Each quarter an update will be provided via Community Hall calls and Discourse. If budget changes are requested they will go to a snapshot vote. If no changes are requested, this proposal will serve as the governing decision. Any unspent amounts at the end of the period will either be available to the DAO, or offset against the next period’s funding proposal.

We note that the Product team are employees/contractors under OpCo. Should DAO Governance vote to restructure the Product team, for example, change who maintains the front-end or for OpCo to cease hosting the front-end, OpCo policy is to provide staff severance equal to the requirements of local labour law in their jurisdiction, subject to a minimum of one month’s notice.

The table below shows the applicable expense categories by quarter, followed by descriptions of their make-up.

A breakdown of the Product Dev People costs is here:

Requests for USDC:

The OpCo holds funds saved due to the reduction in spend achieved by OpCo and Orb vs their original budgets in year 1. Estimated savings at the OpCo in year one have been partially allocated to fund the Foundation for Q3 FY23. The final savings figure will be known in Q3 FY23. We propose that USDC funding needs for Product be drawn from these funds, which are estimated to cover the nine months of the Product proposal.

Q3 FY23 - USDC 240,744 - cover with funds held at OpCo

Q4 FY23 - USDC 241,975 - cover with funds held at OpCo

Q1 FY24 - USDC 240,775 - cover with funds held at OpCo

Request for BAL transfer:

Q3 FY23 - 28,958.33 BAL - for transfer after the snapshot vote, if successful.

Impact on the Treasury

The projected spend associated with this proposal can be covered by projected savings at OpCo and Orb from year 1, since we now have more recent data on those projections. Thus OpCo does not require any funding from the DAO Treasury to fund this proposal.

For objective comparison, the Treasury currently holds ~4.5M in USDC. OpCo holds ~1.4M in unallocated USDC (resulting from the savings mentioned), together ~5.9M in USDC. Funding this proposal for the year would cost around 12.3% of combined current unallocated funds at OpCo, and current DAO Treasury USDC (not including the impact of projected revenue during the period).

People Costs - Product

People Costs are comprised of remuneration and employment costs for the developers. Remuneration is currently denominated in USD, AUD, GBP, and EUR. Exchange rate fluctuations against the US Dollar will impact the actual results. We have built a 3% buffer on FX rates.

There is also a buffer to cover small unexpected variances in employment costs. As mentioned, this has been cut from 10% to 1%, which includes cutting staff allowances for phone, internet, co-working and hardware to zero. Any unused amounts will either be rolled into the next funding proposal or returned to the DAO.

In addition, the Balancer OpCo is requesting 28,958.33 BAL for the nine-month period of the proposal that aligns with the grants included in staff employment packages. These BAL would be awarded as compensation to current team members on a 4-year vesting basis, with a 1-year cliff, starting from each employee’s initial employment date in the ecosystem.

Should any of these employees leave before the completion of the 4-year vesting period, any unvested BAL would not go to the departing employee and would be available to the OpCo for allocation as incentives to potential replacement staff, or return to the DAO Treasury.

Non-People Costs - Product

Non-People Costs Product consists of software subscriptions to front-end development tools and TRM. These costs have reduced significantly from year one. New additions to the cost structure relate to the design element, proposed to be housed in OpCo from 1 August 2023.

Alchemy is the largest line item at $2,945 per month or $35,340 for the period. The TRM annual subscription runs until May 2024. The annual renewal (est $30k) is outside the period of this proposal and is therefore excluded. In addition, the team is cutting the budget for TRM API calls from $20k to $0. The team is working on a lower-cost in-house solution to be implemented ASAP.

These and the other software costs depend on certain variables, including, for example, the number of users, log-ins, number of entities in the community that have access, and service calls. Some are billed monthly and others quarterly or annually, hence the changes in costs from one quarter to the next. We have estimated these figures using the best information available as of now, and recognise there will likely be variances during the year as more accurate data becomes available and actual costs become known. The team continues to monitor the usage of these services in order to reduce fees, and where possible negotiate more favourable rates - noting that material negotiations were undertaken in year one that we continue to reap the benefits of.

ETH Address to Receive BAL:

0x3B8910F378034FD6E103Df958863e5c684072693, a multisig controlled by the Balancer OpCo.

Link to Service Provider Agreement (if going through the Balancer OpCo):

Not applicable given this entity is internal. The Product team will be directly accountable to the Balancer OpCo and the BalancerDAO community through the reporting process applicable to all Balancer SPs, primarily with reference to the objectives and KPIs noted above.