CIP-62: Core Treasury team mandate and funding

Simple Summary

This CIP proposes to consolidate several existing mandates of the Core Treasury team, originally established by CIP-19 (karpatkey Proposal to Create a Core Treasury Team) and to request an allocation of 80 million COW tokens to empower the team and karpatkey to pursue additional liquidity provisioning, economic opportunities for the treasury tokens, and funding opportunities for the development and execution of CoW DAO product roadmap over the next 4 years (2025-2028).

The goal of this CIP is to strategically allocate COW in connection with long-term partners. The Core Treasury team will enact its best judgement on re-allocating COW between different initiatives in order to maximise the funds generated for CoW DAO’s products.

At the time of writing, we are requesting 80 million COW tokens from the DAO’s currently owned COW tokens.

Motivation

CoW DAO’s products have been revolutionising DeFi and protecting users from MEV since 2022, when the project spun out from GnosisDAO. Since then, CoW Swap & CoW Protocol have facilitated more than $70.8 billion in trading volume, more than $187 billion of value has been protected by MEV Blocker and more than $27 million of volume has been supercharged by CoW AMM’s features.

CoW Swap currently stands as the #1 UI for attracting trading volume, combining unparalleled ease of use with advanced trading tools to deliver an optimal user experience where price improvements are shared with users. CoW Swap & CoW Protocol makes CoW DAO’s products recognized as the largest intent aggregator, seamlessly connecting users to the best trading opportunities, and the second-largest DEX aggregator in Mainnet, enabling efficient and optimized decentralized trades.

As an innovator in intent-based decentralized exchanges (DEXs), we lead the industry by setting new standards for trading efficiency. Additionally, our pioneering LVR-resistant AMM technology mitigates the risks associated with impermanent loss, providing users with greater stability and profitability.

We also take pride in being the first RPC provider to reimburse users, offering a groundbreaking approach to incentivizing and supporting our community, ensuring users are rewarded for their engagement and loyalty.

In addition to these technical and market fit achievements, the team has shown it can also deliver financially, generating 2M net profit for 2024.

This is why, in order to stay ahead of the innovation curve and keep delivering outstanding products, the team would like to increase the buffer of funds in the treasury, to allow scaling up the core team.

CoW DAO’s innovative products operate on top of sophisticated tokenomics and incentive mechanisms, as highlighted in CIP-38 - Solver Computed Fees & Rank by Surplus and CIP-48 - Solver rewards budget renewal and update of CoW DAO bonding pool operations.

As depicted in the image above, there is a gap between the revenue accrued by the DAO and the funds received in the Treasury. All operational income generated is first used to reimburse solvers for gas. As there is a weekly gap between fees charged in native tokens, withdrawal in ETH and payment to solvers, a buffer allocation is kept in ETH in the intermediary contracts to ensure correct operation of the protocol. From the net revenue, the Core Treasury team performs COW buybacks (as per CIP-38 - Solver Computed Fees & Rank by Surplus) and funds the Defense Reserve (vd. CIP-50 - Establishing a Legal Defense Reserve). Only the remaining portion of the net revenue is utilised by the Treasury for active DeFi management. For the development of the DAO’s products, a series of functions and tasks must be performed, which have previously been authorised through several CIPs for IT, business development and grants.

Part of the revenue generated by CoW DAO’s products is converted to COW and used to incentivise the solver competition. Nonetheless, a significant part of CoW’s core development work requires funding for other assets.

This CIP’s intention is to give flexibility to the Treasury to fund the development of the DAO’s products through a new COW token allocation, assuming a continued increase of the amounts to be invested (net of accrued revenue) by 10-20% per year in the period of 2025-2028.

As outlined in CIP-19, karpatkey was mandated to create, train, and support a Core Treasury Team. This mandate has been successfully fulfilled, and the Core Treasury Team now comprises members of both the existing Core Team and karpatkey.

This new CIP seeks to update the mandate of the established Core Treasury Team, building upon the foundation laid by CIP-19 to ensure the continued support of CoW DAO's long-term development.

Specifications

Given the above, the Core Treasury team requests 80 million COW tokens, that would be allocated to the following initiatives:

• Development of the CoW DAO products - 42M COW
  • This will cover the majority of the investment plan for the period of 2025-28
• Defense reserve completion - 5.5M COW
  • Complete the allocation of CIP-50 - Establishing a Legal Defense Reserve, ensuring proper funding of the protection layer of the DAO and stop the allocation of part of the DAO’s Revenues
• Provision of liquidity - 4.5M COW
  • Increase DEX liquidity (mainly on Mainnet and one additional L2), to ensure proper price discovery in DEX markets, in line with the increasing liquidity on centralised exchanges
• Solver rewards - 16M COW
  • An estimated budget for 2025 for the Solver Rewards programs, in line with previous weeks / months (see example weekly payment here for Mainnet) and in line with the Growth plan for new networks.
• Strategic partnerships - 10M COW
  • This allocation is intended to be used for partnership agreements where CoW DAO's products are integrated into other web platforms, with the underlying objective of increasing market share and revenue through revenue sharing, increased volume to the Protocol and/or other economic benefits.
• Other initiatives - 2M COW
  • This allocation is intended to perform opportunistic market awareness activities, such as creating incentives for new solver feature development or for token holders.

The above-mentioned allowances are indicative and flexible, and the Core Treasury team would be mandated to use their best judgment in reallocating funds between each category. For clarity, this means that the total amount requested across all allocations is fixed, but that the amounts allocated to each are what may be changed.

Listings Mandate

The Core Treasury Team’s work as part of the CEX listing initiative, led to the COW token being listed by the following venues:

• Coinbase
• Binance
• Kraken (Perpetuals)
• Kucoin
• Gate.io
• Bitget
• Crypto.com
• HiBT
• MEXC
• Bitkan
• Bitmart
• ZKE
• Bybit (Perpetuals)

Given the success of the listing strategy, and the fact that more venues will be pursued in Q1 2025, the Core Treasury team requests that the remaining funds from the 4M COW budget allocated under CIP-47 - Funding for the purpose of facilitating the listing COW token on CEXs, be fully utilised for the mandate under this CIP. This means that funds which were originally earmarked to be returned to the DAO on 2025-06-31, will remain under this treasury mandate.

Product Development Mandate

To clarify the amount of 42M COW earmarked for the development of CoW DAO’s products:

• does not exclude the need for individual service providers or grantees to the DAO to request funding through further CIPs; and
• is not intended solely to be sold on the open market.

To ensure the responsible utilisation of COW tokens allocated for the development of the CoW DAO’s products the Core Treasury team proposes the following “guidelines”, with all percentages referring to the portion of the allocation designated for the product development mandate:

• The majority of this allocation cannot be exchanged in the market, and should require limit orders above the previous monthly average price (provided by CoinGecko);
• To foster collaboration and long-term partnerships, the Core Treasury team may transfer the tokens as follows to entities that can provide substantial long term support to the development and goals of CoW DAO. The Core Treasury team is mandated to pursue the best interest of the DAO and ensure that transactions are done at a higher than market price or at adequate vesting schedules.
• To maintain a diverse and decentralised ecosystem, no single entity may be transferred more than 3% of the total COW token supply (30M tokens) under these mandates.

Text edited to fit into Snapshot chars limit. Please refer to the forum post for the whole text, specially the "Additional Terms" section.