Authors Lemz, SeaGolem, Ani

Summary

This LIP proposes the removal of the current Portfolio Sub-DAO council structure, replacing it with a single fund manager responsible for managing liquid assets and overseeing treasury activity. The proposed structure reflects a shift toward efficient liquidation and capital preservation, with no new capital deployments at this time. A follow-up LIP will determine future usage of the Portfolio Sub-DAO funds, with the community encouraged to brainstorm and share ideas that can be actioned in a future proposal.

Abstract

The Portfolio Sub-DAO's structure will transition to the following:

• Fund Manager: A single individual elected to oversee treasury operations and liquid asset management.
• Council: The existing council will be dissolved.
• Epoch Duration: The fund manager’s term will be 6 months with elections to take place approximately one month before the change in epochs.
• Capital Deployment: No new capital will be deployed until a future LIP passes determining use of funds.

Motivation

As the Portfolio Sub-DAO shifts into a capital preservation and liquidation phase, the existing council structure is inefficient and unnecessary for current role demands. Managing liquid assets does not require a multi-person council. Instead, a single fund manager can provide focused oversight and execute with greater agility.

These changes are intended to:

• Streamline the decision-making process by consolidating responsibility.
• Optimize the management of both liquid and illiquid positions.
• Maintain incentives for active treasury oversight.
• Leave room for community-driven proposals on future fund usage.

Specifications

Overview

The proposed structure will include: Fund Manager:

• One individual is elected by the community
• Responsible for all portfolio-related decisions, including liquidation and fund preservation.
• Expected to provide regular updates to the community.
• The existing council will be dissolved.

Epoch Duration:

• The fund manager will serve for a term of six months, maintaining the existing duration.
• They may be re-elected for the subsequent epoch.

Compensation: The fund manager will receive a $500 monthly stipend in addition to a share of profit from liquidations.

Updated Incentive Structure:

• Removal of 15% Team allocation in order to use those fees to incentivize the fund manager further
• 5% fee on profits realized by the fund manager managing the treasury
• Existing deals signed by current and previous council members will still honour the 5% fee as their compensation and past contributions (1% per council member)

Capital Deployment: No new investments or capital deployments will be made at this time. A future LIP will be introduced to approve use of the treasury funds.

Rationale

This new structure reflects the current state of the Portfolio Sub-DAO and the need to maintain focus on treasury management and liquidations.

Key considerations include:

• Operational Efficiency: A single fund manager eliminates the delays and complications that can arise from requiring consensus among multiple parties.
• Cost Efficiency: Maintaining a $500 stipend ensures continued engagement without straining the budget.
• Incentive Structure: The current incentive structure only compensated those who made the early stage deals, with no incentive to maximise return on liquidations. With these changes, we have appropriate incentives for each different aspect of the Portfolio Sub-DAO. For reference and comparison to traditional fund structures, they have a management fee (typically 1-2% annually) + a performance fee (typically 20% of profits).
• Removal of Team Allocation: The existing incentive structure for the council was lacking and in order to increase this, changes in distribution are required. In order to protect the community’s allocation, the team’s 15% profit allocation has been pledged to fund this.
• Community Empowerment: Community-generated ideas and proposals for fund use ensures broad participation and ownership of the Sub-DAO's future.
• Security: The primary holdings of the portfolio sub-DAO will remain in a secure multi-sig wallet.

By adopting this structure, the Portfolio Sub-DAO can ensure responsible treasury oversight in the near term while allowing for future flexibility and growth.