(There is a character limit of 10,000. Please read the full proposal in the Reddit thread)

TL;DR This proposal is a huge step in shaping the future of the Donut ecosystem. It's about:

Formally establishing Donut DAO as a decentralized, unregistered organization with the flexibility to grow beyond Reddit, allowing DONUT to continue to operate independently of any single subreddit or platform.

Transitioning DONUT’s structure to remove its dependency on r/EthTrader, making r/EthTrader as one arm of a broader organization.

Balancing the allocation of funds to create a more sustainable and equitable distribution model.

Clearly defining roles and responsibilities for Donut DAO contributors, while ensuring fair compensation for their efforts.

Optimizing leadership and governance by welcoming new contributors and reevaluating inactive roles (moderators, multisig guardians).

The objective is to create a robust foundation that supports growth, decentralization, and the sustainability of DONUT, while rewarding content creators, contributors and giving power to the community.

The focus of this organization is to give contributors opportunities to grow, connect with other interested individuals, build a professional portfolio, and receive compensation in the process. Thus, the Donut DAO would create an environment of mutual benefit and recognition for all participants.

Current situation For too long, the mod team has relied on a "mint more DONUT whenever we run out" approach. This may've worked 5 or 6 years ago, but it’s no longer effective considering DONUT is now a valued asset, subject to market mechanics. Also, with regulatory scrutiny increasing, it’s time we collectively reassess our current practices, formalize our policies / structure, and establish a more strategic approach to DONUT minting and allocation.

As a SocialFi token, DONUT’s primary purpose is to reward content creators and promote decentralized governance. To fulfill this mission, a dedicated team is essential. We need people responsible for maintaining operations, promoting growth, and investing on long-term sustainability.

This proposal is probably the most significant and complex initiative we have ever had as a DAO. Submitting dozens of individual proposals would be a lot more complex and would delay important progress. This is a consolidated proposal that reflects the collective insights of the mod team, and is the result of internal discussions and team calls. Our vision is to position DONUT as a project that goes beyond r/EthTrader, making sure its growth is not limited by the subreddit’s boundaries. In this structure, r/EthTrader will be a branch of a broader ecosystem, known as the Donut DAO (proposed below).

Problem We're going to be fully transparent with the community, the current structure and team reached a pivotal crossroads. Even though our project made significant progress, the current structure has shown limitations that could compromise growth, sustainability and even operations's maintenance.

Right now, there is formally no team or organization responsible for promoting DONUT. Technically it's the mod team and the community as a whole. While this flexibility worked in the early stages, it now creates uncertainty regarding the project's purpose, reach, and goals. What worked 6 years ago no longer works today, especially in the Web3 industry that changes by the day. To attract serious contributors and partnerships, establishing and formalizing a decentralized entity is important. Without this, we risk, once again, stagnation and missed opportunities to expand.

Another problem is the existing reward and funding structure. This model led to concerns about managing resources and a lack of reserves for future growth initiatives. If this issue is not addressed, this project will struggle to fund new and current contributors, attract talent, or even finance ecosystem expansion.

Yet another problem is, over time, some roles within the project (like moderators and multisig guardians) have become inactive or loosely defined. This creates inefficiencies in important decisions.

Additionally, the absence of clear and fair compensation made it very difficult to recruit and retain contributors, leaving gaps in operational capabilities. In other words: people aren't receiving enough rewards for the value and work they provide.

Finally, DONUT has huge potential as a project, but its current visibility is confined largely to this sub. This limits its audience and adoption, making it harder to grow and compete in the Web3 industry.

Solution The solution goes through different steps to evolve our project into a sustainable, decentralized organization while focusing on its future.

Here are the proposed measures:

1 - Establishing Donut DAO

We propose transitioning our entire project into (a new) Donut DAO, an official, (legally speaking) unregistered decentralized organization.

DONUT’s success should not be limited by one platform or subreddit. We should aim to create a structure that can operate independently of Reddit, enabling expansion into other platforms or even transitioning into a whole new token category if needed. This protects the project from external risks, like changes to Reddit’s policies or infrastructure. DONUT would continue to work and grow even without Reddit or r/EthTrader.

Under this new organization, r/EthTrader would still be a vital part of the ecosystem, but the Donut DAO would be the overarching organization, positioning itself for broader opportunities and long-term survival. Simply put, r/EthTrader would be one of the many branches of the Donut DAO.

2 - Structuring Donut DAO

Donut DAO would operate as a decentralized organization, but with a defined structure that promotes efficiency and collaboration. This would promote a more collaborative approach, while giving clarity on roles and responsibilities.

The proposed structure is as follows:

Co-founders: Responsible for partnerships, overseeing operations, managing the treasury, handling administrative tasks, grants, and ensuring the organization’s overall direction.

Proposed co-founders:

Carl Larson: Original developer of the Reddit community points system (DONUT) and an early contributor to the Ethereum ecosystem.

Basoosh: Veteran DONUT contributor, developer, formerly responsible for monthly distributions and currently responsible for the Donut Dashboard.

Marc Aurel: Ecosystem growth lead, responsible for partnerships, networking, business, and operations.

Developers: Focus on maintaining and scaling DONUT’s technical infrastructure, including websites, subreddit tools, and others.

Content moderators: Responsible for subreddit (in this case, r/EthTrader) and Discord management, aiming to promote healthy community engagement.

Art sector: Focus on creating art for advertising, partnerships, and campaigns.

Community sector: Organizing events, giveaways, and supporting users directly.

3 - Optimizing DONUT allocation

We propose reallocating the monthly DONUT distribution to optimize fund management, support development, and, most importantly, make sure contributors are compensated fairly.

The new proposed monthly allocation is:

Content creation (subreddit distribution) [NO CHANGES]: 850,000 DONUT

510,000 DONUT for posts.

340,000 DONUT for comments.

Liquidity incentives: 450,000 DONUT

Uniswap (ETH/DONUT V2 on Ethereum) reduced from 400,000 to 250,000 DONUT.

Sushi (ETH/DONUT V3 on Arbitrum One) increased from 150,000 to 200,000 DONUT.

Even though Ethereum is extremely important when it comes to liquidity, our DeFi operations take place on Arbitrum One. As such, we should aim to promote liquidity on Arbitrum, also to help the DAO unlock the remaining funds from the Arbitrum Grant (7,500 ARB).

Community contests: 25,000 DONUT.

Reduced from 50,000, as this expense is unfortunately not having the desired effect and is not as impactful given the funds provided.

Moderation [CEASES TO EXIST]

Community treasury [CEASES TO EXIST]

Donut DAO treasury: 415,000 DONUT, distributed as follows:

Developers: 30,000 DONUT/month (+ grants as needed).

Moderators: 15,000 DONUT/month.

Community (community contributors that are not moderators): 5,000 DONUT/month.

Art: Funded via grants based on project proposals.

After covering monthly expenses, there would be ~200,000 - 230,000 DONUT remaining, according to the current size of the team. These funds would be reserved for the art sector, additional grants, strategic investments, or any extra necessity. Also, there are additional operational costs such as the u/donut-bot server, among other small expenses.

Although 1,740,000 Donuts are available for distribution each month, as you can see the funds disappear almost instantly due to the treasury's expenses needed to finance operations.

4 - Restructuring and optimizing mod sector and the multisig

This is not easy to address, but it has to be done nonetheless. To ensure accountability, we propose the following contributor activity policy:

1 month of inactivity: Contributor is defunded.

3 months of inactivity: Contributor is removed from the organization. Rejoining is an option if the contributor becomes active again in the future.

We propose this policy to promote fairness, because funds allocated to inactive members could be redirected to active contributors or other strategic initiatives. We recommend removing inactive members due to sensitive information about the project and to maintain the integrity of our work. Active contributors are important for progress and internal decisions, and people who are inactive can disrupt ongoing efforts. Internal decisions are made democratically, and inactive members who don’t vote can unintentionally stall progress.

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