SUMMARY:

TLDR: Swap DAO ETH for rETH to earn passive rewards via Rocket Pool

This proposal establishes a rolling mechanism to ensure that a minimum of 85% of the DAO’s Ethereum holdings are staked at any given time using Rocket Pool, while allowing the multi-sig committee the flexibility to adjust staking and liquidity as needed. The goal is to generate passive rewards while providing the DAO with the ability to reallocate resources for strategic opportunities.

ABSTRACT:

The Founder’s DAO holds a substantial amount of Ethereum, and with Ethereum’s Proof of Stake network now fully operational, staking offers an opportunity to generate passive rewards. This proposal establishes a rolling staking mechanism ensuring that at least 85% of the DAO’s Ethereum is staked through Rocket Pool at all times. The multi-sig committee will have the flexibility to adjust staking levels, rebalance liquidity, and reallocate funds for DAO-approved initiatives, ensuring both flexibility and consistent rewards.

MOTIVATION:

With Ethereum’s transition to Proof of Stake, the DAO has the opportunity to enhance its portfolio with passive staking rewards. However, the DAO also requires liquidity for investments or operational needs. By setting a rolling threshold of 85% staked Ethereum, the DAO can generate rewards while maintaining enough liquidity and the flexibility to adjust based on evolving needs or DAO decisions.

CONNECTION TO MISSION:

This proposal aligns with the Founder’s DAO mission to empower community-driven investments while providing transparency and flexibility. By ensuring a minimum of 85% of Ethereum is staked, the DAO can secure rewards while maintaining the ability to adapt to new opportunities.

SPECIFICATION:

• Staking Threshold: The multi-sig committee will ensure a minimum of 85% of Ethereum holdings are staked via Rocket Pool at all times.
• Liquidity Management: The multi-sig committee has the authority to unstake Ethereum below the 85% threshold for DAO-approved purposes (e.g. investments, operational expenses). The committee will make reasonable efforts to restake Ethereum promptly if the amount falls below 85%, taking into account network conditions and gas costs, to ensure that liquidity remains available for DAO-approved initiatives while maintaining the desired level of staked Ethereum. Future proposals requiring liquidity will not need to address unstaking in their specifications.
• Staking Protocol: Ethereum will be staked via Rocket Pool, which provides rETH tokens to offer liquidity while earning staking rewards.
• Transparency: All staked amounts, rewards, and liquidity usage will be publicly visible on the blockchain for DAO members to track.

BENEFITS:

• Ongoing Rewards: Generate passive income while maintaining liquidity.
• Flexibility: The multi-sig committee can adjust Ethereum staking and liquidity based on DAO-approved activities.
• Liquidity Preservation: By maintaining up to 15% of the total Ethereum unstaked, the DAO retains liquidity for operations without sacrificing significant rewards.
• Decentralization & Security: Rocket Pool is a decentralized staking solution, contributing to Ethereum’s security and decentralization.
• Simplicity of Staking Token: Using rETH, a tokenized version of staked Ethereum, makes it much simpler to access liquidity compared to traditional staking. Instead of waiting for a potentially lengthy unstaking process, the DAO can simply swap rETH tokens using the Rocket Pool UI, Uniswap or other similar decentralized exchanges, offering immediate liquidity when needed without the typical delay associated with unstaking.

WHY ROCKET POOL?

Rocket Pool is considered the most decentralized and secure staking solution for Ethereum outside of solo-staking. Unlike centralized providers, it operates through a network of independent node operators, reducing centralization risks. Key benefits include:

• Decentralization: Staking is spread across a decentralized network of node operators, reducing centralization risk.
• Liquidity with rETH: Rocket Pool's rETH token provides liquidity, allowing the DAO to access staked Ethereum for DeFi use or other purposes.
• Security & Performance: Rocket Pool incentivizes high node uptime and performance, ensuring optimal staking returns.

Note - the amount of rETH received will be less than the amount of ETH put in - this is normal. rETH represents 'ETH + staking rewards', and is therefore worth more than ETH. rETH will continuously appreciate over time compared to ETH. At time of writing, 1 rETH = 1.125ETH

DRAWBACKS:

• Market Volatility: Ethereum's price fluctuations may impact staking rewards and liquidity availability.
• Flexibility Risks: While the multi-sig committee has discretion, this could create uncertainty regarding the exact amount of Ethereum staked at any given time.
• Smart Contract Risks: As with all decentralized protocols, there are inherent risks with smart contract vulnerabilities, though Rocket Pool has a strong security history.
• Gas Costs: Since Ethereum is staked on the mainnet, high gas fees would reduce some of the staking rewards via transaction costs involved in staking and liquidity management.

OUTCOMES:

• Staking Metrics: Ensure at least 85% of Ethereum is staked via Rocket Pool.
• Liquidity Metrics: Track the use of unstaked Ethereum for DAO-approved purposes.

The proposal will be deemed successful if at least 85% of Ethereum remains staked through Rocket Pool and the remaining Ethereum is used for DAO-approved initiatives as needed.*