FTW- IP03: First Steps on Decentralization

FTW’s community has reached the size and maturity that the founders feel we are ready for the next step in decentralisation. We propose to form a more formal and expanded form of governance in the FTW Association, the legal entity that sits behind FTW DAO’s operations.

The Association’s role as a legal entity is to serve its members, with day-to-day responsibilities delegated to the DAO’s decision-making. As it stands, the only members of the Association’s board are Ben and Isla, who are treasurer and chairperson, respectively, and its sole board members. Given the maturity of the DAO, this is a situation that we feel should change to better reflect the diversity, skillset and commitment of our wider community to the DAO’s mission.

Description

The founders propose to elect a council of 7 members who will be responsible for ensuring the continued existence and organic growth of FTW DAO over the next 12 months. At least 5 council members must be willing to be part of the DAO’s board, and hold the membership for a full 12 months. Those not wishing to be nominated for 12 months, may be part of the council but will not be elected to the DAO’s board. Council members would be nominated by the founders and DAO members in a 72 hour nomination window in May. Members who accept nomination will be asked to provide a cover letter and background for sharing with the community, and nominations will be voted on by all DAO members.

Potential outcomes:

5 board members and 7 council members 7 board members and 7 council members

We propose that council members will be rewarded for their efforts in the $FTW governance token. Based on overall performance of council OKRs, and a sufficient Association treasury (minimum CHF 100k) board members could potentially receive 20% of their awards in fiat following a successful AGM. We propose to set baseline OKRs for the council, as well as stretch OKRs. We propose that the cash portion of their reward is based on achieving all baseline OKRs. Baseline OKRs will need to be developed and proposed by the council within 14 days of their election, and then be discussed and ratified by the DAO. Council members wishing to be relieved of their position will be asked to give the community 6 weeks’ notice in order to nominate and elect a replacement.

For the purpose of continuity and stability, we propose that Isla will remain the President of the Association for 2023, and that Ben remain the treasurer but we are open to having these positions as elected positions if the community feels strongly inclined towards this. Isla and Ben as sole Association members will enact the will of the community post election process, by formally electing the chosen council members to the Association’s board at the AGM in May. Until then, the council members will operate as informal board members.

Each year at the AGM, we will transfer to a newly elected council. For now, we don’t see a need to set an upper limit on the potential tenure of council members, but this is something to potentially discuss in the future. Rationale

The operational responsibilities of a 100+ member DAO go beyond the desirable level of effort for two or three people, and require a greater range of skill-sets and perspectives to fairly and completely represent the various members and stakeholders of our community. Full decentralisation, and complete delegation to the wider community is something we don’t think is possible, just yet.

We’ve observed over the past year that a certain level of ownership and assigned responsibilities are critical to maintaining commitment and rewarding members with greater commitment and participation in the DAO.

For the above reasons, we propose to elect a representative group of DAO members to act as a council, meeting regularly to oversee the DAO’s budget, compliance and governance responsibilities, and shepherd the wider community towards greater decentralisation.

Proposal Details

Council Responsibilities

The council will have the important role of ensuring that FTW DAO’s central and ‘minimum viable’ operations are sufficiently maintained to continue basic operation of the legal entity, and, by extension the DAO. The council will be responsible for meeting our legal obligations, financial reporting, preparing an annual report, budget and conducting the annual general meeting.

The council’s role is not to run the DAO or necessarily push forward specific initiatives, but to enable and support the DAO, provide a functioning framework and smooth operational baseline, and ensure basic legal, compliance, tax and reporting obligations of the legal entity are met so that DAO members and contributors have the best possible foundation on which to develop governance, strategies and initiatives that will bring our community and ecosystem forward.

Council Operations

Each person in the council will have a main area of focus and responsibility, and larger decisions will be voted on by the council members in council meetings. Council meetings will be recorded and shared with the community, along with meeting notes. Confidential or particularly sensitive discussions can be raised specifically and discussed off record, if and when necessary.

The council will update the DAO on outcomes of each council meeting via email and a community announcement, all recordings and notes will be shared in Notion. All members may listen in to the council meeting, but not participate or vote on decisions unless invited to present. This is to prevent council meetings becoming too large for meaningful discussion.

Council Meetings

Council members will all work together and meet (online) every 6 weeks for 120 minutes for council meetings. If necessary, special council meetings could be held to make fast decisions on matters of urgency.

We believe it is important that the council represents a diverse group of FTW members with complementary skill-sets. Some skill-sets we have in mind are: finance, accounting, legal, compliance, risk, governance, operations, marketing, and communications.

Council Succession and Continuity

For the purpose of continuity and stability, we propose that Isla will remain the President of the Association for 2023, and that Ben remain the treasurer. Additional roles would need to be outlined and refined, as a next step. Some suggestions of where we see a need are outlined below and up for discussion. We feel each Association role-holder should identify and train at least one potential role successor to ensure organisational stability and smooth succession planning.

Council Member Remuneration

Council members will be rewarded for their time contributions in membership (governance) tokens. The token price for 2023, would be set at CHF 0.12 (the current price for investors). One hour of contribution would be valued at $150. It is assumed that the role of a council member requires 10 hours per month, thus compensation in membership tokens would be at the equivalent of $18,000 for a full fiscal year. Any contribution beyond the role of a council member would be collected in the monthly reporting process (as established in February 2023). The council members agree that 80% of the value of their work will be transferred into tokens at a token price of CHF 0.12. In order to align incentives, and collaboration, the cash part of the compensation to council members will be awarded at the end of the financial year, assuming the minimum OKRs of the entire council are met. Reasonable costs and expenses incurred in performing the role can be covered as per Association rules (example of rules - FTW specific rules need to be developed).

Risks

a. Non-performance

Given the key role the council will play in ensuring the association meets its legal obligations, genuine and stable commitment of council members will be a necessary precondition for the functioning of the council. Mitigation: Handling of absences

The attendance at the council meetings will be mandatory, and repeated absence will lead to a re-election of the council leadership role at the discretion of the remaining council members.

Council members will hold 9 meetings in the calendar year, with a longer break over Christmas and New Year, and an extra meeting before the end of the financial year to plan for financial reporting, the AGM, and the nomination and re-election of the council. These meetings will be scheduled at the time of the previous meeting (e.g. ca. 6 weeks in advance).

Excluding genuine emergency situations, each member should be able to miss a maximum of one meeting in the year, without consequences, as long as they notify the council coordinator prior to the meeting and have contributed to meeting notes and talking points. Members that miss a second meeting will be requested to review their commitment and ability to fulfil the role and discuss with the council at the next meeting. Following this discussion, it will be decided by council vote, whether the member is still the best person to fill the council position, or whether a reelection for the role should take place. b. Setting governance expertise bar too high for new members

Mitigation: council meetings open to all members to listen in on

c. Risk of knowledge loss / human capital risk

Mitigation:

Board members should ideally remain active as part of the council for the 12 month term + 2 months in order to onboard the new council Council members should identify and onboard their replacement as soon as they are aware that they will give up their role

Resources required:

Proposal costs A council of 7 members will require a total of 1,050,000 tokens out of a planned 120,000,000 $FTW tokens for 12 months of operations Assuming software and other third-party expenses represent around 1 ETH per month in ongoing costs, this implies that minimum levels of operation of FTW DAO would cost a total of around 12 ETH per year, or require around 2 new founding member acquisitions per quarter, in order to cover costs. This represents around CHF 20k in ongoing software and third-party administrative costs annually. We aim to reduce these costs in 2023, but this needs to be examined in detail during the budgeting process. The fiat cost of the final 20% stipend to council members would be up to a total of CHF 25,200, and is only awarded if we reach all baseline OKRs (of which one will be reaching a certain treasury level for the DAO)

Financial implications

In the months since our membership launch, we have averaged around 5 ETH per month in revenue from membership and token pre-sales, which represents around CHF 100k per year in revenue at current levels of member growth. The proposed CHF 25,000 to run the council represents around 30-40% of the current salary costs for a 12 month period, and about 10% of what it would cost to run the full-time team on full salaries as we have had while paying 3-4 core team members over the past 9-12 months, though it also represents the reality that many of the larger set-up efforts and costs are now behind us. Total fiat expenses for operation would amount to approximately 50% of our gross revenues, if our revenue in 2023 remains stable vs 2022.

Next steps:

Verify legal and compliance aspects of implementation (initial review done) Discuss and vote on the overall decentralisation proposal (28 March - 8 April) Announce the AGM date and time to all DAO members (9 April - 14 April) Nominate councillors (April 9th - 14th) Councillor elections / voting (April 14th - 20th) Prepare the 2023 financial plan and budget with councillors (April 20 - 30) Open the budget for input and discussion of community (May 1 - 5) Introduce elected councillors as Association members at the AGM (Mid May) Vote on the proposed 2023 plan and budget at AGM Vote on Association and council roles at AGM Update Association articles if necessary to reflect new structure

Success Measures:

Meeting attendance and meeting notes Minimum 50k CHF community treasury $FTW token launched by December 2023 Minimum OKR achievement OKRs to be defined and ratified in separate proposal Annual financial report completion Annual general meeting held New council onboarded

Open questions:

Council role definition Best operating mode for sprints going forward How to best incentivise core contributors beyond council e.g. Angel Lounge, DAOVOZ, dApp core contributors Inclusion of the token launch for June / July as step 2 in decentralisation as part of proposal OKRs for the council to be defined in later proposal and ratified by DAO Implications with regards to existing plans for founder tokens and vesting

Potential council member categories:

Financial sustainability and tokenomics Align community incentives with product Ensure financial sustainability of business model Budgeting and cash flow management

Member utility and product design User research and community design NPS measurement and reporting Member growth / strategic marketing

Membership experience and ecosystem Community relations Community operations Ecosystem and partnerships development

Compliance / Operational viability Ensuring DAO’s legal compliance Advising on roadmap risk / compliance etc. Guiding members on risk management / reporting obligations etc.

SUPPORTING DOCUMENT: Council Nomination Process https://docs.google.com/document/d/16shKOOBlcfSGXZ_gho66YU-5Bc9dTybcCtP-zm5VWzc/edit