GCP #6: Revised Token Investments Carry Economics

Summary/Proposal

Per GCP #4, on each investment that GCR does, the GCR investment vehicle currently charges 10% carried interest (”Carry”) as an incentive fee.

With this new proposal (GCP #6), we propose a new carry of 15% for all GCR investments. For GCR investments that have generated >15x return, we propose a carry of 25%.

Carry will be distributed to the contributors involved in all GCR community investments going forward. The three broad categories of contributor roles will be Deal Scout, Deal Lead, and Operations Lead.

As a reminder, this carry definition will apply to investments that exit in the form of token distributions. Carry stands for the percentage of the investment exit value of the token investments that the GCR community invests in.

Motivation

To date, GCR has successfully invested in and supported numerous projects within the Web 3.0 ecosystem with superior returns. With this new proposal, we want to re-create a framework that will benefit GCR community and contributors / partners who were involved in the investment process.

Specification

Definition of Carry

For token investments, carry is simply calculated as a percentage of the investment exit value. For example, on a $100 investment that becomes $1,000 at the exit, 15% carry on this will be $150.

Calculation of Investment Return

Investment returns will be calculated based on the distribution cadence: if the distribution happens every quarter, investment return for the deal is calculated based on a trailing 3-month volume-weighted average price (VWAP).

For the VWAP calculation, we would take the average of the ‘open’ and ‘close’ prices for each day:

Quarterly Investment Return = 90-Day VWAP / initial investment token price - 1

Deal Contributor Role Categories

All Investments (15.0% carry)

Deal Scout: $2500 in $GCR tokens (0% carry distribution share). To qualify for this compensation, Deal Scout should at the minimum do the following: (i) secure an investment allocation amount (minimum of $100k) for the GCR community; and (ii) manage the relationship with the project pre-investment. NOTE: As an additional benefit, if the Deal Scout chooses to invest in the deal, they are exempt from the 15% carry costs.

Deal Lead: 4.5% carry distribution share. To qualify for this share, Deal Lead should at the minimum do the following: (i) conduct due diligence on the project (e.g. leading the deal call, taking notes, etc.); (ii) manage communications within the GCR community; (iii) support the project post-investment and manage the angel network (carry to be split with contributors within the angel network); and (iv) manage the team responsible for active management of investment proceeds in GCR Treasury.

Operations Lead: 1.5% carry distribution share. To qualify for this share, Operations Lead should at the minimum manage the back-end processes behind the investment that include: (i) setting up the investment vehicle; (ii) confirming allocations and securing funds from GCR community members; (iii) legal and tax work; and (iv) distributing the funds.

Investments >15x return (25.0% carry)

Deal Scout: $2500 in $GCR tokens & 1.0% carry distribution share. To qualify for this compensation, Deal Scout should at the minimum do the following: (i) secure an investment allocation amount (minimum of $100k) for the GCR community; and (ii) manage the relationship with the project pre-investment. NOTE: As an additional benefit, if the Deal Scout chooses to invest in the deal, they are exempt from the 25% carry costs.

Deal Lead: 7.0% carry distribution share. To qualify for this share, Deal Lead should at the minimum do the following: (i) conduct due diligence on the project (e.g. leading the deal call, taking notes, etc.); (ii) manage communications within the GCR community; (iii) support the project post-investment and manage the angel network (carry to be split with contributors within the angel network); and (iv) manage the team responsible for active management of investment proceeds in GCR Treasury.

Operations Lead: 2.0% carry distribution share. To qualify for this share, Operations Lead should at the minimum manage the back-end processes behind the investment that include: (i) setting up the investment vehicle; (ii) confirming allocations and securing funds from GCR community members; (iii) legal and tax work; and (iv) distributing the funds.

Broadly speaking, these three roles represent the beginning, middle, and end of an investment. The Deal Scout initiates, the Deal Lead conducts diligence, and the Operations Lead manages the back-end execution. Deal Lead will also work with the angel network to support portfolio companies post-investment. The details around the roles and the enforcement thereof are subject to change based on the Core Team’s learnings from ongoing developments.

It will become a standard requirement for all GCR investment vehicles to pledge carry to the Deal Scout, Deal Lead and Operations Lead as per this proposal.

This new carry framework will apply to future investments that occur post this proposal.

Vote

The ‘Single choice voting’ Snapshot voting system will be used for this proposal, meaning each voter must hold at least 1 GCR token to be able to vote and may select only one choice:

Yes - Approve the proposal No - Decline the proposal