Vote 37: Gro DAO Strategic Path Forward

Summary

Despite the incredible dedication, time, and resources that all Gro DAO contributors and members have poured into this community and protocol over the past three years, Gro DAO finds itself facing challenges that cannot be ignored. The difficult market, underperformance of the Gro protocol, and key departures in the Groda Pod have put Gro DAO at a critical juncture, requiring a decision on its future. Please find below a summary of the situation:

• The DAO’s flagship product, risk & yield tranching Gro protocol, has been underperforming for an extended period.
• Key contributor departures and failed deliverables have created a leadership void in the Groda Pod (Gro DAO’s only remaining Product Pod), and together with the failed extension of the DAO’s other product pod (Panda) has triggered broader existential questions for the DAO.
• Groda Pod’s 6-month grant period is ending on October 3rd '23, and it needs to submit a new DAO proposal if it wants to extend its work.
• Due to the leadership vacuum and existential uncertainty, web3 Studios has been asked to conduct an objective analysis of potential pathways for both Groda Pod and the broader DAO.

See [GRFC] - Gro DAO Strategic Path Forward for full details and an in-depth analysis and discussion of each option.

Voting Options

• 1. Unwind the Protocol and the DAO: Providing a clear exit strategy for stakeholders.
• 2. Unwind the Protocol, Continue Building: Allowing for focused and leaner product development.
• 3. Reject all options, which has two outcomes: Leave the DAO without technical capabilities and continuing automated strategies without issue monitoring (Outcome A), unless another proposal is put up for vote and approved (Outcome B).
• 4. Abstain: No opinion on the proposal

Implementation

1. Unwind Protocol and DAO:

• Immediate unwinding of both Gro protocol and Gro DAO.
• Extend Groda for 3 months (Oct 3rd - Jan 3rd) to focus on unwinding the protocol and the DAO, with a budget of 180,000 USDC.
• Users can always withdraw their assets (indefinitely) from GVT, PWRD and Pools.
• Treasury will be distributed to all who deposit their GRO into a redemption contract, within a 4-week time frame (“collection period”), that would start on the date of this option passing the Snapshot vote.
• All pods support users in exiting the protocol until January and then dissolve.

2. Unwind Protocol, Continue Building:

• Immediate unwinding of the Gro protocol, assisting users with exit.
• Users can always withdraw their assets (indefinitely) from GVT, PWRD and Pools.
• Extend Groda for 6 months (Oct 3rd - Apr 3rd) to focus on streamlined product building with a budget of 245,000 USDC and 350,000 $GRO.
• Groda downsizes to two key members to focus on product development, foregoing the search for a new product lead.
• Bi-weekly reports submitted to the DAO.
• Hiring outside contractors for marketing when the product matures.
• All pod grants that the DAO has made will continue as granted although workplans will be altered.

3. Reject all options:

• Do not allocate a budget to extend Groda.
• The DAO will no longer have any technical developer capabilities within its Pod contributors as of October and an orderly unwinding of either protocol or the DAO will technically not be possible.
• FiSt Pod is tasked with formulating a new strategy for the DAO, which will be up for a vote by December.
• The grant for People Pod that the DAO has made will continue as granted although workplans will be altered.
• Two potential outcomes: -- Outcome A (Default): Continue automated strategies and stop issue monitoring, leaving no room for an orderly future wind-down. -- Outcome B: Open the door for new proposals to come up, allowing for the consideration of strategies not previously assessed.

Process Steps, Budget, Teams

1. Unwind Protocol and DAO I. Protocol Wind-down

• Halt Gro protocol strategies and put into withdrawal-only. No further yield generation.
• Users retain the ability to withdraw assets indefinitely. A decentralized IPFS interface ensures uninterrupted, decentralized, and easy access to the protocol.
• All Gro protocol source code will remain open-source for the benefit of the DeFi community. G^2 is a battle-tested, multiple times audited, risk and yield tranching protocol that can wrap any EIP4626 token.
• Set GRO reward emissions to zero.

II. Treasury Consolidation

• Withdraw treasury assets from all protocols.
• Return unspent pod buffers and additional budget to the DAO treasury.
• All treasury assets will be consolidated into USDC and deposited into Compound, and the resulting cUSDC tokens (what is a cToken) will be deposited into the redemption contract.

III. GRO Collection

• The GRO Collection and Redemption process will be handled through a trustless smart contract.
• Users (excl. team and investors) will be able to immediately withdraw both locked and unlocked GRO from the vesting contract. The duration of the vesting period will be shortened from 365 to 0 days so that DAO members can redeem all their GRO tokens immediately.
• For investors and the founding team, the original 3-year linear vesting schedule set by the DAO when it deployed its own tokenomics remains in effect, allowing only vested tokens to be available.
• Users will be able to access a dApp interface for a redemption smart contract where they can deposit their GRO. GRO deposited into this contract will let them claim their share of the DAO treasury. Each depositor’s share will be their GRO out of the total GRO deposited into the redemption contract.
• The GRO collection period will be live for 4 weeks, starting on the date when this option passes the snapshot vote or when the redemption contract is made available (no later than a month after this proposal is passed), ensuring all active DAO members have enough time to deposit their GRO for redemption.

IV. Redemption

• After the collection period is over, the redemption price will be known and depositors can claim their pro-rated share of the treasury assets. The price will depend on two factors: the final amount of cUSDC from the treasury and the amount of tokens deposited into the redemption contract.
• The GRO redemption smart contracts will be accessible indefinitely, so that DAO members who deposited GRO during the 4-week collection period can claim their share whenever. A web interface for the redemption contract will be actively supported for 3 months, and then kept indefinitely on IPFS.

V. Budget and Team

• For 3 months, Groda proposes a budget of 180,000 USDC that will be transferred to the Groda Product Pod’s operational wallet if approved: 5 full-time contributors’ compensation (current Groda team): 155,000 USDC over 3 months
• Service provider and operating expenses (e.g., Infura, Alchemy, Gelato and other fees and expenses): 25,000 USDC over 3 months. Any remainder of this budget will be transferred back to the Treasury and made part of the redemption pool after 3 months.
• All pods support users in exiting the protocol until January and then dissolve.

Option 2: Unwind Protocol, Continue Building I. Protocol Wind-down:

• See detailed description of protocol wind-down above

II. New Product Development:

• The initial direction for the new streamlined Groda Pod will build a synthetic asset generator backed by staked ETH. This platform will be designed to support the creation of any synthetic assets, contingent on the existence of a Chainlink oracle to ensure price stability and handle liquidation. The initial MVP will revolve around a Synthetic MemeCoin, functioning as a proof of concept and a means to generate preliminary market interest.
• Within the 6-months period, the Groda Pod will be able to: -- Implement the Synthetic MemeCoin which will serve as an experimental step, with the broader vision focusing on versatile synthetic asset generation. -- Integrate staked ETH as the primary collateral. -- Establish a model for incorporating Chainlink oracles. -- Regular updates to the DAO on progress, challenges, and next steps.

III. Budget and Team:

• For 6 months, Groda proposes a budget of 245,000 USDC and 350,000 $GRO that will be transferred to the Groda Product Pod’s operational wallet if approved.
• 2 full-time contributors’ (Kat and SHAKOTN) compensation: 170,000 USDC over 6 months
• Outside contributions including collaborations with contributors like Haywired and specialized marketing personnel: 75,000 USDC over 6 months
• All pod grants that the DAO has made will continue as granted although workplans will be altered.

Option 3: Reject all options I. Outcome A (Default): Continue automated strategies and stop issue monitoring.

• Technical operations offboarding: The Gro protocol will continue to operate without contributors that can handle risks and unforeseen events. Groda will only have few weeks to wrap up operations. This will prevent any orderly future wind down of the protocol.
• Formulation of new strategy: FiSt Pod is responsible for formulating a new strategy for the DAO with limited assets, subject to a vote by Dec. All DAO members are invited to make proposals.
• User Asset Accessibility: Users will be able withdraw assets even if operation is ceased.
• Potential repercussions of this Outcome A (Default) include: -- Lack of User Support: Due to the limited time, risks exist around the ability to provide follow-up support for unresolved issues & assisting users in asset withdrawal and clear communication. -- Vulnerability in Market Volatility and Emergency situations: In the absence of active management, no one will be available to step in if, for instance, LUSD goes off-peg or USDT experiences issues. -- Inability to Stop Automated Strategies: If the Gro protocol continues to operate without active oversight, automated strategies may run unchecked, potentially leading to operational risks, financial losses, or system vulnerabilities that can compromise the safety and performance of the protocol.

II. Outcome B: Pods come up with alternative paths for the DAO.

• Hypothetical Future Proposals: All DAO members are invited to make proposals, outlining alternative strategies not considered in this assessment. This path would follow the standard governance process of the Gro DAO.

III. Team

• No extension of Groda Pod. The current mandate runs until 3rd of October.
• All pod grants that the DAO has made will continue as granted although workplans will be altered.

Pros

• Option 1: Clear exit strategy, asset redemption for stakeholders.
• Option 2: Potential for new product-market fit, leaner operation.
• Option 3: Keeps all options open for future strategies.

Cons

• Option 1: Loss of community and product.
• Option 2: Continued operational risk and financial expenditure.
• Option 3: Lack of technical capabilities, increased operational risks.

Timeline & Budget

This vote will run for 5 days and will follow the ranked-choice voting (instant runoff voting) format as there are multiple viable options to choose from. Accordingly, users can rank their choices in order of preference. If no option receives a majority share of votes (over 50%), the option with the least amount of votes will be eliminated, and those who voted for this option will have their second choice recorded instead. This process is repeated until there is an option with a majority share of votes.

You can read more about ranked-choice voting here (https://docs.snapshot.org/user-guides/proposals/voting-types#ranked-choice-voting-instant-runoff-voting)

The timelines and next steps for the different options are as follows:

• Option 1: 3 months, 180,000 USDC for the existing Groda Pod. As next step, the Groda Pod will start with the Protocol Wind-down, Treasury Consolidation, and preparing the 4-week Collection Period (as outlined in the process steps outlined in above).
• Option 2: 6 months, 245,000 USDC + 350,000 $GRO for the streamlined Groda Pod (kd, SHAKOTN). As next step, the Groda Pod will start with the Protocol Wind-down, and shift to streamlined Product-building mode (as outlined in the process steps outlined above).
• Option 3: No timeline or budget, Groda continues until 3rd of October. As next step, the Groda Pod will wrap up technical operations and aim to bring the protocol into automation mode. Furthermore, the FiSt Pod is tasked with formulating a new strategy for the DAO, which will be up for a vote by December. Similarly, any Pod or community member has the option to put up alternative proposals (as outlined in the process steps outlined in above).