(Counter to SCP-205) - [SCP-206] No USDC for future DAO labor related contributions

Summary With the drafting of SCP-205, the seriousness of the budget issues that the DAO has continually navigated have been brought out of Leadership conversations and into the forums and governance for community debate. While the issue has been prescribed a solution, I believe that SCP-205 does not present a future that addresses the deficit appropriately.

SCP-206 alternatively proposes a simple future workstream budget referendum to address the budget issue head on: Future proposed workstream budgets can compensate labor in FOX tokens only with USDC reserved for infrastructure COGS.

Motivation Given current market conditions, lack of growth of revenue, and salaries being taken in USDC or unlocked FOX. The DAO has found itself in a more dire place than the last cycle of austerity.

With revenues where they are at currently, the DAO is looking at ~$20-$50k a month. The options for the DAO acquiring USDC to afford our current runway (TWAPs and asset sales) has a timeline that is dramatically shrinking as well. SCP-205 states we have a 7-8 month runway if all renewals do not embrace a more austere, minimal or FOX centered approach to compensation.

Where this proposal diverges from SCP-205 is in its presentation of a solution. SCP-205 takes an unprecedented approach in FOX governance, combining multiple workstreams’ budgets without detailed and specific spending cuts presented for validation or scrutiny. It also presents a solution that will cost $110k in USDC/month while revenues stay at ~20-30k per month.

This proposal establishes a unified approach to the DAO’s survival by addressing the budgeting issue specifically and immediately. This re-establishes a new baseline spend that forces the DAO to rediscover and re-define necessary and essential tasks or roles, with a more appropriate compensation for them without interrupting organizational operations.

Abstract The ShapeShift DAO has operated in growth mode with the expectation of increasing revenues. Current market conditions (FOX token at $0.012) and revenue trends (~$30k a month in total revenue) indicate this strategy is no longer viable. Rather than continuing current spending until complete USDC depletion, this proposal implements strategic restructuring that: Preserves Core Capabilities: Maintains and essential operations to ensure the product maintains uptime while leaning into automation. Extends Runway: eliminates the clock of a death spiral and puts ~21+ months of runway (not including any revenue calculations) Reduces Risk Constraints: Profits allow for and gives DFC ability to use treasury as an asset and generate additional revenues for the DAO. Creates Clear Milestones: Presents budget growth opportunities that could scale when revenue grows to demand it. Provides space for each workstream to present cases for essential spend: Allows validation and verification of budgets on a workstream by workstream, line item by line item approach. Embraces the current state of automation: Resets the DAOs valuation of labor market worth, embracing the most disruptive parts of AI.

Specifications This proposal expands upon the precedent set in SCP-81 and updates the contributor compensation framework of USDC with optional FOX (that is preferably locked), to just FOX (that is preferably locked). If SCP-206 passes, future Workstream proposals will need to compensate all labor wages in FOX that is preferably locked, as well as validate and verify any USDC budget line items with reasoning as to why it cannot be paid in FOX.
The DAO has specific infrastructure costs that are not able to be paid in anything but USDC or fiat currently. SCP-206 acknowledges that some infrastructure costs will require USDC as payment for a time into the future and preserves the USDC for that minimum COGS spend over anything else.

SCP-81 outlines the importance of locked FOX to the DAO. There is no argument that the DAO prefers locked FOX as compensation over unlocked FOX. Future proposals should be in line with this consideration and that the best incentive the DAO has at its disposal is FOX tokens that will be received by people who are willing to hold it and believe in its utility. This proposal not only addresses the budget deficit, it also solidifies and strengthens the community of FOX holders that acquire the FOX via contributions. This language will be added to the current forum post template and governance process: “All future workstream proposals must include reasoning and specifications for any USDC spend with rationale as to why the spend cannot be paid out in locked FOX. All labor compensation must be paid in FOX”

Benefits Extended Runway: Adds ~21+ months of operational capacity not depending on revenue. Preserved Essential Operations: Prioritizes product suite, site, and app operations over any individual contributors’ salaries. This re-aligns long term success and belief in the DAO and FOX token with the DAO’s ‘payroll’ obligations. " Clear Path Forward: Establishes a baseline budget that allows the treasury to finally grow instead of continually looking for ways to compensate for overspending. Quick Results: Proposals are at renewal season already. New proposals will have to adjust proposals and workstream expectations quickly resulting in almost immediate savings. Unified Approach: Not a single approach dictated by backroom conversations. Allows all contributors to address how they can still support the DAO under a balanced budget. Maintains Optionality: Avoids operational collapse, doomsday wind down conversations, and DAO becomes profitable as soon as old budgets are not renewed. Instant Profitability: Creates a new normal for how the DAO can measure success that has the DAO realizing profits by cutting spend rather than hoping for a moonshot. Market Timing: If market conditions improve rapidly, DAO is still resourced to survive and then thrive.

Drawbacks Reduced Capacity: Significantly diminished team of contributors. Output and velocity will assuredly slow down while we continue to embrace automation, making up the gap in the long run. Contributor Impact: Many contributors will lose positions; all contributors face reduced compensation, many will not want to continue. This will hurt momentum. Growth Constraints: Basically triggers a ‘Survival’ mode of the DAO, prioritizing minimum spend on current operations to continue to create revenue before being able to expand like our current budget/team allows. Morale Risk: Organizational downsizing should impact remaining contributor motivation.

Rationale This proposal chooses strategic downsizing along with a prioritization of the FOX token. SCP-205 does not take enough of a cut into our current spend and only kicks the can down the road on the real budget solution: reducing labor costs. This counter proposal provides a real answer to the budget deficit, does not depend on market conditions or increases in revenue, and introduces profit back to the DAO upon passing. By implementing these measures now, we: Extend operational runway. Maintain the ability to ship product and generate revenue. Preserve product core over any executive suite positions. Create time for market recovery or strategic pivots. Enable sustainability without the need for a transition to a wind down.

Vote For: Approve the proposal as written.
Against: Reject the proposal. For with Changes: Approve with modifications (please specify in forum discussion)

This proposal implements immediate cost-cutting measures to thrust the DAO into profitability while maintaining product suite operational capacity. With current treasury projections showing only 7-8 months of runway at current spend levels, we must transition from growth mode to lean mode.