CIP-7: Dissolve DAO and Terminate Operations

Author(s): 𝖁𝖆𝖒𝖕𝖎𝖗𝖊 𝕺𝖋 𝕮𝖗𝖞𝖕𝖙𝖔 Created: 9/25/23

Objective:

To lay out and execute a structured dissolution plan to orderly shut down the DAO. This allows JADE, sJADE, and vesting bonders to exit the DAO at the full value of the treasuries, aiming to protect community interests and assure equitable resource distribution.

Summary:

This proposal recommends immediate dissolution and cessation of all DAO operations amid rising uncertainties about the DAO’s vision and future. The prevailing apprehensions regarding the DAO landscape pose significant risks to all token holders.

Disclaimer:

Jade Protocol operates as a decentralized autonomous organization where decisions, including final website design selections, are community-driven. No individual entity can be solely responsible for the outcomes. The aim of this proposal is to establish community consensus through due diligence.

Abstract:

The DAO is currently stagnant due to escalating legal, regulatory, and operational concerns, creating significant investment risks. This proposal suggests distributing the full treasury NAV to all token holders and terminating all operations, causing JADE/FWD labs to cease existence.

Motivation:

There is a lack of clarity and growing concerns among the community surrounding the future of the DAO.

Other critical issues that impact the success of the DAO include a lack of deal flow in the near foreseeable future, although a rebrand to Forward Labs was meant to address this.

Based on the latest updates on Discord from core contributors, there is little to no confidence in the DAO being able to fulfill its original vision. It is simply difficult to get investments due to low volume/private market deal flow issues, NDA concerns and the challenging legal landscape for DAOs.

CIP-7 highlights the need for a course change given the challenges the DAO is facing getting investments and navigating the uncertain regulatory environment.

In conclusion, distributing all treasury funds back to all token holders without delay is the ultimate win-win situation for everyone.

Next Steps:

Every governance proposal must be logistically feasible and legally sound in order to be implemented by a DAO. Thus, the following steps are recommended:

1. A discussion should take place regarding this proposal.
2. If approved by majority of community, it should go up for 7-day voting on the Governance forum (https://vote.jadeprotocol.io/)
3. If this proposal passes, all assets between Investment Treasury and Backing Treasury will be converted to USDC and moved to Arbitrum (see “Treasury Value” below)
4. If this proposal passes, an on-chain Snapshot will occur 48-hours after the end of the voting period. Exact date of on-chain Snapshot will be announced in Discord.
5. 6 hours prior to Snapshot, all POL (Protocol Owned Liquidity) will be pulled on AVAX & BSC. It is recommended that all users unwind their liquidity positions as well.
6. On-chain Snapshot occurs, looking at all JADE, sJADE & Remaining Vesting Bonds
7. A website will be shared where users will have 72 hours to verify that the totals are correct. If users are reporting errors in Discord related to the accuracy of their balances, then a new Snapshot will need to occur.
8. Once the community has verified that the Snapshot data is correct, a redemption UI will go live where users can immediately claim their USDC on Arbitrum, after digitally signing, via your crypto wallet, a Disclaimer hosted on IPFS.

Updated Disclaimer:

Legal safeguards and member protections will be bolstered through an enhanced Disclaimer, accessible here, embodying legal best practices for web3 and risk mitigation strategies for DAOs.

The updated Disclaimer for the Redemption Interface has been refined to mitigate legal risks. These provisions are designed to limit and address potential litigation and regulatory challenges, now and in the future.

Treasury Value:

All token holders will have multiple opportunities to claim their respective portions of the Treasury Value - see “Redemption Windows” below. Treasury Value is defined by the value of all assets across all JADE-owned wallets which converted to USDC and moved to Arbitrum with a few exclusions:

1. SkyMeta is not liquid. If it is able to be sold, assets will be moved into the Second Redemption Window, or if too late (see “Redemption Windows” below), then moved into LDF.

2. All SMRTR in treasury wallets and the TRESR allocation allotted to the JADE DAO will be sent to a burn address (avax:0x0000000000000000000000000000000000000000). DAO-owned NFT.com Genesis Keys will have ownership transferred to the NFTREASURE treasury (avax:0xaDE43935a4fFB14a6FBe68a39300199c91d5F054).

As of September 29, 2023, “JADE-owned wallets” identified as:

0x02944e3fb72aa13095d7cebd8389fc74bec8e48e 0x6f0bc6217faa5a2f503c057ee6964b756a09ae2c 0xf15ff5df9924dbf0f257a79b63bf5678701af564 0xd012a9c8159b0e7325448ed30b1499fdddac0f40 0x489f866c0698c8d6879f5c0f527bc8281046042d 0xcb0718b150552af8904e7cb1c62758dcb149b072 0xaea6b4aad5e315a40afd77a1f794f61161499fa5 0x169169a50d9a8fbf99edacf9aa10297e2b3c92dd 0x1aa87a1554919f1537e48626eaa49cb3e967a737

As of September 28, Treasury NAV = $31.9M (this is a rough calculation provided by Debank)

Redemption Windows:

The Redemption Windows are structured with the goal of facilitating an organized, transparent, and equitable distribution of the treasury to all token holders.

• Window One - 30 Day Claim Window: All token holders will have a 30-day period to claim their respective portions of the Treasury Value. The claiming process will be facilitated through an intuitive, user-friendly interface, ensuring ease of access and transaction efficiency.

• Window Two - Unclaimed Funds Redistribution: Should there be unclaimed funds remaining after the 30-day redemption period from Window One then Window Two will be activated for a 30-day period. This second phase redistributes unclaimed funds from Window One minus a carve out for non-redeemers from Window One, whereby non-redeemers who missed Window One can redeem at terminal floor ($8.35) during Window Three. Every wallet that successfully claimed their portion during Window One will be allocated an additional share, proportionate to their initial claim, of these Window One unclaimed funds, that they will then need to claim from the redemption UI during Window Two.

A community made, rough estimate of this process and redemption totals can be found here: https://docs.google.com/spreadsheets/d/1Himr4ETYqrnl_x7ceofpN2GjWr06jY8KsAA0n5i8sKo/edit#gid=79025607

After Window Two concludes, all socials and contributors are removed from the DAO, which will move to a single foundation admin.

• Window Three - One Year: Window Three is designed to fairly compensate users who return to the protocol late. These users (non-redeemers from Window One) will find that their unvested Jade Bonds have been fully accelerated and can redeem at the current terminal floor of $8.35.

• Window Four - 30 days: A form will be released for the final redistribution window for unclaimed funds from Window Three.

Please note that despite a clean audit and multiple code reviews by the DAO’s contributors for the Redemption Contract, community members should accept and be aware of industry standard smart contract risk during the Dissolution Process.

Monitoring and Notification Protocols:

To facilitate awareness and active participation, dates for each claim window will be set in advance and shared in Discord after the passing of CIP-7.

Website:

Jadeprotocol.io will be revamped to offer the following:

1. Balance checker UI
2. Redemption UI
3. Ticket submission form to communicate with DAO admin for next 5 years
4. Q&A to update any non-Discord users on CIP-7
5. Links to Snapshot and Turbyne

Discord, Telegram, Twitter:

Following the passing of CIP-7, Discord will be moved to “Announcements” and “Help Desk” only. All official dates regarding Redemption Windows will be shared immediately via Discord and Website Q&A.

After Window Two: Discord, Telegram and Twitter will be decommissioned, and Turbyne will be set to “read-only”.

Quorum:

As per the supply document shared by DAO Contributor Avicenna: there are roughly 600,000 JADE + sJADE in user-owned wallets (excluding Liquidity Pools, CELR bridge & unvested bonds).

We propose a 3% quorum.

This would require that a minimum of 18,000 sJADE tokens participate in the vote with 51% of voting governance power “in favor” to approve the proposal.

This quorum is in line with other DAOs. The best data available shows the following numbers as historical DAO quorum numbers:

• Aavegotchi - 14.21%
• Sushi - 2.59%
• Wonderland - 0.55%
• Jade Protocol (historical quorum) - 0.087%

Legal Defense Fund (LDF):

A provision to allocate an additional $0.5 million to the Legal Defense Fund (LDF), bringing its total to $1 million, to adeptly address the legal and operational complexities inherent in the DAO’s dissolution, as well as any potential future legal expenses for the next 5 years. This fund will cover legal costs regarding inquiries, litigation, and other issues targeting core contributors.

Self-insurance is a well-known risk management technique that consists in setting funds aside for covering a possible future cost. Technically, it is a tool for retaining and managing risks professionally. Typically, self-insurance is used when risk cannot be transferred through traditional insurance.

The LDF is structured to manage an array of crucial expenses and tasks necessary for a smooth and efficient winding down, such as maintaining essential communication channels, developing and upkeeping smart contracts for claim window deployment, and insurance for any future legal expenses. Also included is additional administration, such as the Foundation Company and its Director(s).

The $1 million enables the assembly of a specialized team, consisting of legal counsel, facilitating legal work, ongoing support (help desk) to meticulously conduct all remaining administrative and legal tasks over the next five years. This LDF administrative team’s compensation will be sourced from the LDF, reflecting the intricacy and risks involved.

Sushi $2M LDF: https://forum.sushi.com/t/establish-sushi-legal-defense-fund/11813

Maker $5M LDF: https://forum.makerdao.com/t/mip55c3-sp14-defense-fund/19076

Core Contributors:

The current core contributors and moderators of Jade Protocol DAO shall continue being paid until December 31st, 2023 (as per CIP-5). These key individuals are entrusted to fortify the transitional phase, working synergistically with the administrative team to facilitate a smooth and efficient dissolution process.

Voting:

Once the official CIP-7 goes live on Snapshot, a 24-hour warm-up period will precede a 7-day voting window.

• [YES] Vote signifies agreement with the proposal to dissolve the DAO, distribute funds, and terminate operations.

• [NO] Vote would maintain the status quo.

Eligibility:

All users with an sJADE balance on Avalanche and Binance Smart Chain are eligible to vote.

In Conclusion:

The immediate distribution of treasury funds appears to be the most balanced approach to address the diverse interests of new investors, longtime members, Smartcoin bonders, BSC holders, and advisors.

Note: The proposal's adaptation and evolution are rooted in responsive, member-centric dialogues and feedback loops, ensuring a comprehensive and community-aligned resolution.