Authors: Aman (@amanwithwings), Andre (@Andre)

Created: 2024-12-02

Abstract

This proposal builds on top of earlier discussions (1, 2), and outlines a minimum viable first version for a Committees and Councils structure as an amendment of the Outcomes-based resource allocation framework(OBRA), primarily intended to reshape SafeDAO’s grants strategy.

Proposal types

State which proposal type this proposal belongs to.

SEP: Constitutional Proposals

SEP: Governance Proposals

Other SEPs

Proposal details

A. Scope

The scope of [SEP #8] Outcomes Based Resource Allocation Framework as described under A. Scope of framework applies with the following amendments: The resource allocation framework below generally applies to any grant from the SafeDAO treasury towards predefined counterparties, such as individuals or teams, given that the requested amount is less than $100k. This framework does not apply to incentive campaigns, airdrops and initiatives that impact the Joint Treasury.

B. Committees and councils

This proposal introduces two new groups within the DAO: Steering Committees and Councils. Their responsibilities, oversight, and working relationship are described below.

For the initial term, we propose establishing one Steering Committees in the form of a Strategy Steering Committee and one Council in the form of a Grants Council.

The Strategy Steering Committee will serve from Season 4 / Sprint 4 to Season 6 / Sprint 4 (an initial term of 8-9 months), and the Grants Council from Season 5 / Sprint 1 to Season 6 / Sprint 4 initial term of 7-8 months. The Grants Council will be set up by the Strategy Steering Committee following its inception through an open nomination process.

Note that this proposal does not seek to ratify the Treasury Management Steering Committee, which is part of a separate proposal.

I. Strategy Steering Committee (SC)

For Safe to scale and decentralize over time, the DAO needs to focus on building capability within to address technical, community, and governance challenges. The Strategy Steering Committee aims to help SafeDAO build this capability over time, by ‘incubating’ Councils and providing them with the necessary resources and context.

Number of Strategy Steering Committee Members: 3

1. Responsibilities

• Propose adding new strategies and modifying existing ones
• Lead the creation of the Grants Council
• Define payout terms for the grants council and initiatives (e.g. milestone-based payments, KPI-based, optimistic streamed payments)
• Define mechanisms for intaking new initiatives, e.g. future development of an RFP process
• Support the Grants Council in evaluating grant applications
• Provide dispute resolution between Council members and manage Council member onboarding and offboarding
• Decide in cases where it’s ambiguous if an initiative falls under a specific strategy
• Keep the DAO abreast of any unusual activity from the Grants Council
• Facilitate regular communication and engagement with the community through meetings and other channels

In their initial terms, the Strategy Steering Committee is tasked with creating and working closely with the Grants Council.

2. Powers and accountability

The Strategy Steering Committee is directly accountable to SafeDAO, with token holders and delegates evaluating, re-approving, or providing feedback on the committee’s work. At any point, token holders are able to offboard the Strategy Steering Committee by pausing/ending this framework and reverting to the previous or a new setup. Steering committee members can resign using an offboarding template (to be published later by the Strategy Steering Committee).

3. Eligibility and selection

Initially, the Safe Ecosystem Foundation (SEF) will have the exclusive right to nominate members of the Strategy Steering Committee. The initial members will be announced by the SEF once this proposal is ratified. All members will either be contributors of the Safe Ecosystem Foundation or Core Contributors GmbH.

4. Compensation

Steering Committee members are compensated, unless a contributor of the SEF or Core Contributors GmbH. As all members during inception are contributors of SEF or Core Contributors GmbH, they do not need to be separately compensated by the DAO.

5. Budget

Safe Ecosystem Foundation, being the legal wrapper around SafeDAO, operates under strict requirements for KYB/KYC, AML checks, agreement process, milestone checks, reporting, and other compliance measures. To support the effective management of these responsibilities, the Strategy Steering Committee will request its own operational budget, along with dedicated budgets for each strategy and payouts for Grants Council members. The Strategy Steering Committee will issue a transparency report at the start of each term (detailing the expected usage) and at the end (detailing the actual usage) of the operational budget request.

6. Term length

Following ratification by the DAO, the Strategy Steering Committee will assume their roles for the initial term of 9 sprints, starting from Season 4 / Sprint 4, with Season 6 / Sprint 4, being the final sprint.

II. Grants Council

Grants Council is a body of experts that possess a high context on various components of the Safe ecosystem. In the initial term, the Grants Council will comprise of 3 experts selected by the Strategy Steering Committee following an open nomination period. Once this proposal is ratified, the Strategy Steering Committee will immediately commence the open nomination period. Anyone can apply to be a part of the Grants Council.

As decision making power on each proposal is distributed across all members of the Grants Council, each member ideally needs to be an expert in a strategy (or more), and possess a working knowledge of other strategies. During the open nomination period, the Strategy Steering Committee will evaluate the competence of each applicant against the proposed strategies, and their overall context on various components of the Safe ecosystem. The Strategy Steering Committee retains the right to choose all 3 Grants Council members. Grants Councils in future terms may be elected through a DAO-wide vote, or through other mechanisms.

Number of Grants Council Members: 3

1. Responsibilities

• Evaluate grant applications, by working together with the Strategy Steering Committee and allocate the budget effectively
• Review, and relay feedback on grant proposals. If the possibility exists, work with potential grantees to refine their funding requests and scope of work.
• Maintain a public list of funded initiatives, along with key details (funding amount, length, milestones, point of contact, result, etc.)
• Document the impact of every funded initiative and publish a consolidated report at the end of the term
• Manage and support operational processes as necessary. The Grants Council is responsible for subject matter evaluation of milestones, ensuring that the content and outcomes of the initiatives align with strategic objectives. This responsibility focuses on assessing the quality and impact of the milestones rather than formalities like verifying if reports were submitted, which can be managed by the Safe Ecosystem Foundation (through its staff or external agencies).

The Grants Council carries out these evaluations and approves payouts, with KYC/KYB, grant agreements, and payouts overseen by the Safe Ecosystem Foundation. The Strategy Steering Committee will play an oversight role, bridging the gap between the Grants Council and the Safe Ecosystem Foundation. While the Steering Committee does not conduct milestone reviews, it will periodically check initiatives, milestones, and reporting sheets to ensure they adhere to expectations and contribute effectively to the overarching strategy.

2. Powers and accountability

• Accountability: Grants Council members are directly accountable to the Strategy Steering Committee who are evaluating, and providing feedback on their work. Token holders are able to dissolve the Grants Council (not a specific member unless the member explicitly violates the operational rules under the Conflict of interest policy below) through a DAO vote. If a DAO vote aims to dissolve the Grants Council, it should also specify how the subsequent Grants Council will be formed (e.g., at the discretion of the Strategy Steering Committee, through a DAO vote, etc.).
• Offboarding Council Members: The Strategy Steering Committee can offboard a Grants Council member, provided they violate a conflict of interest, or fail to fulfill their duties. However, an offboarded Council member can challenge the Strategy Steering Committee’s decision through the governance process (SEP #7). A Council Member can always resign using the Offboarding Template (to be published later by the Strategy Steering Committee).

3. Eligibility and selection

• Expertise in specific strategies and high context on different components of Safe
• Able to commit 15 hours per week on average
• The Strategy Steering Committee will hold an open nomination period to select members for the Grants Council

4. Compensation:

Compensation and terms will be suggested by the Strategy Steering Committee and subject to approval through a DAO vote.

5. Conflict of interest policy

The conflict of interest policy, and a set of operational rules are detailed below. It will evolve over time:

• Grants Council members should be individuals, not organizations.
• The Grants Council should not include more than one person from the same organization
• Individuals cannot be a member in both the Strategy Steering Committees and the Grants Council at the same time
• A Grants Council member is not allowed to partake in evaluating funding requests from organizations they have vested interest in. This includes organizations they draw a salary from (full-time or part-time), organizations they founded, organizations they have invested in/advise. Decisions in such cases must be made by the rest of the Council.
• All Grants Council members will need to successfully undergo KYC checks and sign and acknowledge the necessary agreements with the Safe Ecosystem Foundation in order to be confirmed and onboarded.

C. Submission and review process

The diagram below describes how the new grant flow proposed works:

Step 1: An initiative team (any group or individual that wants to create a positive impact in the Safe ecosystem) applies for funding. Applications can only be made to one approved strategy at a time. The definition of a strategy remains the same as in SEP#8. In future iterations, a formalized RFP process may also be introduced to complement grants.

Step 2: Each proposal will be evaluated by the Grants Council, and the Strategy Steering Committee. Each body has 1 vote, and if both agree on the funding decision, we proceed to the onboarding phase such as KYC, and grant agreement (if the funding decision is YES); otherwise the grant is declined (if the funding decision is NO). This structure also allows decision-makers to collaborate with initiatives to rescope funding asks and modify proposals to better align with the needs of the Safe ecosystem.

Note that funding requests that do not fall under a pre-defined strategy will be declined. Funding decisions, as well as grant amounts awarded will be made publicly available, along with the reasoning of the Grants Council and Strategy Steering Committee.

Step 3: This is an optional step to resolve cases where the Grants Council and the Strategy Steering Committee is unable to agree on a funding decision. In such cases, the initiative team will be instructed to submit the proposal to the DAO, where it will be processed through the governance framework (both the Strategy Steering Committee and the Grants Council can instruct the initiative to do so). In such cases, if the proposal ends up passing on Snapshot, it will be funded from the DAO treasury and not through strategy budgets.

D. Next steps

Once this proposal is ratified, the Strategy Steering Committee will publish another proposal with information on strategies, budgets, impact evaluation, operational set up, etc. These features will be assured:

1. All initiatives teams, given their proposal falls within the scope and goals of the approved strategies will have an equal opportunity to request funding.
2. Decisions, along with reasoning of the Grants Council, and the Strategy Steering Committee will be made public.
3. Grant agreement, and payouts will be managed by the Safe Ecosystem Foundation. Milestone tracking will be handled by the Grants Council, with external help as required

E. Entry into force

If ratified, this proposal will go into effect in the next sprint - Season 4 / Sprint 4. This proposal effectively supersedes the current OBRA setup (SEP#8, SEP#10, SEP#11) where it’s conflicting until it may be reintroduced through a DAO vote. The budget remaining after processing OBRA funding requests from Season 4 / Sprint 3 will be returned to the DAO. Additionally, the ratification of this proposal will supersede current OBRA strategies, budgets and payout terms. Initiatives with ongoing funding are not affected.

Purpose and Background

The Outcomes-Based Resource Allocation framework (OBRA) in its current shape is not an effective vehicle to distribute grants, which is currently its main application. The framework requires every proposal to go through a DAO-wide vote, causing voter fatigue as it can be seen from decreasing voter participation. Furthermore, it does not create a clear path to attract and develop domain experts which are a basis to allocate capital effectively. While each delegate might have an area of expertise, it is suboptimal to the Safe ecosystem to filter every grant application through a generic layer. To adapt and effectively allocate resources to the growing needs of the Safe ecosystem, SafeDAO needs to iterate the existing OBRA framework to be more use-case specific in the form of a more efficient grants program.

[Discussion] Introducing Steering Committees and Council Structures]([Discussion] Introducing Steering Committees and Council Structures) which introduced the concept of Steering Committees and Councils received extensive feedback from the community. This proposal is a scaled-down version of the original idea, incorporating multiple changes to address a critical need: grants allocation. This version also serves as a feasibility study for SafeDAO, helping evaluate the structure’s effectiveness for other applications.

The primary intention behind implementing a committees and councils structure at this stage is to increase SafeDAO’s efficiency to bootstrap and fund initiatives beneficial to the Safe ecosystem.

There are several reasons why this structure can be highly effective for SafeDAO. To start, it allows for a closer partnership between the Safe community and the core contributors, which can lead to better funding decisions. This setup also enables SafeDAO to cultivate an incentive-aligned, high-context group of community contributors through inputs, strategic guidance, and valuable context provided by the Safe team. Over multiple terms, the Grants Council may develop the same level of competency as the Safe team, allowing it to become the sole decision-maker, even on highly technical or strategic grant requests. This model also allows for more dialogue between the initiative teams and DAO representatives, which is missing from the current setup. This will be helpful further refining the proposals, and negotiating grant amounts.

This structure further ensures that neither the Grants Council, nor the Strategy Steering Committee, has sole decision making power. Each body gets 1 vote, and in the cases where these two aren’t aligned, the DAO can process the funding decision through the governance process.

Note that voting power is distributed equally between all members of the Grants Council and Strategy Steering Committee. This ensures that one member does not have sole decision making power, even though they may be an expert in a category.

This new structure refines the existing OBRA framework by reducing its inefficiencies, while still aligning with OBRA’s core concept of defining the funding scope and keeping it measurable via strategies. The initial term of the Committees and Councils Structure, with a focused mission (i,e, allocate grants more effectively), will help SafeDAO assess the practical aspects of committees and councils. Furthermore, the limited scope and short duration makes it easier to revert to the initial state if required.

As part of our principles of dynamic governance, this structure will be an iterative process. With clearly defined roles, term lengths, and accountability measures, this framework provides a scalable and adaptive model for grant funding impactful initiatives within the Safe ecosystem. The initial term will serve as a valuable testing phase, allowing SafeDAO to refine and optimize this approach for long-term success.

Effects and Impact Analysis

This proposal aims to significantly modify the current grant allocation framework. If ratified, it introduces a Strategy Steering Committee and a Grants Council, responsible for processing grant requests. Only in cases of misalignment between the two bodies will the DAO need to process a grant through its governance process.

If ratified, this proposal will enable the Strategy Steering Committee to elect a Grants Council from the community. Modifications to existing strategies and the introduction of new strategies will need to come as proposals from the Strategy Steering Committee, which must be voted on by the DAO.

The primary risk with this proposal is the risk of change—SafeDAO risks upsetting the current grant allocation mechanism by introducing the newly proposed one. However, given that the initial term is not more than two seasons and that this model aims to create a much-needed feedback loop between the community and the Safe team, it is a risk worth taking. The DAO can vote to dismantle the Strategy Steering Committee by ending this grants program and can also reelect the Grants Council. Additionally, it has the power to withhold funding for the program’s continuation if it doesn’t appear promising after the initial term. Given these features, there are no critical risks associated with this proposal.

Alternative Solutions

This proposal is a result of continuous ideation and feedback collection from various stakeholders in the Safe ecosystem. Multiple grant allocation mechanisms are in use across the web3 ecosystem, streaming hundreds of millions of dollars annually (reference). At the current state of SafeDAO’s maturity, it is crucial to adopt a working model that balances the influx of guidance from the core team with insights from the community.

This model aims to achieve more efficiency in allocating grants, without compromising on expertise or decentralization. It is therefore recommended over alternatives such as retroactive funding, domain allocation, and other mechanisms, which may be more suitable for SafeDAO at a later stage.

Implementation

Implementation of this proposal does not require new code.

Once ratified, the implementation of the proposal will be carried out by the Strategy Steering Committee that will be put into place.

Own implementation possible

Own implementation but with funding (how much % to implementation)

Request for technical support through Safe matter experts:

Open Questions

1. Term length: currently, the Strategy Steering Committee has an initial term length of 8-9 months, and the Grants Council 7-8 months.
2. Ideas/comments for the steering committee to make this setup even more successful.

Acknowledgements

Special thanks to Amy Jung, Eugene Leventhal, Anke Liu, Valentin Seehausen, Hats Protocol, Areta, LuukDAO and others for feedback and comments on this and earlier version of this proposal.

Copyright

Copyright and related rights waived via CC0.