[SEP 54] Temporary pause on resource allocation of SafeDAO

This submission is on behalf of the Safe Ecosystem Foundation represented by the Foundation Council.

[SEP 54] Temporary pause on resource allocation of SafeDAO

Authors: Safe Ecosystem Foundation

Created: 2025-07-08

Abstract

The proposal establishes a temporary funding pause on all resource allocation initiatives of SafeDAO. During the first 6 months after implementation, only the Council of the Safe Ecosystem Foundation (SEF) may lift the pause. After 6 months, either the Foundation Council or a SafeDAO governance vote may lift the pause. Additionally, the Foundation Council shall have the sole right to propose treasury management proposals going forward.

Proposal types

[X] SEP: Governance proposals

[ ] SEP: Constitutional proposals

[ ] SEP: Other SEPs

Proposal details

Purpose and Background

The proposal aims to achieve the following objectives for SafeDAO and the Safe core team:

• Reduce complexities in governance processes
• Increase focus on the most critical initiatives that will shape Safe's future
• Minimize operational effort and costs during a period of transformation

For this, the Safe Ecosystem Foundation proposes the following:

1. Establish a temporary funding pause on all resource allocation initiatives of SafeDAO. This temporary measure creates space for Safe to focus on critical structural transitions. During this period, the Foundation will assess and redesign the funding mechanisms based on learnings from previous approaches. Within the first 6 months after implementation (sprint after a successful vote), the pause may only be lifted by the Council of the Safe Ecosystem Foundation. After 6 months, it may be lifted by either the Foundation Council or a SafeDAO governance vote.
2. Additionally, the Foundation shall have the sole right to propose treasury management proposals (including auxiliary proposals needed to implement it, e.g. council structure or fee structure). This still allows SafeDAO, even during this funding pause, to potentially do treasury management from its treasury under the support and oversight of SEF as the legal wrapper of the SafeDAO treasury.

During the funding pause SafeDAO may still propose and vote on other proposals whose scope is not aimed at new resource allocation or treasury management.

Until 6 months: Pause can be lifted solely by Foundation Council (4 August 2025 - 16 February 2026)	After 6 months: Pause can be lifted by Foundation Council and SafeDAO governance vote (from 16 February 2026 on)
Pause on resource allocation by SafeDAO

By temporarily pausing new funding initiatives, Safe can dedicate its full attention and resources to successfully execute the structural changes already underway. Safe currently stands at a key moment in its evolution, requiring focused attention on fundamental structural changes:

• Safe Labs is being launched as a dedicated commercial entity focused on enterprise-grade self-custody infrastructure, designed to operate with startup velocity and clear revenue objectives, with a focus on long-term sustainability of the Safe project.
• At the same time, Safe Research is being established as SEF's dedicated R&D arm, advancing the cypherpunk self-custody stack through applied research on smart accounts with emphasis on security, censorship resistance and privacy.

These organizational changes coincide with strategic product decisions.

• Safenet as a cross-chain product is being paused and open-sourced, allowing community-driven development while enabling core contributors to focus on higher-impact initiatives.
• Safe Labs is shaping its "Cypherprise" vision. Harmonizing cypherpunk principles with enterprise-grade rigor to create products that are architected to enterprise standards yet accessible to everyone. Safe Labs will work towards pushing self-custody and sovereign ownership values while working to make owning assets more secure and user friendly for enterprises through this new vision.

These changes represent fundamental shifts in how Safe operates and serves its ecosystem, which requires careful coordination and dedicated resources to execute successfully.

We realized through SafeDAO’s early grants program and OBRA that for ecosystem funding to be effective, next to the work of delegates or council members, it requires substantial resources from the core team to provide strategic direction, evaluate proposals, provide technical guidance and ensure successful implementation (see also general insights from retros here and here). However, the same resources are currently dedicated to critical work on the core products. This creates a recurring tension between funding evaluation and core product development that this strategic pause aims to give room to resolve. In the past, this support couldn't always be given by the core team which naturally led to frustrations.

During this funding pause, the Foundation will assess and redesign the DAO’s funding mechanisms based on learnings from previous approaches including grants administered by the ecosystem team, OBRA funding as a DAO-native mechanism and accelerator programs. During the funding pause, SEF may continue financially supporting the ecosystem from its own funds, e.g. through direct investments.

These changes align with developments in other DAOs which are shifting focus on sustainable ecosystem building, including Jupiter DAO on Solana which recently paused voting, and Arbitrum’s new vision that condenses rights and responsibilities around Arbitrum Aligned Entities (AAEs).

Effects and impact analysis

Pros:

• Enhanced focus and strategic clarity: Redirects Safe’s focus towards building core products and monetization.
• Risk mitigation: Reduces exposure to misallocated resources and improves fiscal responsibility.
• Funding mechanism optimization: Creates dedicated time to evaluate and improve funding approaches based on past experiences with grants, OBRA, accelerator programs and investments.

Cons:

• Reduced funding availability: Limits funding for ecosystem initiatives during the pause period
• Reduced community participation: May decrease community engagement within the DAO

Mitigations: The pause is time-bound with a defined path for early termination by the Foundation Council within 6 months, and thereafter by either the Foundation Council or SafeDAO governance. During this time, SEF may continue to also financially support the ecosystem, as it has done in the past, from its own treasury. It will communicate transparently about SEF funding and share its commitment to resume DAO funding with improved processes.

Alternative solutions

Council Structure Implementation [SEP 49] Considered but not pursued: The alternative would be to proceed with implementing the committee and council structure as proposed and voted on in SEP 49, which introduces the collaboration between a Strategy Steering Committee and Grants Council within the OBRA framework. However, this approach is dependent on substantial resources from SEF and Safe Labs team members to effectively evaluate proposals and provide technical guidance. Additionally, this structure only covers certain funding requests capped at $100k and doesn’t allow the DAO to take part in financial upside, limiting its scope and impact.

SEF-only funding proposals Considered but not pursued: This proposal would restrict funding proposal submission to only the Safe Ecosystem Foundation. This means tokenholders and delegates would permanently not be able to submit proposals aimed at resource allocation. However, this approach would create an asymmetric power structure where SEF is the only entity to submit all resource allocation decisions while the DAO can only accept or refuse. This governance change could risk manifesting tensions and inefficiencies, as token holders would need to lobby SEF for funding decisions rather than having their own mechanism to propose strategic initiatives.

Implementation

This proposal requires no technical implementation. SEPs that request funding from SafeDAO would be deemed out-of-scope during the pause period and not eligible for voting. SEPs aimed at lifting the funding pause are deemed out-of-scope for the first 6 months as only the Foundation Council can lift it. The SEF may still continue funding ecosystem initiatives from its own resources during this period.

[x] Own implementation possible [ ] Own implementation but with funding [ ] Request for technical support through Safe matter experts

Open questions

None

Copyright

Copyright and related rights waived via CC0.