[SEP 44] Creating SafeDAO’s first revenue stream through Community-Aligned Fees

Please refer to the full proposal text on the SafeDAO forum. Some parts may have been removed to fit within the character limit on Snapshot.

Link to previous discussion: https://forum.safe.global/t/discussion-creating-safedao-s-first-revenue-stream-through-community-aligned-fees/5684

Title:

[Draft] Creating SafeDAO’s first revenue stream through Community-Aligned Fees

Authors:

@Christoph (Safe Ecosystem Foundation), @Andre (Safe Ecosystem Foundation)

Created: 2024-08-29

Abstract

This proposal introduces SafeDAO’s first revenue stream which strengthens token utility, community governance and empowers the vibrance of the ecosystem.

Proposal types

State which proposal type this proposal belongs to. [] SEP: Constitutional Proposals [] SEP: Governance Proposals [x] Other SEPs

Proposal details

Purpose & Background

As part of a larger effort toward economic sustainability, The Safe Ecosystem Foundation (“SEF”) has taken the initiative to orchestrate the first revenue stream for SafeDAO. As part of this, SEF has taken the recently introduced Native Swaps in Safe{Wallet} as an opportunity to create an alignment of ecosystem products and solutions with the community brand. More specifically, SEF utilizes its Safe-related trademarks to facilitate revenue generation of third-party integrations within Safe{Wallet} via a license model with Native Swaps as the first integration of this kind. It should be particularly emphasized that Safe{Wallet} does not extract any value around Native Swaps. Instead, revenue streams are pledged to SafeDAO. The intention is to give SafeDAO more agency regarding the use of funds. For details around sustainable ecosystem building and the concept of Community-Aligned Fees, see here.

This proposal suggests ratifying that SafeDAO accepts the revenue transfer for Native Swaps through the Safe{Wallet} integration.

Fee Conversion and Acceptance of Funds For Native Swaps, a fee conversion mechanism collects the fees in the assets accepted by CoW Protocol, using the proceeds to buy SAFE tokens on the open market and then (upon ratification) brings them under community control. This means, upon ratification of this proposal, the revenue streams will be transferred to an account which is designated for SafeDAO. As such the SEF or a fully-owned subsidiary serves as the legal wrapper for the revenue streams of the SafeDAO treasury.

Resource Allocation The funds received from 3rd parties would be part of SafeDAO’s treasury and as such they can be allocated according to SafeDAO’s governance and resource allocation frameworks (i.e. Outcomes-Based Resource Allocation).

Annex 1:

Fee details:

For more details check Introducing TWAP Orders and Tiered Fees in Safe{Wallet} Native Swaps, How does the widget fee work for native swaps? | Safe{Wallet} Help Center and Support. and Cowswap - Partner fee calculation.

Effects and Impact Analysis

If the proposal is accepted, the revenue generated from Native Swaps will be allocated to SafeDAO and become part of its treasury. As such it can be allocated according to SafeDAO’s governance and resource allocation. This will be the first income stream for the DAO and allow for a more sustainable resource allocation governed by SafeDAO.

Looking at the generated fees during the first month of Native Swaps and considering a hypothetical stagnant development, this income stream would create an annualized amount of ~$2.5M of community-aligned fees already. However, limiting an assessment to such a conservative view would completely disregard the fact that there are multiple areas for optimization, e.g. raising awareness for the feature and rolling it out to more networks.

If the proposal is rejected, the revenue generated from Native Swaps will remain under the control of the Safe Ecosystem Foundation. It will be allocated in line with the Foundation's purpose: fostering the Safe ecosystem. However, this revenue will then not form part of the SafeDAO treasury and will not be governed by token holders or SafeDAO delegates.

Alternative Solutions

An alternative to the introduction of the community-aligned fees would be not to focus on financial sustainability. Another alternative would be not to have the revenue governed by SafeDAO. We don’t see this as a valid alternatives as this will limit the DAO in its ecosystem funding.

Implementation

[x] Own implementation possible [] Own implementation but with funding (how much % to implementation) [] Request for technical support through Safe matter experts:

• Who is needed?
• Did you reach out?
• Is there a roadmap?

For the implementation the SEF or a fully-owned subsidiary of SEF under the surveillance of the Foundation Council will operationally set up a wallet attributed to SafeDAO with the same setup as the SafeDAO treasury.

Open Questions

None

Acknowledgements

Will be added during the discussion.

Copyright

Copyright and related rights waived via CC0.