Summary

This proposal is for the funding of the Balancer Foundation for year three.

As a recap, the Foundation provides the DAO with an additional mechanism for executing work in a decentralized environment, and supports resilience across the Balancer Ecosystem.

The Balancer Foundation is a traditional legal entity that is directed by the DAO. It helps create a sustainable environment where many groups of people can participate. It allows the DAO to operate at a larger scale and engage with service providers who require formal contracts, and is able to take certain actions that a DAO is unable to perform on its own behalf.

The Foundation and its operating subsidiary (Balancer OpCo Limited) act as facilitators of the Balancer Ecosystem. This governance structure, at the direction of the DAO, can leverage other teams to execute work that can further the adoption of the Balancer Protocol – for example, the front-end team or other technology providers.

In short, the Balancer Foundation acts as an agent for the DAO and part of the DAO’s governance within the structure of the traditional business world.

The Balancer Foundation operates within a formal environment (The Foundation Companies Act) in the Cayman Islands and thus brings protection and certainty that comes with formal organizations.

Specification - Foundation expenses and reserves

The budget identified for the Foundation is line-item specific and includes very few estimates. The Foundation has, however, assisted in achieving meaningful savings elsewhere in the ecosystem, mainly by optimizing costs across many different service providers.

The Foundation’s independent Cayman director reviewed these projections in comparison with a number of foundations similar portfolio to the Balancer Foundation, and sees the Balancer Foundation achieving a material cost saving overall with its proposed figures.

This proposal is created to seek funding for the Balancer Foundation for four quarters, effective April 2024 running through March 2025. This proposal does not request any change to the self-insurance reserve, currently covered by the approval of BIP-198.

Foundation Expenses

The summary below reflects the proposed budget for these four quarters, and introduces a few changes to our Cayman/BVI structure without compromising our footprint in these jurisdictions, significantly reducing our USDC burn.

The current CEO (Tristan Relly) has given notice and the Foundation Board, with support from team leaders in the Ecosystem-Council, has identified @Danko8383 to perform the operational and administrative roles for both the Foundation and Balancer OpCo, deprecating the “CEO” title.

Danko is a seasoned Balancer community member, part of the Balancer Maxis and has been a Director on the Foundation Board since Dec 2022. From Q2 and beyond, this proposal would also see other daily operational duties of the DAO (currently held from within the Maxis) move into the Foundation/OpCo setup, reallocating this scope of work (see more on the Maxis funding proposal here);

In order to replace Tristan Relly’s signing authority in the Cayman Islands, the board has carried out discussions with independent directors based in the Cayman Islands, and would like to propose that the Foundation retain the services of an additional professional director provided by Leeward Management Limited (“Leeward”) that is being offered at a competitive price. The budget includes an element of operational and legal support for the Foundation on a monthly basis. Leeward and their personnel are drawn from recognized industry professions, are experienced in governance and compliance matters for Cayman Islands foundation companies, and act for many leading projects and some of the largest DAOs. This particular candidate has a legal background that will be useful to the Foundation well in reviewing legal contracts.

The Foundation Board proposes that the appointment is effective immediately on the conclusion of voting should the proposal pass. According to article 5.3 of Balancer’s Foundation Articles of Association: “The Token Holders have the power, by Governance Resolution, to appoint or remove Directors.”

Board meetings held on-site in the Cayman Islands are also accounted for in the budget, given last epoch’s were paid from savings. The meetings with a totality/majority of the members present are considered a great advantage for jurisdictional substance.

If approved, we propose that year three be funded from funds already held by Balancer OpCo due to savings achieved there, rather than additional funding from the DAO. If budget changes are requested, they will go to a snapshot vote. If no changes are requested, this proposal will serve as the governing decision.

The table below shows the applicable expense line items by quarter. Descriptions for each line item are included under the “Detail” section further below.

The Foundation’s fiscal year runs January to December, and one will see annual fees due around December/January that lead to higher funding needs in those quarters. The year two budget accounted for two years worth of annual fees and professional director's fees due to the timing of payments. That was a one-off and now the budget aligns with those payments once a year.

Detail

For reference, please see below descriptions of the individual line items.

Registered Office and Registrar of Companies fees (via Campbells Corporate Services Cayman)

Annual registered office and registrar fee (US$3,207.00). These fees are due in January each year and are based on current figures, with a 10% uplift. Includes:

• providing the registered office and registered agent
• maintaining the statutory registers
• preparation and submission of annual returns
• filing economic substance notifications
• maintaining the UBO register and reporting on the same

Annual Secretary Fee

Under Cayman Law, a Foundation Company must at all times have a secretary who is a 'qualified person' (i.e. a person licensed or permitted under the Companies Management Act to provide company management services). These fees are due in January each year and are based on current figures, with a 10% uplift.

Neither the secretary fee nor the registered office fee includes the preparation of minutes and resolutions. The Foundation will prepare these for typical matters but might seek assistance from Campbells if complex matters arise (see “Legal Counsel” below).

Legal Counsel

The Foundation may seek counsel on matters of Cayman law and industry standards as they evolve. It is hard to estimate this cost as it could vary considerably depending on the item. We have inserted a placeholder for each quarter. For clarity, this refers to an additional Cayman legal team rather than the in-house service team.

Any additional corporate requests (e.g. requests for certificates, certified documents, updates to registers, filing changes, mail forward, etc) are here included as a buffer and will also be charged separately.

Tentatively, if the budget is available, the Foundation will seek counsel regarding MiCA developments in Europe and tax legislation, focusing on U.S. fiscal and regulatory overreach.

Governance/Supervisory Services

Director and Supervisor Responsibilities

Under the Foundation Companies Act, 2017 and the Memorandum and Articles of Association of the Balancer Foundation, the Foundation is required at all times to have at least one Supervisor who is able and willing to supervise the management of the Foundation Company.

“Supervisor”, for a Foundation Company, means a person, other than a member, who under the Foundation Company’s constitution has an unconditional right to attend and vote at general meetings, whether or not the person has supervisory powers or duties.

The non-executive Director responsibilities are:

• To act as the Chairperson for the purposes of board meetings (to the extent the other board members do not wish to have this rotated to them), to delegate matters to the company secretary, and to ensure appropriate board packs and documents are prepared by the secretary or relevant Foundation officers or employees or contractors
• To act as the Supervisor for the Foundation and to carry out the tasks of the Supervisor under the articles of association of the Foundation
• To work with the wider board of directors to:
  • set the direction for the foundation and its business with the board of directors;
  • set an agenda for board meetings;
  • further the growth of the Balancer DAO as appropriate
• Along with other board members to select and remove directors where appropriate
• Along with other board members, oversee efforts to support and grow the Balancer ecosystem including seeking funding and setting budgets, establishing the Foundation’s efforts to further its mission
• Along with other board members, oversee the Foundation CEO, the Foundation and the BVI subsidiary
• Where necessary to execute contracts and agreements for the Foundation and BVI Subsidiary with or in the stead of the executive director

The contracted fees for these services are in line with industry standard, and less than certain providers. The fees are due in full in January each year.

In this present proposal, as presented above, the Foundation is budgeting for the appointment of a 4th Director to the board in replacement to Tristan Relly, allocating a maximum of 5 hours/mo (hourly charges incurred per hour capped), which should be sufficient for the Board needs.

Community Board Member duties

The Directors have ultimate responsibility for the oversight of the Foundation. In particular, the Director’s responsibilities wil...