SCP-170 Treasury Management and Diversification Committee (TMDC) Mandate Update & Rename into DAO Finance Committee (DFC)

Summary

This proposal seeks to reform the existing Treasury Management and Diversification Committee (TMDC) by expanding its mandate and renaming it to DAO Finance Committee (DFC). This proposal also updates the procedures & policies of the DFC. The new mandate includes explicit management of discounts/fees/promotion details from previous and future governance proposals, management of all future grants & non-FOX token revenue to any of the DAO's wallets on any chain increasing the oversight of token allocation from 180M FOX to encompass all grants & non-FOX token revenue from the passing of this proposal onwards. This proposal would explicitly prohibit capricious or speculative uses of both the 180M FOX and future grant/non-FOX token revenue. This proposal would set policies and procedures for adding agenda items, removing DFC members, and appointing interim members when below quorum.

Abstract

As discussed in [SCP-148] and [SCP-77], the TMDC has been pivotal in "advising on the allocation over certain limited assets within the ShapeShift treasury" and "managing the treasury to meet payroll and operating expenses with stablecoins each month"​​. Building upon this solid foundation, the proposed DFC aims to integrate a more holistic approach by including fee management and all grants & non-FOX token revenue, ensuring a comprehensive treasury, revenue, and financial health approach.

Proposal Details

Mandate Expansion and Renaming:

The TMDC will be rebranded as the DAO Finance Committee (DFC), with an extended mandate to oversee a broader array of financial responsibilities. This includes:

• Management of Discount Fee Parameters: From governance proposals.
• Oversight of All Future Grants and Non-FOX Token Revenues: Across all DAO wallets and chains.
• Enhanced Reporting: On DAO's financial health and strategic recommendations for financial sustainability.

Definition of Specific Powers & Limitations

• Asset Management: Selling assets for stablecoins, allocating to cryptocurrencies like BTC/ETH for diversification, and using funds for user incentives.
• Prohibitions: To prevent speculative activities, including banning the engagement in swapping assets for speculative tokens or protocols and prohibiting speculative bets on low market cap assets.

Policies & Procedures Update

Uncertainty in Scope

• Governance Engagement: Submitting proposals to governance for specific actions beyond the mandate or amending the DFC’s authority as needed.

Agenda Procedure

• Detailed rationales required for agenda items, focusing on revenue growth, user expansion, position management, and cost analysis.

Vote of No-Confidence Amendment

• Allows any DFC member to trigger a vote of no-confidence in another member, with governance deciding on removal. Tokenomics workstream leader or any member of the DFC will put a proposal up within 7 days of appointment.

Emergency Authorization Powers

• If below quorum, the DFC can vote in new members to reach quorum, subject to governance re-affirmation within 7 days.

Rationale

The proposed expansion and reformation of TMDC into DFC are driven by the evolving needs of the ShapeShift DAO. The inclusion of fee management and broader asset oversight will equip the committee to make more informed, strategic decisions that align with the DAO's long-term vision and sustainability. The committee's priority is to take a holistic approach to DAO treasury management, and must act toward the long-term success of FOX token holders, the FOX token ecosystem, and thus the ShapeShift DAO as a whole​​. By encompassing a more comprehensive financial strategy, DFC will play a crucial role in steering the DAO towards financial resilience and prosperity. The recent Optimism (OP) grant situation underscores the necessity for the expanded mandate proposed for the TMDC. Without explicit inclusion in the TMDC's mandate, the management of such assets rests in a state of limbo, pending direct governance actions. This scenario reflects a critical oversight: the failure to anticipate the diversification of assets like the OP grant, which, while crucial for the DAO's strategy, fall outside the traditional FOX-focused paradigm. The absence of a clear, proactive management strategy for these assets could lead to missed opportunities or missteps, undermining the DAO's operational efficiency and strategic agility. Initially, the Treasury Management and Diversification Committee (TMDC) was envisioned with a focused scope, primarily managing the 180M FOX tokens and assets derived therefrom. This scope was rooted in the belief that direct DAO governance should preside over assets outside this purview. However, the landscape of governance and asset management within the DAO has evolved significantly since the TMDC's inception, revealing gaps in this approach. Meanwhile, the ecosystem of protocol DAO risk management has blossomed into a category. There are numerous examples of teams allocating assets, performing open market operations, changing parameters based on monthly analysis, and reporting it all back to token holders for rigorous review. The rationale for expanding the TMDC into the DFC and broadening its mandate is precisely to address such scenarios. By entrusting the DFC with the management of the grants and future non-FOX tokens, the DAO ensures a more responsive and responsible stewardship of its assets. This proactive approach empowers the DFC to dynamically manage and leverage a diverse portfolio of assets, aligning with the DAO's evolving needs and governance discourse, and ultimately fortifying the DAO's financial foundation and strategic execution.

Benefits

• Comprehensive Financial Oversight The DFC will have a broader mandate, enabling it to manage discounts, fees, grants, and non-FOX token revenues more effectively. This holistic approach ensures that all aspects of the DAO's treasury and financial health are under vigilant oversight.

• Strategic Financial Management With the expanded purview, the DFC can make more informed decisions that align with the DAO's long-term vision and sustainability goals. This strategic approach allows for proactive management of the DAO's assets, enhancing financial resilience.

• Enhanced Governance Alignment The reformation into DFC reflects a governance structure that is more aligned with the evolving needs of the DAO and its community. It allows for a more agile response to changes in the financial landscape and governance requirements.

• Operational Efficiency By centralizing financial oversight and management tasks within the DFC, the DAO can achieve greater operational efficiency. This streamlined approach reduces redundancy and ensures that financial strategies are implemented cohesively.

Drawbacks

• Complexity in Oversight The broadened scope of the DFC might introduce complexity in managing a wider array of financial tasks and responsibilities. This could require additional resources or expertise to navigate effectively.

• Potential for Overcentralization With the DFC taking on an expanded role, there's a risk of overcentralizing decision-making power within a single committee. This could potentially limit diverse input and perspectives on financial management strategies.

Voting

• For: Supports the transition and expanded mandate.
• Against: Prefers maintaining the current TMDC structure.