At Govmos, we have already presented our welcoming support to the creation of a Treasury subDAO which is perfecly suited to answer the present and future prospects of the dYdX chain. To this day we have received two propositions in this forum. To present a balanced comparison, we’ll focus on their respective strengths, keeping the evaluation nuanced and leaving room for everyone’s subjective preference.
We currently stand with no preference towards one or the other, we simply noted some key differences in their designs and vision. To share these findings with the broader community, we will break down our comparison into separate categories.
1. Structure of the Treasury DAO
- Karpatkey Proposal: Karpatkey presents a detailed structure based on their experience managing other DAOs, proposing to bring their expertise to dYdX. As they state, “The Karpatkey team proposes to establish a Treasury SubDAO to manage the dYdX Treasury. The team has extensive experience in managing DeFi treasuries, including with Gnosis and others.” This highlights a professional, scalable structure that emphasizes operational clarity.
- StakeHouse Proposal: StakeHouse also proposes a solid framework but places more emphasis on a community-led model. They note, “Our goal is to create a more decentralized structure, allowing the community to have a significant role in decision-making.” This model favors an adaptable structure, allowing for flexibility as the treasury grows and evolves.
Comparison: Both proposals offer strong structural frameworks. Karpatkey brings in a tried-and-tested approach, while StakeHouse promotes a decentralized, community-driven model that leaves room for adaptability.
2. Governance Approach
- Karpatkey Proposal: Karpatkey aims to balance decentralization with professional support. As outlined in their proposal, “The governance of the Treasury SubDAO will be decentralized, but Karpatkey will provide operational and strategic support.” This suggests a governance system that seeks efficiency while maintaining community involvement.
- StakeHouse Proposal: Governance in StakeHouse’s proposal is more explicitly community-driven. They highlight “a hands-on approach for the dYdX community, ensuring all major decisions are made in a decentralized manner,” giving token holders a more direct role in managing the treasury.
Comparison: Karpatkey offers a hybrid model with professional oversight, while StakeHouse focuses on empowering the community in governance decisions, which may appeal to those favoring a decentralized ethos.
3. Risk Management
- Karpatkey Proposal: Risk management is a cornerstone of Karpatkey’s proposal, where they emphasize “robust risk management strategies, including diversified treasury allocations.” Their experience in other DeFi projects suggests they have a clear framework for protecting treasury assets.
- StakeHouse Proposal: StakeHouse also highlights risk management but takes a more flexible approach. They mention “adapting risk strategies based on market conditions and community input,” allowing the community to play a role in shaping the treasury’s risk profile.
Comparison: Karpatkey’s approach is more structured, drawing from their experience in treasury management, while StakeHouse offers flexibility and community involvement, which could lead to more innovative strategies depending on the community’s risk appetite.
4. Transparency and Accountability
- Karpatkey Proposal: Karpatkey places significant emphasis on transparency, committing to “regular reports and external audits to ensure accountability.” This structured reporting ensures that the community remains informed and that operations remain transparent.
- StakeHouse Proposal: StakeHouse also prioritizes transparency but leans more toward community oversight. They suggest “open reporting to the community, with all financial operations visible on-chain,” allowing the community to monitor activities directly.
Comparison: Both proposals highlight transparency as a priority. Karpatkey’s use of external audits adds a professional layer, while StakeHouse’s on-chain, community-monitored approach offers a more decentralized method of ensuring accountability.
5. Long-Term Sustainability
- Karpatkey Proposal: Karpatkey’s focus on long-term sustainability is evident in their detailed roadmap for treasury growth. They emphasize “stable, risk-adjusted returns over time,” with clear mechanisms to ensure the treasury’s growth while minimizing risk exposure.
- StakeHouse Proposal: StakeHouse also aims for sustainability but takes a more adaptable approach. They propose “adjusting strategies as the market evolves,” allowing the community to decide on shifts in the treasury’s strategy as needed.
Comparison: Karpatkey offers a more fixed, methodical approach to sustainability, while StakeHouse allows for greater flexibility, letting the community adapt strategies in response to changing market conditions.
6. Financial Proposition and Fee Mechanisms
- Karpatkey Proposal: Karpatkey proposes a 5% service fee on the net yield generated under the staking program, to be paid in USDC. They also introduce a minimum fee of $300K per year and a maximum fee of $1M per year, accommodating the volatile nature of crypto markets. Additionally, they state that Karpatkey will subsidize the initial setup costs for the Treasury SubDAO and Cayman Foundation infrastructure as a signal of their long-term commitment to the dYdX community. Optional elements will be subject to separate proposals with their own respective pricing.
- StakeHouse Proposal: The StakeHouse proposal does not specify a fee structure in their current submission. This leaves the financial compensation model for their services open for future clarification or further proposals.
Comparison: Karpatkey’s proposal offers clear financial terms, which provides transparency and predictability for the dYdX community. In contrast, StakeHouse’s proposal does not include fee details, which could invite further discussion or follow-up clarification about the cost structure for their services.
7. Treasury Funds Allocation and Seeding Mechanisms
- Karpatkey Proposal: Karpatkey proposes a methodical approach to seeding and growing the treasury by focusing on staking as the primary mechanism for yield generation. They emphasize setting up a Staking Program for the dYdX treasury, where treasury funds will be allocated to staked assets to generate yield. As noted in their proposal, “Our focus is on implementing a staking program that will diversify risk and generate sustainable yield for the dYdX treasury.” This approach indicates a reliance on staking as the central strategy for treasury growth, which comes with predictable returns, especially under market conditions favorable to staked assets.
- StakeHouse Proposal: StakeHouse takes a different route, proposing to “explore a fundamental change in the tokenomics” suggesting that treasury funds could seeded directly from the protocol revenues, essentially proposing to redirect a share of the revenue toward the treasury account and subsequently reduce the current allocation to stakers.
Comparison: Karpatkey’s approach is more focused on staking as the primary mechanism for seeding and growing the treasury, which offers stability and predictability but may be more conservative. StakeHouse, on the other hand, suggests a community lead initiative to reform tokenomics and reward distribution.
Conclusion: Balanced Insights
Both Karpatkey and StakeHouse present compelling proposals for the dYdX Treasury SubDAO, each with its own strengths. Karpatkey brings a wealth of experience and a structured, risk-conscious approach that many may find reassuring, especially in terms of governance, risk management, and transparency. Their methodical approach offers stability and predictability, ideal for those looking for steady long-term growth and a well rounded plan.
StakeHouse, on the other hand, advocates for a community-centric model that emphasizes flexibility, decentralization, and performance-based incentives. Their focus on community decision-making and adaptability could attract those who prioritize decentralization and dynamic strategies that evolve with market conditions.
Ultimately, both proposals offer well-considered frameworks for managing the dYdX treasury, one significant difference resides in the choices to seed the program. Despite this design difference, the choice may come down to whether the community prefers a more professionalized, structured approach or a collaborative and adaptive model that encourages direct participation.
At present, our designated validator, (PRO Delegators), is expected to abstain from choosing one candidature over the other. We incline to let our delegators cast their own vote instead. This post is specifically designed to help them do it with the necessary information.
Hoping that our review will help every token holder making a well advised decision when the time comes, we thank you for reading this extensive post.
Govmos.
