Exploring the dYdX Operations subDAO’s near future

Governance/DAO Discussions
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Exploring the dYdX Operations subDAO’s near future

Context

The dYdX ecosystem is approaching a critical juncture: the potential launch of dYdX V4 mainnet is approaching, and the initial 6-month term of the dYdX Operations Trust (“DOT”) is set to expire on June 19, 2023. Consequently, the dYdX Foundation is releasing this blog post about the current situation and potential near future of the DOT, so the dYdX community may discuss the capabilities and resources that the DOT could require to be prepared for the potential mainnet launch of dYdX V4 and beyond.

TL;DR

  • The dYdX ecosystem is approaching a critical juncture: the potential launch of dYdX V4 mainnet is approaching, and the initial 6-month term of the DOT is set to expire on June 19, 2023.
  • To best position the dYdX DAO for the potential mainnet launch of dYdX V4, it is probably in the dYdX community’s best interest to start discussing the future scope of the DOT.
  • The DOT may need to recruit external contributors, including some technical capabilities, to scale effectively in anticipation of the potential mainnet launch of dYdX V4.

Introduction

On November 2, 2022, the dYdX Foundation published “A Take on the dYdX DAO’s Near Future” to inspire the dYdX community to initiate discussions about the future of the dYdX DAO. Since then, dYdX Trading has released updates about completing Milestone 2 and Milestone 3. We encourage the dYdX community to review these posts in detail.

On December 19, 2022, the proposal to create the DOT as a dYdX subDAO passed, and 225,000 DYDX were transferred from the dYdX community treasury to fund the DOT’s operations during an initial 6-month term. The vote represented “DYDX Consent” (as defined in the Trust Instrument) to form the DOT, a Guernsey non-charitable Purpose Trust, with Reverie Reserves, LLC, Joanna Pope, and Callen Van Den Elst appointed as trustees, and George Beall appointed as the enforcer. For more information about the Guernsey Purpose Trust structure, we encourage the dYdX community to review “Legal Framework for Non-U.S. Trusts in Decentralized Autonomous Organizations.”

To best position the dYdX DAO for the potential mainnet launch of dYdX V4, it is probably in the dYdX community’s best interest to start discussing the future structure and scope of responsibilities of the DOT and, if applicable, to start working on a plan for the DOT’s immediate future.

Potential next steps for the DOT

Since the inception of the DOT, considerable progress has been made in establishing the infrastructure required for the dYdX DAO to be prepared for the potential mainnet launch of dYdX V4 and beyond.

The dYdX community should consider whether the DOT should continue operations for another term, potentially with expanded responsibilities. If the community decides to extend the DOT’s mandate into a second term, the team that leads this second mandate of the DOT could focus on scaling the DOT’s main activities, including, among other things:

  • managing a DAO communications platform,
  • managing accounting, payroll, and payments infrastructures,
  • creating and executing a strategy to increase transparency of dYdX DAO communications and decision-making, and
  • developing and operationalizing a budget and transparently publishing documentation to justify spending.

Further, on March 27, 2023, dYdX Trading Inc. announced that it will “publish open-source deployment configurations and scripts (where applicable) for the validator (protocol), indexer, and front-end services.” Given this information, it would likely be in the dYdX community’s best interest if the DOT’s potential second mandate included the necessary technical capabilities to properly position the dYdX DAO for the potential mainnet launch of dYdX V4.

Conclusion

The dYdX ecosystem is approaching a critical juncture: the potential launch of dYdX V4 mainnet is approaching, and the initial 6-month term of the DOT is set to expire on June 19, 2023. To best position the dYdX DAO for the potential mainnet launch of dYdX V4, it is probably in the dYdX community’s best interest to discuss the future scope of the DOT and consider entrusting the DOT with a second mandate, which may include technical enablement and capabilities for the DOT to increase the likelihood that the dYdX DAO is prepared for the potential mainnet launch of dYdX V4.

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So if we are to start the discussion, the obvious starting point would be figuring out what roles are required from full-time contributors. Based on the responsibilities outlined above, the following roles would be essential for the next six-month term of the dYdX Operations Trust. Please note that these numbers are approximations, and actual compensation may vary based on experience, location, and the specific needs:

DOT Manager: This is a pivotal role, overseeing the overall operations and managing communication platforms, so the cost could be relatively high. The 6-month compensation could be in the range of $60,000 - $100,000.

Accounting and Payroll Specialist: This person would handle accounting, payroll, and payments infrastructures, which are crucial but less high-level than the DOT Manager role. The 6-month compensation might be around $30,000 - $50,000.

Technical Advisor or Consultant: This would be a part-time role, someone brought in on an as-needed basis to provide guidance on technical matters related to the launch of dYdX V4. The cost for this would vary based on how often their services are needed, but for the sake of estimation, we could consider a part-time cost of around $20,000 - $40,000 over six months.

In total, the estimated 6-month budget for these roles would be in the range of $110,000 to $190,000.

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Thanks for sharing this update. I believe that DOT should continue, especially with the upcoming v4 launch and should be highly prioritized given the urgency. I’d agree with the aforementioned goals and onboarding technical contributors once the foundation is ready. However, beyond the work processes and infrastructures necessary, a very clear timeline will be needed to ensure milestones and deliverables are achieved on time (similar with what the Trading team and Foundation share - to be on a more granular basis).

IMO, a 6month runway seems ideal to set up the fundamentals but this should be envisioned as a long term project - i.e. a longer runway (since front end services, indexers etc will be necessary). Therefore, DOT can possibly run for 8 - 12 months instead as it will take time for these dev projects to be set up and this would minimize disruptions and transitions.

In terms of manpower, I’d largely agree with @foxlabs in the roles necessary, but would suggest that the DOT manager be able to have technical expertise as well to support the overall vision, since tech will be a crucial added responsibility.
In the immediate term, the main hire would be the DOT manager to establish the ops and workflows. After which, technical contributors can be onboarded in line with v4 launch. Once a certain number has been onboarded (eg. 1/2 providers), the payments specialists etc can come in to ensure that the budget and accounting frameworks are in place.
Compensation wise, a reference can be made from MakerDAO’s Core Unit Framework. About Sustainable Ecosystem Scaling Core Unit at MakerDAO.

This next phase of DOT will be critical to ensure the smooth launching of subDAOs and embrace the notion of decentralization with the transition to v4.

Other inspirations: MIP39c2-SP10: Adding Sustainable Ecosystem Scaling Core Unit.

edit:
Would like to add on as well to thank Reverie - @carlbergman for helping with this initial phase and hope that they will continue to play a role in contributing and building with the dYdX community

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I’d also like to echo @0xcchan.

Thank you to Reverie for getting the Operations subDAO from 0-1—a challenging task that has built the groundwork for future contributors and allowing a potential V2.0 to flourish.
https://dydx.forum/t/next-steps-for-the-dydx-ops-subdao/185

Agree with the notion that the next phase of DOT is crucial.

Baselining compensation against different DAOs could be a component the subDAOs/community may want to consider. It might be worthwhile for the community to create some guidelines here, although this could be a responsibility of a potential Operations Lead.

Looking forward to seeing this discussion progress!

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Based on the current feedback, it seems the immediate priority is to identify a DOT Manager with technical expertise and a deep understanding of dYdX. This individual would be instrumental in aligning the technical and operational aspects of the DOT, especially in preparation for the dYdX V4 launch.

We agree with @0xcchan’s suggestion for a longer term, and believe extending the term to 12 months would offer needed stability during this critical phase. This duration allows for more effective planning and execution of projects, while minimising disruptions and transitions.

In terms of funding, an initial allocation of 500,000 dYdX could perhaps be considered. This would sufficiently cover operational costs and ensure smooth running of the DOT. Any remaining funds at the end of the 12-month period could either be rolled over into the subsequent term or refunded back to the treasury, based on community consensus.

We are interested in hearing @carlbergman’s perspective on this approach and any suggestions for improvement.

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