Following the successful approval of the 3rd Mandate Proposal for the dYdX Operations subDAO (“Ops subDAO”), the Ops subDAO requests $11.65 million in DYDX to fund its operations for the following 18 months.
Context
In 2023, the dYdX Chain community mandated the Ops subDAO to manage and operate critical infrastructure for the dYdX Chain exchange, including the web front end (dydx.trade), the dYdX Chain Indexer, and the dYdX mobile applications (iOS and Android). The dYdX Chain community later extended this mandate for 36 months (until January 2028) and also decided to expand the Ops subDAO’s responsibilities to include QA efforts.
The funding for the 3rd Mandate was initially postponed because the Ops subDAO’s balance sheet was well-capitalized at the time of approval. Currently, the Ops subDAO has approximately 3 months of runway ($1.5 million USDC) based on a monthly cash burn of roughly 450k USDC. As such, we plan to initiate the first tranche of funding to ensure uninterrupted operations.
Funding the First Half of the Ops subDAO’s 3rd Mandate
As specified in the 3rd Mandate Proposal, we have budgeted USD 23.3 million for the full 36-month duration, ending on 19 January 2028.
We request $11.65 million in DYDX (~14.4M DYDX based on a $0.8114 DYDX price) from the dYdX Chain Community Treasury to fund the Ops subDAO operations for the following 18 months. The exact amount of DYDX will be determined by TWAP before the proposal is created on-chain. Since this is the first tranche of funding, we do not find it necessary to add a buffer for market fluctuations. Instead, differences in TWAP and effective selling price will be accounted for when requesting the second tranche of funding.
With the establishment of the Treasury subDAO, the funding model for the Ops subDAO could be optimized. We invite the Treasury subDAO to provide feedback on potential optimizations to the Ops subDAO funding model.
Given the current market conditions and the significant pressure on the DYDX token, I believe it is crucial to explore alternative revenue streams that could sustain the operations of the Ops subDAO without exacerbating the downward pressure on the token price.
One of the key strengths of the dYdX ecosystem remains its Total Value Locked (TVL), which is primarily held in USDC. Utilizing this capital more efficiently—such as generating yield while funds remain within the system—could provide the necessary resources for the Ops subDAO. This approach would not only ensure operational sustainability but could also create additional capital for ecosystem growth initiatives or even DYDX buybacks in the future.
I encourage the Ops subDAO and the Treasury subDAO to consider mechanisms for yield generation on idle assets, balancing risk and reward, to optimize treasury management. This strategy could reduce the reliance on token sales for funding while reinforcing the long-term value proposition of dYdX.
Looking forward to the community’s thoughts on this approach.
I also invite the Tresury subDAO to coment on this proposal in order top provide a plan for future funding mechanics.
Selling DYDX tokens for operations funding is not the best course of action (that’s why the recent tokenomics was put into effect).
At current $DYDX prices it´s required to make massive token sales in order to reach the ammount needed.
It will certainly be necessary to sell $DYDX at this stage to fund subDAO Ops, however a different funding mechanism should be proposed for future needs, possibly by increasing the amount of $DYDX tokens for staking to be allocated to the Treasury subDAO in order to generate more USDC and create a more robust treasury that can fund the whole operations costs.
I would like to clarify a few points. When can we expect to see the financial report for Q4 2024 and for the entire year of 2024? I understand that the cost structure may have changed significantly since the last term was launched. I once looked at your expense reports in a Google Sheets file; there was excellent transparency at the start, but it seems that this is no longer a priority for you.
I feel that dYdX is currently at a stage where it should be as lean as possible (I remember seeing a five-figure expense for the Four Seasons hotel in the financial reporting; such expenses will likely be unacceptable in the near future).
I would like a breakdown of the expense categories, as well as more transparent information about salaries and roles. Are compensations currently different from the initial ones, and are they partially paid in dYdX or provided as additional performance bonuses? I have nothing against these compensations as long as they are reflected in the financial report and they align with the economic situation the protocol is currently in.
I looked at the initial 3.0 topic, and it essentially shows ~2.0 million USD (27%) in personnel expenses per year. I feel that’s a very inflated figure in current situation, but again, without detailed financial reporting, it’s hard to say.
I completely agree with @cryptoplaza. I think it’s worth considering funding through the Treasury subDAO; perhaps we should redistribute some of the fees from MegaVault to the Treasury subDAO. Given the current token price, dumping dYdX tokens into the market is unacceptable
We appreciate the dYdX Operations SubDAO’s thorough proposal and recognise its critical role in the ecosystem. The funding model for the Ops SubDAO can be optimized to strike a balance between capital efficiency and securing an adequate runway. With the current 3-month runway and the proposed 18-month funding request, the Treasury SubDAO would like to suggest two potential funding structures that integrate DYDX token utilization:
Conservative approach. The first approach would grant 12 months of runway to the Ops SubDAO, while allocating 6 months of funding into the staking program;
Aggressive approach. A more aggressive approach would grant 9 months of runway to the Ops SubDAO, while allocating 9 months of funding into the staking program.
We welcome further discussion with the Ops SubDAO to craft a funding structure that aligns with their specific cash flow needs.
Additionally, when considering funding sources, there is always a balance between depleting the stablecoin reserve vs. selling DYDX tokens. The Treasury SubDAO is actively addressing this challenge by:
Strengthening the stablecoin reserve through yield-generating strategies, beginning with Megavault for its ecosystem benefits, while exploring further diversification strategies;
Researching into enhancing the DYDX token’s utility and moat to support long-term sustainability.
The Treasury SubDAO remains available to coordinate with the Ops SubDAO on the best way forward.
I think this is a critically important point in the current situation, regardless of the specific proposal. I would like to hear Karpatkey’s ideas in a separate topic.
Glad to see The Treasury subDAO comments and proposals regarding this funding request. This is the right way to go. Furthermore, we should agree that The Treasury subDAO should have a saying regarding all future funding reqests.
Full support of the proposals made by The Treasury subDAO. Not the best person to say which is best regarding Operations subDAO current runway.
Would also like to add that conecting the operations funding with the business performance is a pathway of internal performance alignment.
Lastly i would also invite The Treasury subDAO to comment in a separate topic on the current incentives campaign funding and overall costs.
Thank you.
Thank you @karpatkey for this suggestion, we are happy to work with the Treasury subDAO to optimize the funding of the operational expenses of the protocol.
For the Ops subDAO the Aggressive approach works well as it provides enough runway in terms of our expenses while providing capital to the Treasury subDAO.
First, I want to apologize for the slight delay in publishing the Q4 and full-year 2024 financial updates. These will be available shortly. We also appreciate your recognition of our commitment to transparency. Please be advised that we are currently in the process of refining how financial records are compiled and presented to make updates more efficient while maintaining the same level of transparency. This has resulted in a slight delay, but the records will be fully updated soon - thank you for your patience.
Furthermore, I wish to reiterate that the budget for the 3rd term of the Ops subDAO was approved via governance proposal. The current proposal simply enacts what has already been approved.
While I agree and acknowledge the importance of maintaining a lean structure, I want to emphasize that the Ops subDAO and its contributors play a critical role in providing and maintaining the community-owned infrastructure, which requires ongoing updates and maintenance.
As previously noted, the budget for the 3rd term of the Ops subDAO has already been approved. However, I want to provide additional clarity on this topic. As of January 2025, the Ops subDAO spends approximately 90k USDC on compensation. Since the original mandate, the Ops subDAO’s responsibilities have expanded significantly, necessitating the hiring of additional contributors to maintain the necessary level of quality. Compensation has also been adjusted according to individual performance, prevailing market rates, and the Ops subDAO’s operational needs. Additionally, I also want to stress that attracting and retaining top talent is key to the success of any business, and particularly in a highly specialized and small team like the Ops subDAO. In other words, compensation is aligned with the Ops subDAO’s ongoing needs while maintaining high execution standards within the approved budget. This ensures we can operate effectively while remaining lean and financially responsible.
I didn’t say that your compensation is inadequate; I just don’t know your compensation structure, performance bonuses, and so on.
I believe that the structure of such compensation should be transparent, and while a fixed portion of the compensation can be established upfront, performance bonuses should definitely be addressed in a separate proposal, in my opinion. This would certainly add transparency to all processes.
Again, I’m not interested in evaluating a specific individual; it’s about assessing the team based on its overall function.
For example, you took on the role of quickly adding new markets to the market map, but today you missed the launch of KAITO, even though the entire crypto Twitter was talking about this project, the contract was known, and it even launched on Binance. If there are a few more situations like this, I wouldn’t want the person responsible for that to receive a performance bonus at the end of the quarter, for instance. I hope I’ve clearly explained my position?
It would also be good to assess the success rate of the activities done. Do they outweigh the costs?
For example; what happens with the newly added markets? Only adding them does not make much of a difference, it needs to attract meaningful trading volume as well, which in turn should generate the same revenue as the costs made to list the project in the first place.
The funding proposal for the 1st tranche of the 3rd Mandate for the Ops subDAO is live: Mintscan
Upon passing the Ops subDAO will receive 16,671,500 DYDX to fund 18 months of operations. Based on the counter proposal by the treasury subDAO, if this proposal is successful the Ops subDAO will send 8,300,000 DYDX to the dYdX Treasury subDAO for the purposes of inclusion with the Treasury subDAO’s Staking Program.
The DYDX will be delegated to validators as part of the Staking Program managed by the Treasury SubDAO. We expect the delegations to be announced next week (the week of March 16th).
The Ops subDAO has sent additional 5.7 m DYDX to the treasury subDAO. They now will stake 14 m DYDX in total on behalf of the Ops subDAO and send the staking rewards back to us monthly.
After carefully considering our cash flow we have come to the conclusion that in the current situation it is the most sustainable strategy.
Also here you can find the finance update for 2024. Thank you for your patience regarding it.