Attributes
Author(s): @Cryptocorn
Recipient(s): Pocket Network, PNF
Category: Governance Upgrade
Implementer(s): PNF
Asking Amount: 0
Summary:
While PNF should be allowed to make day to day budgetary decisions quickly and friction free without the need for onerous DAO/3rd party oversight, a regulatory mechanism should be put in place that larger and longer term budget items are adequately transparent, discussed and overseen by an additional neutral 3rd party.
This pre-proposal is designed to find consensus amongst the community as to what amount they believe increased budgetary scrutiny should be further implemented.
Background/Motivation:
PNF was upgraded to an active Foundation managing both day to day operations and longer term strategic projects on behalf of the DAO as part of PIP-26, ‘Foundation for a Future’. Part of the rationale for PIP-26 and the creation of a Foundation with multiple full time members was to oversee day to day operations for the DAO that were no longer the responsibility of PNI, and to entrust credible employees with budgetary decisions.
The need to approve budgetary requests via the DAO is a slow process, designed to encourage community contribution and debate. While this is useful for some decision making, more simple tasks needing to go through the proposal process would needlessly be slowed down in their execution and tire DAO members with constant votes for small items.
While the $1M+ Era budget that also asked for 80% of the future DAO funds was put to a DAO vote, and approved, 6-figure USD items within that budget are at the discretion of PNF, and (as far as I am aware) there are no official guidelines regulating how PNF spends either the DAO monies or it’s own budget.
There have been at least 2 incidents where PNF’s decision to make medium - large payments have been questioned by the community. While there is no suggestion of malice or something being untoward, there have been calls for increased transparency in PNF decision making and opening more large budgetary decision making to mandatory competition via POPs (Pocket RFQs).
Specifically:
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Payment for Gateway development going to a single company without being a POP or known to the wider community until budgeted for. (N.B. I was personally vocally in favour of this payment as I believed it to be beneficial to the ecosystem as a whole, and would want to re-emphasize that this proposal is not pointing figures or suggesting anything bad has happened, but to create clear rules around future work).
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A dashboard supplier that is well used within the community was awarded POKT rewards + monetary compensation to continue their work managing and maintaining the dashboard (again, I personally agree with this decision, although as mentioned by a PNF employee at the time of the discussion, the optics could have looked better).
Rationale:
In the interests of complete transparency and following best practise to gain the highest ROI for the DAO, a monetary figure for total compensation should be debated and set, such that any individual payment or total on-going payment by PNF to a 3rd party will need some form of oversight and follow a standardised and transparent methodology.
- At what amount will PNF need 3rd party approval to spend funds?
- What should that approval look like? Will it be a full DAO vote, overview by an elected 3rd party (individual or group), a rotating or randomly selected set of DAO voters charged with overseeing and confirming PNF spending? (i.e. a 3 or 5 member DAO committee could be tasked to oversee larger PNF spending, each given their seat for a limited amount of time and a small compensation package - akin to a rotating board).
- At what monetary limit must PNF go through a POP to award a contract?
The rationale behind the pre-proposal is to have the community debate the above 3 items and to then modify the pre-proposal into a full DAO vote that will bind PNF to abiding by the agreed upon guidelines for spending.
Dissenting Opinions:
The main dissenting opinions would be:
- PNF have been entrusted by the DAO to make decisions on our behalf and so should have sole authority to make budgetary decisions as they see fit.
- Having to deal with oversight will slow down decision making, which was one of the impetus for upgrading PNF to it’s current status away from heavy DAO participation being mandatory for budget allocation.
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While PNF were placed/hired to enact the best path forward for the DAO and have been entrusted with a majority of DAO funds, it is common place to have oversight over larger ticket items and have a 3rd party review major spending decisions, much as a company making an acquisition may need board approval before progressing. While we wouldn’t want to overly burden PNF with oversight for day to day spending, it would be appropriate to have clear guidance around the use of RFQs and force competition for work instead of unilaterally offering contracts without input or informing the community.
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Debates and voting do not need to be unnecessarily long. Even the slowest method suggested, going via full DAO votes, could be concluded in ~2 weeks or less. Large allocations are usually known to be needed far in advance, a 2 week consultation and voting period before approval would not be considered unreasonable. Opening up larger contracts to an RFQ process may yield better pricing or better ideas on solving a particular issue and would show greater transparency and build trust with the community.
Implementation:
After a reasonable period of debate, it is hoped that consensus will build around both implementation methodology and budgetary limits that automatically trigger enhanced oversight. At such point a proposal can be put to the DAO to be voted in and later implemented as policy by PNF.
I invite all members of the community to discuss the above and GRIP to help with any additional discussion/expertise as needed (Economic consideration of an optimal number for increased POP/review, infographics, writing etc).