[GRFC] - Gro DAO Strategic Path Forward
Author(s)/acknowledgements
web3 Studios with input from key DAO contributors (Graadient, kd, Bernard)
Summary
- The DAO’s flagship product, risk & yield tranching Gro protocol, has been underperforming for an extended period.
- Key contributor departures and failed deliverables have created a leadership void in the Groda Pod (Gro DAO’s only remaining Product Pod) and triggered broader existential questions for the DAO.
- Groda Pod’s 6-month grant period is ending on October 3rd '23, and it needs to submit a new DAO proposal with a plan for a potential extension.
- Due to the leadership vacuum and existential uncertainty, web3 Studios has been asked to conduct an objective analysis of potential pathways for both Groda Pod and the broader DAO.
- Options include (1) Unwind the Protocol and the DAO, (2) Unwind the Protocol, and Streamline Product Building, or (3) Reject all options.
Comment
The Gro DAO finds itself at an important turning point that calls for clear and thoughtful discussion. The DAO’s contributors all put a lot into this protocol over the past three years, both in terms of time and resources. Now Gro DAO finds itself at a stage where it has to carefully reconsider whether it is still aligned with its initial objective of making DeFi more accessible and if Gro protocol is the right direction for the future of the DAO.
Given the importance of these decisions, it’s time to take a step back and rigorously evaluate the various strategic paths available — hence, this exercise aims to provide the most objective and thorough information to the DAO.
Voting Options
1. Unwind the Protocol and the DAO
- Immediate unwinding of both Gro protocol and Gro DAO.
- Extend Groda for 3 months (Oct 3rd - Jan 3rd) to focus on unwinding the protocol with a budget of 180,000 USDC.
- Users can always withdraw their assets (indefinitely) from GVT, PWRD and Pools.
- Treasury will be distributed to all who deposit their GRO into a redemption contract, within a 4-week time frame (“collection period”), that is starting on the date if and when this option passes the Snapshot vote.
- All pods support users in exiting the protocol until January and then dissolve together with the Groda Pod.
2. Unwind the Protocol, Streamline Product Building
- Immediate unwinding of the Gro protocol, assisting users with exit.
- Users can always withdraw their assets from GVT, PWRD and Pools.
- Extend Groda for 6 months (Oct 3rd- Apr 3rd) to focus on streamlined product building with a budget of 245,000 USDC and 350,000 $GRO.
- Groda downsizes to two key members to focus on product development, foregoing the search for a new product lead
- Bi-weekly reports submitted to the DAO.
- Hiring outside contractors for marketing when the product matures.
3. Reject all options
- Do not allocate a budget to extend Groda.
- The DAO will no longer have any technical developer capabilities within its Pod contributors as of October and an orderly unwinding of either protocol or the DAO will technically not be possible.
- FiSt Pod is tasked with formulating a new strategy for the DAO, which will be up for a vote by December.
Rationale: Analyzing future Paths
The vision of Gro DAO has been to democratize DeFi by providing accessible and inclusive financial products. However, given the present state of the DeFi landscape, key member departures, failed delivery from several pods, and the current leadership void in Groda, it has become imperative to reassess the direction in which Gro DAO is headed. Several key factors have emerged that necessitate a comprehensive reevaluation of the DAO’s trajectory and strategic approach.
To make up for capacity gaps for a project of this critical nature to the DAO, Groda’s interim facilitator in alignment with the People Pod and FiSt Pod have decided to engage web3 Studios (a web3-focused strategic advisory firm) to support the Groda Pod by providing an objective assessment of underlying factors. The assessment includes, among other analyses, a historical performance overview, DeFi and DAO markets assessment, and stakeholder sentiment analysis.
Please take time to review the extensive version of the assessment report under the following [link]
Key Challenges for Gro DAO
In its current set-up, Gro DAO has encountered persistent obstacles that have impeded its growth and efficacy. These can be distilled into the following four key challenges:
1. Adverse Macro Environment: The attractiveness of Gro DAO’s offerings have waned, especially when compared to the risk-free yields of US treasuries. The returns from Gro Vault, given the inherent DeFi risks, have not been competitive enough. Moreover, multiple emerging protocols offer attractive options for investors, the biggest drivers being RWAs, and Liquid Staking Protocols.
2. Weak product-market-fit: Despite continuous efforts; relaunching version 2 of Gro protocol (G^2), and several product teams (including the Panda Pod and Groda Pod) iterating through multiple ideas and prototypes, no pod has identified and built any new products with promising product-market-fit. Over the course of one year, protocol TVL shrunk from $60m to $9m with 59% of its current TVL coming from the protocol treasury. The current Protocol APY for the Vault is 0.23% (Aug ‘23), making it a worse option over 5.06% APY of the tokenized US Treasury. Moreover, very accessible options like USDC and USDT lending provide higher yields, diminishing the value-add of the Gro DAO’s core product.
3. Exhaustive Exploration: There have been many attempts on the path to where the Gro DAO is. Pods, including several new hires, have explored many approaches to reignite both the base Gro Protocol and to build new products. Unfortunately, each avenue presented its challenges, and none assured a promising future for the protocol. In total, 12 ideas in short iteration cycles were ideated, but could not achieve a joint level of conviction within Groda and wider Pods with 0 ideas reaching MVP. Within its last OKR cycle (Apr 1st - Jul 1st '23) the Groda Pod achieved ~40% of OKRs, calling for immediate action for improvement and increased focus. Seperately, the Panda Product Pod, who participated in a 6-month term with the DAO, have not gained approval to continue operating as a pod, meaning that Groda is currently the only development focused team within the DAO.
4. Leadership Drain and Recruitment Barriers: 4 product and semi-product leads departed over approx. 2 years, leaving Groda without a product lead. Top-tier candidates needed for the job, are very difficult to get. Recruiting from Web2 is increasingly difficult during the crypto bear market due to stigma, and high-quality crypto-native product owners are already engaging in other projects. Convincing a superstar product lead to join Gro DAO, which finds itself in a ‘turnaround’ situation, will be a challenging process.
5. Contributor and Community disengagement: On the back of the above factors, the general morale and engagement of pod contributors and the community have suffered. Key contributors have departed and DAO member participation in governance has been low.
Implementation
Disclaimer: The sequence of voting options and textual volume allocated to each option in this proposal are designed for informational clarity and are not intended to bias or influence decision-making outcomes. Readers are encouraged to evaluate each option independently, based on its intrinsic merits and implications.
In light of current challenges and precedents set by similar DAOs, unwinding the Gro protocol and the DAO is an option on the table. Preliminary estimates suggest that GRO would be redeemable for approximately $0.25 per GRO, but final redemption value would depend on the number of GRO deposited into the redemption contract and the final value of treasury assets. This option calls for a collective decision on our future direction.
Please find an extensive assessment of this option in the assessment report [link], including:
- Token Holder Impact Assessment: Assessment on potential financial impacts on GRO token holders, incl. potential distribution amounts and timelines.
- Historical Precedent Studies: Analysis of the Rome DAO project that opted for a wind-down, incl. key takeaways on the process and stakeholder reactions.
Process
In order to enable an orderly wind-down, an efficient process is needed. Based on best practices from similar cases, one of which is detailed in the assessment report, the process is as follows:
I. Protocol Wind-down
- Halt Gro protocol strategies and put into withdrawal-only. No further yield generation.
- Users retain the ability to withdraw assets indefinitely. A decentralized IPFS interface will ensure uninterrupted, decentralized, and easy access to the protocol.
- All Gro protocol source code will remain open-source for the benefit of the DeFi community. G^2 is a battle-tested, multiple times audited, risk and yield tranching protocol that can wrap any EIP4626 token. Hopefully other builders will have use for it!
- Set GRO reward emissions to zero.
- In view of, and in conformance with its obligation to appropriately and responsibly facilitate trading on decentralised exchanges, the DAO is contemporaneously removing excess GRO liquidity from the AMM to which it currently provides liquidity, in a manner that is targeted such that it is unlikely that the removal will affect historically typical trading volumes.
II. Treasury Consolidation
- Withdraw treasury assets from all protocols.
- All pod grants that the DAO has made will continue as granted although workplans will be altered.
- Return unspent pod buffers and additional budget to the DAO treasury.
- All treasury assets will be consolidated into USDC and deposited into Compound, and the resulting cUSDC tokens will be deposited into the redemption contract.
III. GRO Collection
- The GRO Collection and Redemption process will be handled through a trustless smart contract.
- Users (excl. team and investors) will be able to immediately withdraw both locked and unlocked GRO from the vesting contract. The duration of the vesting period will be shortened from 365 to 0 days so that DAO members can redeem all their GRO tokens immediately.
- For investors and the founding team, the original 3-year linear vesting schedule set by the DAO when it deployed its own tokenomics remains in effect, allowing only vested tokens to be available.
- Users will be able to access a dApp interface for a redemption smart contract where they can deposit their GRO. GRO deposited into this contract will let them claim their share of the DAO treasury. Each depositor’s share will be their GRO out of the total GRO deposited into the redemption contract.
- The GRO collection period will be live for 4 weeks, starting on the date when this option passes the snapshot vote, ensuring all active DAO members have enough time to deposit their GRO for redemption.
- The collection period is time-bound to prevent dilution of community’s redemption value from ongoing token vesting, to provide more value to active community members, and to prevent unredeemed treasury assets being stuck in a contract forever.
IV. Redemption
- After the collection period is over, the redemption price will be known and depositors can claim their pro-rated share of the treasury assets. The price will depend on two factors: the final amount of USDC from the treasury and the amount of tokens deposited into the redemption contract.
- The GRO redemption smart contracts will be accessible indefinitely, so that DAO members who deposited GRO during the 4-week collection period can claim their share whenever. A web interface for the redemption contract will be actively supported for 3 months, and then kept indefinitely on IPFS.
The whole process will be executed by Groda, whose term will be extended by 3 months.
Budget
For 3 months, Groda proposes a budget of 180,000 USDC that will be transferred to the Groda Product Pod’s operational wallet if approved:
- 5 full-time contributors’ compensation: 155,000 USDC over 3 months
- Service provider and operating expenses (e.g., Infura, Alchemy, Gelato and other fees and expenses): 25,000 USDC over 3 months. Any remainder of this budget will be transferred back to the Treasury and made part of the redemption pool after 3 months.
For checks and balances, the operational wallet will remain a 3-out-of-5 multi-sig with 2 full-time contributors in the Groda Product Pod and 3 contributors from other Pods (with two from the People Pod).
Key focus of the Groda Pod
Within the 3-months period, the Groda Pod will be able to:
- Execute the Gro protocol wind-down process, including parameter updates and dApp adjustments.
- Execute Treasury consolidation, making sure the maximum value is available for redemption.
- Implement a collection/redemption smart contract, allowing users to redeem their GRO.
- Implement a new collection/redemption front-end page where token holders can deposit GRO and redeem assets with the smart contract.
- Actively support users both for protocol frontend unwind, and during GRO collection and redemption periods, making sure the process is smooth and all token holders don’t have any technical issues.
Team
5 (full-time) contributors:
- Kat (smart contract & pod facilitator)
- Jimemart (frontend)
- SHAKOTN (backend & smart contract)
- Wint3rmute (backend)
- Haywired (design)
In this option, the DAO will proceed on its journey to find product-market fit, but without the constraints of the existing Gro protocol. The streamlined Groda Pod, now reduced to two key members (kd, SHAKOTN), will focus intensely on product development. With the immediate unwinding of the current protocol, as described in option 1, users will be assisted in their exit, making way for new initiatives. Bi-weekly reports to the DAO and the hiring of specialized outside contractors for marketing when the product is mature will keep the organization informed and agile. This new setup provides the DAO the flexibility to explore alternative paths to product-market fit, free from the challenges of depending on finding a new product lead.
Please find an extensive assessment of this option in the assessment report [link], including:
- Historical Performance Review: Assessment on Groda Pod past ideation performance, challenges faced, and spending, as well as past instances of Groda product lead staffing and retention dynamics.
- Stakeholder Sentiment Review: Assessment of pod member sentiment and feedback regarding Gro DAO’s current strategic direction and ideation process, complemented by findings from a recent community sentiment survey conducted by Miss Homie
- Key Changes as Streamlined Product Building Pod: Overview of key changes to Groda Pod’s streamlined team and new product building direction.
Process
Essential steps are outlined to responsibly dismantle the existing Gro protocol while preserving the DAO.
- Gro protocol strategies will be stopped and put into withdraw-only mode. No further yield generation will take place.
- Users retain the ability to withdraw assets indefinitely. A decentralized IPFS interface will ensure uninterrupted, decentralized and easy access to the protocol.
- All Gro protocol source code will remain open-source for the benefit of the DeFi community. G^2 is a battle-tested, multiple times audited, risk and yield tranching product that can wrap any EIP4626 token and it can be hoped for that other builders will have use of it.
- The new Groda term means the minimalistic team will begin working on their 6 months roadmap for the DAO as outlined below.
Key focus of the streamlined Groda Pod
The initial direction for the new streamlined Groda Pod will build a synthetic asset generator backed by staked ETH. This platform will be designed to support the creation of any synthetic assets, contingent on the existence of a Chainlink oracle to ensure price stability and handle liquidation. The initial MVP will revolve around a Synthetic MemeCoin, functioning as a proof of concept and a means to generate preliminary market interest.
Within the 6-months period, the Groda Pod will be able to:
- Implement the Synthetic MemeCoin which will serve as an experimental step, with the broader vision focusing on versatile synthetic asset generation.
- Integrate staked eth as the primary collateral.
- Establish a model for incorporating Chainlink oracles.
Working Model without a Product Lead
- Highly Iterative and Reactive: Utilize a Kanban-based methodology that focuses on work in progress (WIP) limits to ensure tasks are completed before starting new ones, maintaining flexibility and responsiveness.
- Regular Reporting: Bi-weekly reports will be delivered to the DAO, keeping the organization updated on progress, challenges, and next steps.
- Team Scaling: Groda pod will scale back its team size, ensuring minimal overhead and resource consumption on the DAO while maximising efficiency in executing this proposal.
Budget
For 6 months, Groda proposes a budget of 245,000 USDC and 350,000 $GRO that will be transferred to the Groda Product Pod’s operational wallet if approved.
- 2 full-time contributors’ compensation: 170,000 USDC over 6 months
- Outside contributions including collaborations with contributors like Haywired and specialized marketing personnel: 75,000 USDC over 6 months
For checks and balances, the operational wallet is a 3-out-of-5 multi-sig with 2 full-time contributors in the Groda Product Pod and 3 contributors from other Pods (with two from the People Pod).
Team
- Kat (smart contract & pod facilitator)
- SHAKOTN (backend & smart contract)
This option offers two potential outcomes for the DAO:
- Outcome A (Default): Continue automated strategies and stop issue monitoring. The Gro protocol will continue to operate without contributors that can handle risks and unforseen events and cease further development of the protocol. The vote is scheduled for early September leaving Groda only a few weeks to wrap up operations. This will prevent any orderly future wind down of the protocol.
- Outcome B: Any other DAO contributor may propose alternative paths for the DAO. Pods have the option to propose new pathways for the DAO, allowing for the consideration of strategies not previously assessed.
Please find an extensive assessment of this option in the assessment report [link], including:
- Potential Outcomes of the Path: Mapping of potential sub-options forward for this option.
- Repercussion Effects of Inability to Unwind Protocol: Assessment of practical challenges of automated strategies and the inability to unwind the protocol without technical support and potential implications.
- DAO Market Assessment: Analysis of alternative strategies for Gro DAO and option space with examples.
Process
Essential steps are outlined to turn the Gro protocol into automation mode and stop issue monitoring and further development:
Outcome A (Default): Continue automated strategies and stop issue monitoring.
- Technical operations offboarding: The Gro protocol will continue to operate without contributors that can handle risks and unforeseen events. Groda will only have few weeks to wrap up operations. This will prevent any orderly future wind down of the protocol.
- Formulation of new strategy: FiSt Pod is responsible for formulating a new strategy for the DAO with limited assets, subject to a vote by Dec.
- User Asset Accessibility: Users will be able withdraw assets even if operation is ceased.
Potential repercussion of this Outcome A (Default) include:
- Lack of User Support: Due to the limited time, risks exist around the ability to provide follow-up support for unresolved issues & assisting users in asset withdrawal and clear communication.
- Vulnerability in Market Volatility and Emergency situations: In the absence of active management, no one will be available to step in if, for instance, LUSD goes off-peg or USDT experiences issues.
- Inability to Stop Automated Strategies: If the Gro protocol continues to operate without active oversight, automated strategies may run unchecked, potentially leading to operational risks, financial losses, or system vulnerabilities that can compromise the safety and performance of the protocol.
Steps for the presentation of a new proposal include:
Outcome B: Pods come up with alternative paths for the DAO.
- Hypothetical Future Proposals: Pods could potentially present a new proposal, outlining alternative strategies not considered in this assessment. This path would follow the standard governance process of the Gro DAO.
Next Steps & Overarching Process
After a 6-day forum discussion, assuming there is sufficient signalling support, a formal vote will be hosted on Snapshot for an additional 5 days. Subsequent steps will be based on the vote’s outcome.
As a reminder, GRO tokens must be locked in vesting in order to be counted towards votes. So if you want to participate in the forthcoming vote, make sure you have GRO in vesting. If the DAO is wound down, this vesting period will be accelerated to enable redemption so there is no opportunity cost of doing so.
The Gro DAO finds itself in a complex process with heavy weight of the decisions at hand. To that end, all pods are committed to providing full transparency and addressing any discussions, questions or concerns that may arise during this pivotal period.
Conclusion
The journey of Gro DAO is characterized by passion, dedication, and innovation. These options, carved from the present challenges and realities, aim for transparency and fairness for all stakeholders. Whatever the chosen path, the community’s unwavering contribution remains invaluable, and its positive impact on the crypto sphere is anticipated to persist.
Signaling Vote
Please indicate your voting choice for this sub-proposal below:
- Voting Option 1: Unwind the Protocol and the DAO
- Voting Option 2: Unwind the Protocol, and Streamline Product Building
- Voting Option 3: Reject all options