Create a subdao to manage Market Making/Liquidity Provision Activities

[han]

Proposal Title	Author(s)	Phase	Type	Date Created
Create a subgroup to Manage Market Making/Liquidity Provision Activities	han	I	Off-Chain	26.02.2024

Create a subgroup to manage Market Making/Liquidity Provision Activities

Proposal

Create a process to stay informed about the market maker process by selecting a 5-person subgroup to ensure there is accountability, transparency, and representation for the interests of Shutter 0x36 DAO.

The members of the proposed subgroup should have certain skin-in-the-game for the interest of Shutter 0x36 DAO, have sufficient time for this responsibility, be familiar with liquidity provision, market making in general, and/or have worked with market makers previously.

This subgroup should also ensure there is legal certainty regarding the asset ownership transfer out from the Shutter 0x36 DAO’s treasury.

Motivation

As the LBP auction is completed and Uniswap DEX pool’s created, Shutter 0x36 DAO will need to transfer an increasing amount of assets belonging to the DAO to the market making service provider. Given the unique characteristics of market making service, it is more complex to manage this activity via DAO proposals comments and single proposal and ad-hoc communication (e.g Telegram group chat).

As discussed on different platforms (Discourse, Telegram) and during calls, a number of 0x36 DAO members expressed the intention to better manage the aspect of transparency, accountability of the market making service contract.

Shutter 0x36 DAO members expressed the intent to stay informed about the usage of assets, have multiple choices of provider, good service outcome.

Some members ad-hocly try to represent Shutter DAO in engagements with the market maker. But it does lack clarity for both the service provider and other DAO members who can represent Shutter 0x36 DAO’s interest.

Additionally, currently, there is also a grey area concerning who legally owns the assets. The current service provider has made commitments that they would return the assets once the term of service is complete, but there is significant legal uncertainty should some incidents or complicated scenarios occur (e.g., the title after exchange went bankrupt, hack, or significant trading loss). There is a lack of clarity on how such a relationship could end if it does happen. Given there is no legal contract or on-chain mechanism to enforce the informal agreement the market maker and DAO have struck. Nor does any entity have legal recourse to recover these assets.

From the market making service provider’s perspective, they expressed they are also more comfortable communicating with a group of people, regarding their progress with CEX listing discussions and their performance data with an authorized group of people to name a few. There is a need from them for the DAO to have select “authorized” representatives to sign a contract with them.

Active Responsibilities

• Make sure there is legal certainty on Shutter 0x36 DAO’s asset ideally without setting up an entity.
• Regular communication with the market maker on behalf of Shutter 0x36 DAO and request status reports, performance metrics, their general strategy and direction, potential impact of their plan, and other information necessary to oversee the service provider’s activity.
• Review the terms and condition of the service and follow up with the service provider to ensure the quality of service is actually delivered.
• Setup operational multisigs for recurring or specific tasks add liqudities, transfer float for CEX market making etc . With service provider as one of the signers and DAO members to keep custody of the asset.
• Collect DAO members’ and general members’ concerns, feedback, and form action points and convey to the service provider.
• Set up bimonthly governance calls to discuss upcoming proposals and progress.
• Set up frequent catch-up calls with the service provider and handle emergency communitcation.

Lifespan of subgroup

• Purposely set this subgroup’s lifespan to only 3 months.

Misc

Additionally, members who have an interest in joining this group, please also express your interest in the comments.

Also, for all member who has been spent time discuss and review this draft, thank you for your time.

Links

Temp check and discussion on this proposal:

Temp Check Discussion on Shutter 0x36 Structure, Organization, Coordination, and Service Provider Agreements

Separating my personal response into a reply - On the subject of a Foundation, I’d say that would be a difficult and highly complex thing to enact here, and I’m not sure I’ve seen the need for this. I think the 0x36 DAO should pursue better and more refined processes around asset allocation that would allow for more onchain tools that would require less trust, therefore lessening the need for formal “meatspace” agreements. Even if this is a bridge that needs to be crossed, it can be postponed…

Related Discussion

Transfer Artis 2,000,000.00 SHU & $100K USDC in Float Funds for Post-LBP Market Making

I agree with what @miohtama said， we have long way to go to improve shutter dao’s governance. And for this proposal, I will also agree,because provdiing token to set up pool on dex is a “have to” option . And I think this will be a automatic agree as far as we agree artis providing MM sercise for shutter dao. But I hope we can have a better and deeper discussion when spt want to list on CEX, because the non-transparency processes are anywhere for that.

Provide a grant to Artis for post-LBP market making services for SHU token for six months

Status: Proposed Forum Proposal Author: Cornelis Theodorus van der Klooster, Artis Forum Proposal Created: 29 Jan 2024 Summary Provide a grant to Artis for post-LBP market making services for SHU token for six months Proposal Shutter DAO 0x36 recently voted to run a Liquidity Bootstrapping Pool (LBP) on Fjord Foundry in mid February. After an LBP, Shutter DAO 0x36 must transition funds from the LBP to DEX pools and CEX listings, and create liquid markets for the Shutter token (SHU, 0xe485E2f…

Platform

Snapshot

Voting Type

• Single choice voting

Voting Options

Yes to create such subgroup No to not create such subgroup

License

CC0: This work is marked with CC0 1.0 as dedicated to the public domain.

[0xAlex]

Thank you, @han, for summarizing all these thoughts in a very clear and comprehensible proposal. At Kleros Labs, we support an approach that involves committees and operational multisig to be more efficient.

There is different ways to delegate part of the ShutterDAO’s power in a safe manner to an operational multisig managed by 5 signers (4 DAO members and 1 Service Provider). This could involve using Hats Protocol. See more details in this doc: Hats Protocol Integration. Basically, the DAO could give some specific “Hats” (= on-chain roles and permissions based on the ERC-1155 standard) that allow their wearer to be signers of this operational multisig. The DAO can revoke a “Hat” from a signer address at any time, which would automatically invalidate its signature in the operational multisig.

This setup allows ShutterDAO to maintain control over the operational multisig and be able to react in case something happens. Moreover, it is a good way to start using the Hats Protocol, which can be used more extensively to manage sub-committees as ShutterDAO grows.

I also learned recently from @tjos1234 that the Fractal framework could allow some veto power from the parent DAO to a sub-DAO. This solution could also be very useful for maintaining control and can be implemented standalone or in synergy with Hats Protocol (if the technical setup allows it).

At Kleros Labs we highly support this vision. We think that a mature and efficient DAO should have some sub-committees to manage specific aspects while still having control power over them (cf. Hats roles and/or veto power from Fractal).

[han]

Hats Protocol is definitely worth to explore and see how incorporate that into the subDAO proposal.

Some of liquidity unfortunately would reside on CEX so Hats Protocol seems cannot cover the management of that part liquidity?

Additionally, this subDAO could potentially merge/ working with the treasury working group as It is closely related

[Sudo]

You mentioned that your Market Maker is actively working on the CEX. If this is true, why have weeks and months passed without any visible results from Artis’s efforts? Could you please request that Artis refund the money to the DAO? The DAO is not a charity meant to support market makers and developers without delivering results. It is funded by investors who expect to see outcomes. The chart looks terrible, investors are displeased, and it appears no significant work has been accomplished. Money has been squandered. Now, it seems there are attempts to establish a subgroup to further deplete DAO funds, and this is being done secretly? Do not deal with the market maker that doesn’t deliver results. Return the funds please and find another one.

[tatu]

I do agree that I would like to see more transparency and openness towards the 0x36 DAO from Artis.

But also you are just going to an extreme with refunding which seems much too excessive when you can also clearly see that the Uniswap V2 pool has been created for example. It is not any fault of theirs that some people are selling their SHU tokens either.

[Sudo]

You are the dev and you can’t provide liquidity for uniswap? You have to pay Artis?

[han]

Hi Sudo, good to see some participation in this proposal.

But I would like to say this is exactly the opposite of creating a process to deplete funds and transfer funds out secretly. All fund transfers should still be voted on-chain by DAO members.

On the contrary, this proposal is to create a process to address concerns/ provide feedback from DAO members (some people like you and other members).

Most importantly it also makes sure, should it be required, there are some accountabilities on market makers.

It will be a kind of small group of members but this is just a way to represent the DAO. It will be better than no one (In my opinion that is the current status quo ) representing DAO’s interest.

And it goes without saying, that the subDAO should have maximised transparency and on-chain governance like 0xAlex suggested

Happy to hear your idea on how make sure this is a process with transparency and feel free to nominee yourself as one of this subgroup members

[Sudo]

Thank you for clarifying. I appreciate your offer but I prefer doing my thing, which is apeing and shilling my bags. As long as everyone doing what they like to be doing and they doing what supposed to be done with accountability and honesty, then we are all gonna be Gucci. Thank you once again.

[franklivid]

In my opinion , it is neccessary to set up a mechanism or communication chnnel with Arties. I will say maybe a bi-week call or something similar with Arties. Set up a sub-dao will bring the community some trust issue at first place especially with MM related stuff. So I think we can start the communication with Arties first and see how things go to make the further step.

[Loring]

Note: This comment is neither for or against the proposal - simply a reminder.

@franklivid

it is neccessary to set up a mechanism or communication chnnel with Arties. I will say maybe a bi-week call or something similar with Arties.

There is already a “Shutter DAO - Artis” Telegram group which includes 7 prominent Shutter DAO 0x36 members (inc @han and @franklivid).

[tjos1234]

Hey everyone, I just wanted to add a piece from our Fractal perspective on how this kinda setup could be technically implemented.

The setup I recommend, is a Fractal SubDAO<>Hats integration (I met @spencer from Hats this Wednesday to discuss this)

From Hats Protocol side:

Hats can allow the DAO to elect/revoke roles that have specific authorities to access i) a token gated Telegram group ii) signing power on a Fractal subDAO multisig

This would mean these individuals could be revoked at anytime by DAO vote (via the normal proposal time of 3 days). Successful vote would cut the individual’s access to mutlisig signing as well as the offchain Telegram group in one fell swoop.

See the Hats Protocol Docs here - https://www.hatsprotocol.xyz/

From our Fractal side :

We can then offer a further layer of robustness by adding custom powers from the Shutter 036 parent to the SubDAO.

These powers include:

i) execution power so the Parent can also move the funds in the subDAO

ii) power of veto from the Parent to the subDAO via our ‘freeze’ functionality.

The latter sets a custom timelock on the subDAO (e.g. it could be 24 hours). In that waiting time, the parent can review subDAO’s onchain executions and - in case of emergency - freeze the subDAO via a faster than normal proposal (e.g. it could be 12hours instead of the usual 3 days before the 24 hour timelock period is over). Once the subDAO is frozen, they can safely re-elect new hat wearers via normal proposal OR even just reclaim the funds to the parent DAO.

Link to Fractal Docs - Overview | Fractal Documentation

Note - to make this setup work, Hats and I need to tackle some integration questions… but we’ll add urgent prioritation to this if it is of interest to the DAO

I look forward to feedback, questions and challenge.

Best,

Tom

[spengrah]

Hey folks, I’m Spencer, one of the cofounders of Hats Protocol. When @tjos1234 shared this idea and post with me, I got very excited as it makes wonderful use of Hats Protocol capabilities.

If you have any questions about Hats, I’m more than happy to answer them. And if this is the direction the DAO selects, the Hats team will gladly offer support.

And as an aside, I love that you have a protoDAO! The Hats community also has a protoDAO and we’ve found its a great venue to experiment with and begin the process of progressive decentralization.

[Baer_DAOplomats]

At DAOplomats, we support this proposal. We are about to make a Treasury management proposal to the DAO and realise that the DAO doesn’t have much control over assets that leave the central treasury! We propose using the fractal framework’s internal tool to deploy subDAOs and multi-sigs so that the DAO will have direct control through governance.

Hats is a very nice addiction. I believe you can mix the permissions of the Hats protocol with the governance contract.