Livepeer Delta Phase Pre-Proposal - Sustainability, Public Goods Funding, Treasury, and Decentralization

Governance
37

The self-sustainable DAO

Introduction

The Livepeer community is looking to form a DAO to fund grants and other ecosystem initiatives. The initial idea is that the DAO receives protocol subsidies through inflation. This means inflation is taken from orchestrators and redistributed through several proxy initiatives. The hope is that the implied odds of these initiatives adds value to the token by the same amount as is being taken from orchestrators.

This is not only an incredibly hard sell to existing entities keeping the network afloat, it’s also not a sustainabale way of funding a DAO. There are three main reasons here:

  1. The actual unfairness that exists in the ecosystem today.
  2. The cut being paid from the existing orchestrators does not weigh up to how much some entities such as Coinbase Cloud have been bleeding the network dry in the past.
  3. Inflation is not endless

I want to provide alternative ideas for funding the DAO, that can restore the power balances on the network as well as create a self-sustainable future. A DAO funding mechanism that does not take direct subsidies, and does not demand the good actors of the protocol to make disproportionate sacrifices.

Key Principles

1. DAOs are for-profit

A DAO should be treated as an actual business and not a charity.

This means that the DAO should not blindly give out grants, if the grant recipient is creating a revenue generating project. Instead, the DAO should be seen as an early-stage angel investor and given a ownership share in the project receiving the grant.

Rather than a pure grants program, you now have the Livepeer Community Accelerator

2. DAOs can raise external capital

Admittedly (1) and (2) go hand in hand. But once you establish the DAO as a for-profit venture it can perfectly sell ownership shares. With a good plan and good cost projection rather than just spending tokens, the DAO could actually pull off a (Founding) Token Sale.

Meaning rather than taking in LPT from inflation or minting a lump-sum, community members can purchase founding shares in the DAO in exchange for LPT.

3. DAOs should actively manage capital

The grants program has already succesfully operated a Livepeer Orchestrator for multiple years, inflation was used to fund the grants program.

A DAO should actively budget funds it can actively manage and try to get a decent return of investment on these. This can go beyond staking LPT, but also providing for example stablecoin liquidity to the 3CRV pool and earning swap fees and token emissions.

The Plan

  1. Allocate the grants program funds to the DAO, make projections on its annual revenue based on relevant data points today.

  2. Sell the treasury $ARB for stables, get an ROI on the stables

  3. Pursue grants from other projects, such as Tenderize

  4. Collateralise assets to fund grants rather than selling assets, have future cash flow pay back the loans.

  5. (Optional) Create a vote and implementation to route tokens from historically bad faith actors on the network to the DAO. Effective allowing for a redistribution of those tokens.

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