RFC-000-053: Return of all Unused Funds from RGP-000-001

Requests For Comment | RFC
1

Name: Return of all Unused Funds from RGP-000-001
Status: Draft
Scope: Discuss whether RGP-000-001 remains a top funding priority in light of the significant changes to Ren from November of 2022. If no, request the return of all unspent funds to the Ren treasury. Discuss best practices for funding future grants and partner projects to minimize risk.

Overview

Alameda collapsed in November of 2022, and soon after all Alameda funding for Ren development (through Ren Labs) stopped. Ren’s financial health significantly deteriorated. The community rallied to find creative ways to fund future development and operations, including token inflation (not yet implemented). But clearly, from November of 2022, and especially after RenVM ceased operations, two things are obvious:

  1. It’s critical to get Ren 2.0 into production asap
  2. Financing is a major issue

With that in mind, it no longer makes sense to allocate 285k USD to RGP-000-001 for “Decentralized Liquid Staking.” While this is a wonderful initiative in the best of times, much more important now for Ren is to focus on building and delivering Ren 2.0. Liquid staking should wait until Ren has a fully decentralized, functioning solution, on which partners like Renbase can build complimentary solutions. We are a long way away from that now, and funding should reflect that.

The Ren DAO should therefore request all unspent funds from RGP-000-001 be returned to the Ren treasury for use as needed by the newly created Ren Foundation. Liquid staking can be revisited at a future date, when appropriate.

In addition, I believe releasing significant funds to any 3rd party should never again happen without a detailed plan and milestones, and money should be released incrementally, based on achievement of those pre-defined milestones. This will better align partners with performance, and reduce financial risk to the Ren Foundation.

Details

In September 2022, Renbase submitted RGP-000-001, requesting 285k USD from the Ren Ecosystem Fund (the de facto Ren DAO treasury) to build a decentralized liquid staking solution.

Later that same month, the RGP was approved.

In October 2022, the Yield Ops team sent Renbase 285k USD from the Ecosystem fund. At the time, this was a significant portion of the entire Ren treasury. The current value of the Ren DAO treasury today (April 30, 2023) is approximately 250k USD.

In November of 2023, Alameda collapsed. All development funding through Ren Labs stopped. Soon after, Ren Labs informed the Ren community that they would no longer support development of Ren without getting paid. Ren immediately lost all access to development funds. The only source of funds for the protocol remains the Ren treasury.

Clearly the collapse of Alameda in November, soon after RGP-000-001 was approved, required a total rethink of everything, with an emphasis on protocol survival. Therefore, liquid staking should no longer be a priority. The unspent funds allocated to Renbase should be returned. The focus should be on releasing Ren 2.0, and all financial and operational resources should be directed in that direction. It makes little sense to fund anything in 2023 that does not involve restarting Ren in production.

While it’s possible that some of the funds have been spent, whatever is remaining should be returned. This will likely double the size of the Ren treasury! And give the community more breathing room to expand operations of the new foundation, add directors, hire developers, and get Ren 2.0 into production.

Also, for the future, regardless of whether grants of this type will be managed by Ren DAO or the newly formed Ren Foundation, I cannot see any reason to release large sums in advance without recipients having to show results. Each grant should include a milestone based project plan, with agreed amounts released only after completion of those specific milestones.

Finally, I realize RGP-000-001 went to one of the most active community members, someone who has by far carried the bulk of the work since the collapse of Alameda. He is currently serving as the sole Director of the newly formed foundation. Directors should be paid a fair amount for their work! The community should allocate treasury funds for current and future directors. But this is separate from funding a grants project that, imo, makes little sense in the current environment.

Implementation

  • The community should discuss the priority of RGP-000-001 and the 285k USD allocated to that project in light of the collapse of Alameda.
  • If RGP-000-001 is no longer viewed as a priority, the community should create an RIP requesting all unspent funds to be returned to the Ren treasury.
  • The newly formed foundation should revisit this specific grant proposal as a top priority once Ren 2.0 is launched and the financial health of the protocol is more stable.
2 Likes
2

It’s a sensible argument. I feel the RIP was rushed, and handing over a third of a million dollars without requirements was a bit foolish. But of course the person this deals with is one of very few this could have been done over.

It would be helpful to know:
A) are we needing this money
B) if yes does David have it to return

1 Like
3

Well, when you sent Renbase 285k USD in one transaction, which was most of your treasury, were there any reporting requirements? Anything at all to ensure accountability? That was 7 months ago. In those 7 months, have you received any updates?

At least you now have a proper Foundation set up and in theory leadership with a fiduciary responsibility to manage funds in a way to benefit Ren DAO. Perhaps the new Foundation could work with Renbase to reclaim the remaining funds? At the very least ask for a detailed update on project status, perhaps an updated roadmap, and then the community can make a decision on whether to continue? You are about to inflate your token, diluting existing token holders. Doesn’t it make sense to claw back these funds first, before harming existing token holders? Especially if the project is years away from completion?

285k USD is probably 3 months runway for a team of developers to work on Ren 2.0, not insignificant. And it will more than double the size of your treasury. You buy yourself 6 months total runway without having to inflate the token, not just 3 months (your current status).

It would be great if the Foundation would work closely with Renbase to clear all of this up. It’s very disappointing the community released these significant treasury funds with apparently no reporting requirements from Renbase, no way to align the release of additional funds with actual work delivered. I hope the Foundation does not repeat this mistake with future grants.

But it’s not too late to fix this, if the Foundation gets involved.

4

Full agreement with this proposal , Funds could be better spent elsewhere and if the times come for renbase again the community could be prepared to fund it

1 Like
5

Given the more pressing matters at hand right now as a project, I think this is more than a fair proposal (especially if we can use future funds/volume to continue the development of RenBase etc) The thought of having some funds in the treasury right now is still better than nothing.

Here are a few points to consider:

  1. Some (if not most) of that $285,000 may have already been spent (TBC)
  2. Does the DAO have sufficient power to reclaim any funds that have been already approved for use?
  3. Are the funds now in fiat or still in crypto etc?
  4. Does RenLabs have contractual obligations to pay salaries with those funds? Could this cause legal issues etc?

Ultimately, I think David will need to chime in here and fill in the missing details about funds remaining, and how they’ve been allocated etc. I like the idea though if this is possible.

4 Likes