Proposal for a DAO/Company Framework: Building a Synergistic Relationship
We would like to discuss an important topic today – the relationship between the HydraDAO and the LockTrip company, and our vision for an effective, synergistic framework that allows both entities to thrive.
HYDRA, as many of you know, was airdropped to LOC, and because LockTrip’s company held LOC, it naturally came to play a central role in the execution of the HYDRA project. The company’s efforts have been critical in:
- Seeding the network,
- Securing the network,
- Stabilizing the network and dealing with stability issues that led to a reduction in network weight,
- Committing substantial resources for liquidity and market making,
- Onboarding institutional partners into the ecosystem.
Having such a strong entity with such a strong vested interest into the success of the network has been instrumental in the growth so far.
While LockTrip’s role has been fundamental to our journey so far, it is important to clarify that it does not act as a foundation and/or an entitled representative for the DAO. It rather acts as an administrator during the early phase of the project.
Also in terms of pure scale, LockTrip is smaller than the market cap of HYDRA and therefore it is critically important to establish a framework that would prevent excessive relying on LockTrip for key aspects of HYDRA.
All of LockTrip’s actions were on a logical contribution basis and acting in good faith to the wellbeing and success of the ecosystem, however for the purpose of ensuring Hydra achieves an optimal outcome, this dependency should be mitigated. Otherwise critical proposals may be held back, due to lack of funding, or factors individually affecting LockTrip as an entity.
We are committed to the vision of enabling the DAO to become self-sufficient, ultimately outgrowing its original creators. We believe that such independence is a key prerequisite for a project to make a meaningful, large-scale impact. Considering the strong economy behind Hydra, outgrowing this dependency should have a strong positive effect.
The proposed considerations doesn’t mean we want to disconnect from the project. On the contrary, we envision ourselves as contributors, collaborators, and facilitators within this evolving ecosystem. Our goal is to lower the barriers for growth for Hydra and enable it to be more powerful in the next phase of its existence.
With this vision in mind, we find it critical to establish a balanced, fair, and mutually beneficial framework for the DAO and the company to function effectively. Knowing to what extent the DAO can engage with the company.
Summary of the Proposal:
- Company’s Voting Rights : To ensure fairness and avoid conflicts of interest, the company will not be eligible to vote on any proposals.
- Company’s Commitment to DAO Proposals : The company commits a fair share of the staking income it generates towards operational proposals that get approved. To achieve this, the company is willing to delegate most of its HYDRA balance to a DAO-owned validator which would collect a 20% commission. The commission would act as a strong form of contribution, without tempering with decisions, and without adding dependency risks.
- The contribution comes on a voluntary basis, in the spirit of growing the DAO and supporting the network. Adjustments to the contribution can be made unilaterally.
- To make the contribution possible, the deployment of a DAO-owned validator is required.
This approach effectively offsets its economic weight and would gradually reduce its share over time, leading to a healthy contraction that would allow the network to grow stronger as an economy. The rationale behind the delegation/validator setup is that it would be trustless in terms of transactions and the company will continue to support the network security, while effectively enabling a “discount” on DAO treasury spending, as it will subsidize it heavily.
The proposal also comes as a pre-step towards the medium term goal of migrating Hydra-related employees to become part of the DAO, thus increasing not only transparency, but also the influence the community will have over the development cycle.
Allowing the DAO to make decisions for funding on its own will have a liberating effect in many aspects. The goal of the DAO is to enable horizontal scalability on expertise and projects, that far exceed beyond a single entity.
We believe this proposal provides a solid framework for aligning the interests of the DAO and the company, promoting a cooperative environment while ensuring the DAO’s journey towards self-reliance. As always, we invite you to discuss, provide feedback, and help us shape the future of HydraDAO.