This SIP proposes deprecating the current synthetixDAO and replacing it with two new governance bodies, The Synthetix Treasury Council and the Core Contributor Committee. The CCC will be proposed in a separate companion SIP.
The synthetixDAO was formed in 2020 as the mechanism to oversee some of the aspects of the project that had previously been governed by the Synthetix Foundation. The decommissioning of the Foundation led to the creation of three distinct DAOs each of which controlled certain aspects of the protocol. The other two governance bodies, the protocolDAO and the grantsDAO have been folded into the evolving decentralised Synthetix governance process with the synthetixDAO yet to be incorporated into that framework. This SIP proposes to replace the existing legacy synthetixDAO with two new decentralised governance bodies. The Treasury Council and the Core Contributor Committee. If passed this will put all aspects of Synthetix governance under the control of token holders.
The synthetixDAO is currently the only remaining legacy governance component within the protocol, by deprecating it and replacing it with governance mechanisms under the control of token holders we will be removing one of the last remaining vectors for protocol capture.
This SIP establishes a new Council with four members (configurable via SCCP) voted on by token holders using the constituent epoch lock described in SIP-104. The voting will be weighted based on the user’s debt percentage in the last fee period but add no quadratic formula to the weighting of the results. As per SIP-137 aligning governance epochs, the first epoch of the Treasury Council will be shortened to ensure it is synchronised with the current governance epoch, after which it will continue to be aligned with the other governance epochs. The Treasury Council will have the responsibility for making daily as well as strategic decisions for the duration of the epoch with a presentation of major decisions and results during community governance calls.
The synthetixDAO currently has a number of functions, listed below:
- Treasury management
- Core Contributor grant payments
- Core Contributor discretionary bonuses
- Governance participation payments
- Funding grantsDAO
- Funding protocolDAO
- Funding pDAO costs
- Discretionary incentives
- Partnership and operational costs
- OTC and strategic deal making
Each of these functions is critical to the continued operation of the Synthetix Protocol and will be split between the Treasury Council and the Core Contributor Committee. This SIP places the following functions under the control of the TC:
- Treasury management (including approvals of OTC and strategic deals)
- Governance Stipends
- Funding the Core Contributor Committee
- Providing Budgets for the grantsDAO
- Funding operational cost of the protocolDAO
- Issuing Discretionary Incentives
The protection and investment of the treasury funds to ensure that the operating expenses of the protocol are covered into the future. The current estimate of the treasury is ~$500m USD.
The synthetixDAO wallets to be managed under this SIP are
In order to balance risk management and operational efficiency the multisig (0x99f4176ee457afedffcb1839c7ab7a030a5e4a92) will require 3/4 signatures.
Wallet 0x49be88f0fcc3a8393a59d3688480d7d253c37d2a currently holds the SNX and will need to be transitioned into the multisig so it can fall under the management of the TC. This transition will need to be planned and coordinated through the CC's in order to allow the SNX to be moved into the multisig without a detrimental impact to the sUSD peg or Synth liquidity as it currently incurs $130m of debt.
The Treasury Council members will receive 1,000 SNX as monthly stipends in line with the current Spartan Council. The TC will set and manage the governance payments for all elected members of eligible governance bodies including the TC itself.
This is currently set as the
- Spartan Council
The stipends mandate will be monitored by the TC and if required, it may change the cadence or rebase the amount in line with new conditions. In order to remove any conflict of interest the TC and SC stipend will remain identical regardless of the SNX amount. Therefore if any changes are to be made it will impact the TC and SC equally.
The Treasury council will also negotiate with the CCC to set quarterly and yearly budgets for CC expenses and will provide this funding in advance to the CCC. At the outset to de-risk this transition the TC will provide three years of operating expenses to the TC ~$15m USD and ~1m SNX
The grantsDAO currently has more than 100k SNX allocated to it, this will be retained by the grantsDAO and cover the next 24 months of funding. After which the TC will set a quarterly budget in collaboration with the gDAO.
The protocolDAO requires funding for administering the protocol typically this is 15-20 eth per month (including chainlink and other non eth payments), the TC will be responsible for ensuring the protocolDAO has funds needed for testing and administration of the network.
One of the primary benefits of the synthetixDAO has been its discretionary flexibility, this has allowed for funding to be allocated to testing numerous initiatives that would have been difficult to reach consensus on within the Council, these include early liquidity incentives and staking incentives on L2. This mandate could be handed to the Council by establishing a discretionary incentive budget.
The SIP is designed to balance a number of considerations, but the primary reasoning behind establishing two new governance bodies rather than transferring these functions to existing governance systems or maintaining the status quo is to ensure that these critical functions are performed by community members elected specifically for their ability manage these functions. Separating these powers also ensures that there are checks and balances within the system of governance to ensure that all governance bodies are held accountable not only to token holders but to each other.
- The number of members on the Treasury Council
- The Epoch Length of the Treasury Council
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