We recognise and appreciate the detailed response from @AccelXR-1kx and @Georg_Greenfield. This is an important proposal for Gnosis and SafeDAO, and this level of detailed feedback is crucial and welcomed.
There are a lot of shared questions around the following topics, so we aim to address them in a consolidated format below:
Treasury Management Options & Counterparty Assessment
From our perspective, karpatkey is the nearest to an in-house service provider. karpatkey conceived from the efforts of the Gnosis DAO with GIP [20] in 2021. We have an unwavering and long-standing commitment to the success of both the Gnosis and Safe ecosystems. Additionally, these ecosystems are foundational to our non-custodial treasury management services, and we have a deep knowledge of the tech behind the Safe product suite.
We caution against the notion that the DAO can spin up an in-house treasury management team from individual contributors. Without much examination, this may appear advantageous from an overhead cost perspective. Still, unfortunately, this is fraught with management risks that could lead to a net capital loss in the long run. karpatkey has teams dedicated to the active management of our treasuries who are supported by our risk and tech teams, allowing us to offer a full-ranging service. Despite multiple hacks in the industry and fluctuating markets, we have experienced no capital losses in any of our treasuries.
karpatkey’s understanding is that SafeDAO needs more than a treasury manager; it requires a reliable service provider who can tackle other needs. Some related to the $SAFE token, such as protocol integrations, and others like advisory work on investments aimed at strategically allocating SafeDAO’s resources to foster innovation, support community projects, and invest in opportunities that align with SafeDAO’s mission and objectives. karpatkey’s expertise in working with leading DeFi protocols like Aave, Balancer, Lido, and ENS, in addition to Gnosis DAO, will be of great value when addressing these initiatives.
Regarding counterparty risks, karpatkey leverages our on-chain non-custodial asset management infrastructure to mitigate these issues. On the one hand, the assets remain under the control of the DAO and, on the other hand, it is possible to swiftly remove them from any DeFi protocol they may be deployed, thanks to our solution, which builds upon Safe.
Terms of Engagement and Responsibilities
We structured the terms of our proposal so that SafeDAO and its token holders have the ultimate authority to end our service provider agreement at any time. If our performance is deemed unsatisfactory or any other arbitrary reason, they can remove us from the treasury safes via the governance mechanism. This is also a significant concession that gives the DAO and its token holders power over the proposed agreement. SafeDAO and GnosisDAO retain complete control over the funds at all times, with the joint treasury being moved to a 3/6 Safe; karpatkey will only have two signers, with the remaining four signers to be appointed by the Safe Foundation and GnosisDAO. SafeDAO and GnosisDAO also control the Safe through the Safe Module installed on the joint treasury.
The mention that the agreement is open-ended minimises the above concession and implies that we will have diminished oversight. To be clear, we expect that the SafeDAO, its token holders and investors will play an active role in treasury-related discussions.
Our non-custodial treasury management method is public and open and inherently lends to an active relationships with the DAOs we serve. Our active engagement is demonstrated as a reality throughout our existing service provider agreements, where we have worked with community requests, and by authoring proposals which were ratified via established governance processes.
To adddress our responsibilities, in our proposal we state that karpatkey’s responsibilities will be contributing to the following:
- Treasury management
- Protocol integrations for $SAFE
- Risk management
- Research
With the passing of this proposal, the signers responsible for this joint treasury are intended to prioritise and develop actions that correspond to these responsibilities. The initial will likely goals will be focused on token utility and liquidity provisions.
Fees and Payments
Karpatkey has proposed SAFE, ETH, and Stables as payment options for fees. However, we’d note that being long-term aligned partners is crucial for any of our engagements; therefore, we would not sell SAFE simply to cover our fees and would be happy to accept SAFE directly as payment—as outlined in the proposal. The payment options are simply to provide a set of options for when the treasury is more diversified.
With the SAFE token currently in a non-transferrable state, with no price and no liquidity, uncertainty makes it difficult to predict the optimal fee structure; we feel that the fee structure outlined in the original proposal is appropriate currently. As previously stated, the DAO can change the agreement at any time, and we are willing to be proactive in addressing new fee structures, such as moving to more performance-based fees as the treasury develops.
Alternative Processes
An RFP process in the SafeDAO is challenging because this framework does not exist. The only established process we know of is the Outcomes-Based Resource Allocation (OBRA) framework. Also, the SAFE token transferability has unanimous support, which imposes a more immediate need for treasury management.
The immediate assets to be managed under this proposal are those of the joint treasury between SafeDAO and GnosisDAO. Given that karpatkey is already the treasury manager of GnosisDAO, thereby already holding half the delegation of the joint treasury, we believe karpatkey is a natural fit for the delegation. Having two separate treasury managers for the joint treasury would likely result in more friction and inefficiencies.
