Tangle Community Treasury “Year in Review” — Part 2: Governance Update

7 min readFeb 6, 2024

TLDR:

The Tangle Community Treasury committee is going to propose a new structure that will allow it to scale to the next level. It proposes that two reviewers (team leads) will be designated responsible for managing incoming grants in each Treasury (IOTA & Shimmer). The program lead can then continue with the operations such as developing the legal structure, social marketing, managing support for the DEFI ecosystems, keeping financials up-to-date, creating contracts, and actively engaging with the community to find solutions to the ecosystem challenges such as taxes and developer support. Though some operating costs will increase, the Treasury will still be below the industry average. The Treasury will offset these extra costs through revenue generation. Most importantly, the Treasury committee will focus the following year on Web3 governance and funding integrations such as treasury swaps, Quadratic Funding, etc.

Governance Update

In October, the community supported the IGP-0001 and SGP-0006 governance proposals. These two proposals updated the community treasury framework and also approved 10,000,000 IOTA to be used for the 2023 to 2025 committee terms. The framework revision also took the lessons from the committee’s six months of operations. It introduced a newer structure, which allowed the committee to be more active in supporting the ecosystem’s growth. Such revisions are bulleted below.

The Treasury can act as the community representation with a purpose-bound intent. For example, the Treasury can take ownership of network infrastructure products that the IOTA Foundation may choose not to own (e.g., Shimmer Bridge) and fund network infrastructure audits.

This revision enables the committee to use unused assets to benefit the Shimmer and IOTA ecosystem and community.
These changes allow the Tangle Treasury DAO to create and sign contracts with grant receivers.
Revisions that add or update the Specification to make it easier for community members and committees to understand the Specification.
Essential revisions: change wording, edit grammar, or mention the IOTA Community Treasury to the Specification.

This framework revision showed a tremendous positive effect as there would have been substantial delays, or even the Shimmer EVM network would be without a foundational building block, such as a bridge. This revision showed that the Tangle Community Treasury can take on technical implementations supporting ecosystem growth through its technical partners. It is a permissionless ecosystem; we will see more integrations in the future from many projects, organizations, and the Tangle Ecosystem Association.

Governance Future — 2024 to 2025 Term

Below is an organizational structure that will be proposed for the next term. The last eight months have shown that the current system in which the program lead completes all roles and responsibilities isn’t sustainable. Assigning two reviewers to be a team lead for each Treasury will allow the program lead the legal structure, social marketing, managing support for the DEFI ecosystems by providing liquidity, keeping financials up-to-date, website upgrades and Web3 integrations, creating contracts, and actively engaging with the community to find solutions to the ecosystem challenges such as taxes and developer support.

Governance Structure — Cost-Efficient

The above structure may seem like more hours will be incurred, and they will, as the team leads may work up to 20 hrs per week. However, as we saw over the past year our reviewers do not always max their hours out. Over the past year, it is very clear that the treasury operating costs and salaries are easily below the industry average, thus creating cost savings. Further, we will continue innovating with automated web3 integrations with the treasury processes. These integrations will allow for cost savings as we continue building and scaling!

To show why we can’t scale with the current structure, we can look at the program lead hours. The program lead has already, on average, worked 45 hrs per week but only gets paid for 40. This equates to working 260 hours ($18,200) for free within his first year uncompensated. Despite the average DAO paying their program leads over $200,000, our program lead is committed to the treasury and understands we are in a startup stage. However, this is not sustainable going into year two, and thus, the above structure will be proposed in the coming governance vote. Note that salaries are recommended to stay the same over the second year.

The above-proposed organizational structure will allow the Treasury to scale and support the community better. Though it will increase the administrative budget somewhat, the treasury committee has shown they do not excessively waste administrative costs. This is demonstrated by comparing the annual salary and administrative expenses estimated at the beginning of the year to the actual yearly salary and administrative fees.

The chart below shows that the TCT’s actual operating cost is 32% ($223,363) lower than the estimated budget of ($330,000). The reviewers could have invoiced more hours for their gain, but they did not. Still, the reviewers conserved their hours as they knew the Treasury suffered a significant loss due to the $SMR price depreciation and supported more funding for the community. The savings were directly attributed to the reviewer’s efforts to be more efficient and conserve their time.

What’s more interesting is when comparing the operational budget of other DAOs to that of the TCT. The Tangle Community Treasury operates on a meager budget than other DLT ecosystem DAOs. We have developed a cost-efficient treasury that seeks to represent and support the community best. The proposed new structure will increase the annual budget but is far from what other DAOs currently operate with.

Additionally, increased costs will be offset by the revenue generation the Treasury is currently receiving and will generate through the year.

An Active Future! Web3 Integration and Innovation

In the first year, we saw the initial framework tested and then some revisions. After the modifications in October, the committee’s ability to be active resulted in integrating the IOTA & Shimmer (layer-1 and layer-2) networks into community-supporting projects such as the implementation of the layer-zero bridge, tax support applications, and partnering with Akkodis to offer industry-leading DAG developer support.

Over the next year, the Treasury will focus on a strategy of better revenue generation (while supporting positive ecosystem growth), integration and innovation with Web3 integrations, and better developer support for community projects and developers. A detailed list is below.

Potentially implement Quadratic Funding (QF) with an identity solution specific to the IOTA and Shimmer network and participate in Gitcoin public good grant funding.
Potentially implement a legal Web3 token treasury swaps by integrating Audit.one’s KYC NFTs with Hedgey.Finance treasury swap solution. This potentially can automate a treasury swap method that releases tokens on a timed vesting schedule and is legally compliant with KYC soul-bound NFTs.
Implementing the Shimmer and IOTA networks into portfolio management Dapps such as DeWork, Rotki, De.Fi, and or Nimbus. Also work on possible real-time Treasury dashboard analytics such as Dune or others.
More community-supportive grants that empower the community through structure Web3 airdrops such as community content creators (Web3 integration to support content creators), developer empowerment Group (Web3 integration to support ecosystem developers), and project initiative support (Web3 integration to support ‘any’ project that builds on the IOTA & Shimmer networks.

Treasury revenue generation will come to fruition in the next term. We will see such revenue assets that have been acquired in the first year become available and other revenue-generating streams be activated that support the community and ecosystem through the following:

$Soon and $Build token release
$Audit token release
$Peppy token release
$Bloom token release
Defi farm rewards
Connect ecosystem projects with Venture Capital through a Web3 treasury vetted database to showcase to investors.
Support the ecosystem and projects with an experienced DAG developer team (Akkodis)!

The above is just a short-term strategy for the next term which is aimed at innovating the treasury to be more Web3 and better ways to empower the community and grow the ecosystem. At the beginning of the year, the Treasury set short-term and long-term goals. Over the past year, we have successfully completed many of those goals.

This is only the beginning and we look forward to taking things to the next level!

Part 1: Fiscal Analysis
Part 2: Governance Update
Part 3: Success Metrics
Part 4: New Year with an Active Treasury (Coming out soon).

Keep an eye out for Part 3, which will give a summary of the successes and non-successes of grant funding in the 2023 to 2024 term.

Treasury Donation Wallet: 0xDac6c2470fc3058BBf7E3093B03794996558f164
Website: www.TangleTreasury.org