Jul 26, 2022
Delivering Rewarding Governance Mechanisms For DAOs
Ever wondered how to improve the quality of governance of your DAO? Are you struggling to align the DAO to its mandate? PieDAO has implemented a solution that rewards members for participating in the DAO’s governance matters.
TL;DR
- The rewards distribution mechanism distributes 60% of the total treasury’s farming monthly earnings.
- The eligibility criteria reward those holders that are actively contributing to governance while redistributing the rewards from those who don’t.
- Staking veDough and voting at least once a month are the minimum requirements to participate.
Background
A proposal known as PIP-60, published on August 27th, 2021, fundamentally changed how PieDAO would operationalize a value accrual mechanism for token holders that attract long-term capital by rewarding active participation in the DAO. The staking framework used by the DAO distributes protocol fees and other revenues the organization generates.
The proposal also defined the DAO’s revenues and the distribution breakdown that allocates 60% directly to veDOUGH holders, 25% towards compounding the treasury principal, and the remainder to cover operational costs.
Now that you are hooked on the pie, let’s see how the process transpires.
Players
There are three leading players to consider in the process:
- Treasury Farming Committee — this body determines the number of tokens that will be made available for distribution at month-end.
- Core contributors — core operators of the rewards system are responsible for issuing monthly reports, issuing the rewards distribution and minting SLICE (the PieDAO reward token).
- veDOUGH holders — members who validate issued reports and notarize the distribution amounts and recipients.
Defining The Distribution Amounts
At the end of the month, the treasury farming committee issues the farming reports that disclose the amounts earned by the treasury marked for distribution and to be used for minting SLICE. The allocated portion is sent to a multi-sig controlled by the core contributors for the monthly distribution.
The SLICE is a basket of top-performing crypto-assets managed by PieDAO, whose composition is defined through governance voting. This opportunity provides an exposure-as-a-service function as veDOUGH holders vote to change the composition of the rewards to a most beneficial position. This is similar to dollar-cost averaging into a portfolio of assets over time, but the assets are governance-managed and community picked.
Operations
SLICE is minted once the assets for distribution are defined and transferred to the core contributors, who generate reports that detail the tokens to be allocated to every qualified recipient. This opens a 72-hour snapshot period where you, as a DOUGH holder, are required to review and verify that your address and rewards balance are reflecting correctly on the Merkle tree shared by the core contributors.
The review has to happen during a 72h notarization window, where veDough holders will be required to vote if the merkle tree is valid or not — the notarization process supporting documentation is always shared in the snapshot vote, so there is no need for you to remember the process.
Eligibility
The following can be used to determine eligibility:
- If you voted in the last epoch, you are eligible. Your rewards will accumulate in your account and you will be able to claim them when distributed.
- If you did not vote in the last epoch but voted in the earlier epoch, you are also eligible but flagged as inactive. The rewards will accumulate in your account, however, you will not be able to claim them as the claimable balance is determined as zero as per being inactive.
- If you haven’t voted in 3 consecutive months your unclaimed rewards will be redistributed (slashed) among all eligible members. After slashing, the holder’s unclaimed balance will be equal to zero.
- Eligibility is determined by whether you voted or not during last month’s voting period(referred to as an epoch).
- Accumulation means that the allocated rewards will accrue to your account and will reflect in your account balance.
- Claiming will be the ability to withdraw the accumulated balance.
Notarization
Once you assess your eligibility, you can approach the notarization process and approve the distribution details in the report. Ensure that you can locate your address in the Merkle tree and check the rewards to be distributed to your account (remember the balance show the cumulative position that lists all unclaimed assets)
If your account is missing or there seems to be an error with your allocation, kindly vote as invalid and alert the core dev team at the DAO to look into your matter whilst the snapshot is still open — at the #bug-report channel at PieDAO’s discord
Please note that the claiming process is suspended whilst the snapshot is running and you can only resume claiming once the snapshot has been concluded and the distribution completed.
Distribution
Once the snapshot vote has been concluded, the rewards are distributed to your account. A message will be shared on the official channels to inform about the distribution. If you decide to claim your SLICE you’ll be able to redeem, accumulate or forward your balance for further compounding. If you don’t want to claim, that’s also fine, you will keep accruing rewards as long are you don’t get slashed
Worth mentioning that you can compound your SLICE for more veDough to increase your position. If you choose this option you will be claiming your SLICE and sending it to the PieDAO Treasury’s address, which will define a rate and distribute the veDough 2 weeks after the distribution happens — now more about the mechanism here.
Happy days, eh?
You Want In?
If you want to get some Dough you can swap if for ETH at Sushiswap or 1Inch. Then proceed to the Staking Portal to stake your Dough, or to the Staking Simulator tool to simulate the amount of veDOUGH (vote-escrowed DOUGH) you can earn for a determined lock-up period.
Conclusion
Every month, a new distribution will come where the treasury committee and the core contributors team handle the asset allocation and rewards distribution. It is your duty as a veDOUGH holder to support through validation during this process and to participate in Governance not only to get rewards but to also build and grow the DAO. Keep voting!!
Remember to join the Discord community and follow the DAO’s official communication channels listed on the website. Also, read about the first DAO-to-DAO acquisition in Ethereum’s history.
Happy staking and earning!
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