Now that the Protocol has launched, the DAO is in control and the Labs team can only do what the DAO authorizes it to do and pays it to do. Labs believes the services in this Temp Check are essential, that Labs is the best qualified to provide the services, and that Labs’ proposal to do the work on a ‘time & materials’ basis is the most mutually beneficial and reasonable way to proceed.
The Indigo Protocol is by design intended to be the most decentralized DeFi protocol on Cardano. Key to that goal is ensuring that the DAO is in control and Labs is limited to doing what the DAO authorizes.
The Labs team “Fair Launched” the Protocol with no investor funds so that the Protocol could be as DAO-controlled and decentralized as possible at launch. To continue being maximally decentralized post-launch, the DAO needs to now vote on how to secure future services for the Protocol and Foundation.
Under the Indigo DAO Constitution, the Indigo Foundation is the legal entity empowered to implement the votes and directions of the Indigo DAO. The Foundation’s only role is to implement those votes.
Since the Foundation is not yet staffed to directly support the Indigo Protocol and implement DAO votes with its own team, the DAO must vote to have the Foundation contract with someone to do the work the DAO authorizes. In the first Indigo Proposal from November, the DAO voted for the Foundation to sign a Services Agreement (SA) with Labs which authorized Labs to provide essential launch and some post-launch services to the Protocol and the Foundation.
The SA allows the Foundation and Labs to easily enter into additional work agreements in the future - called Service Schedules - as may be authorized by a vote of the DAO.
This Temp Check asks the DAO to vote to authorize the Foundation to enter into a second Services Schedule with Labs to perform the future services for the Protocol and Foundation that are listed below.
We believe that the services in this Temp Check are essential to the future development of the Protocol and to supporting the Foundation, and that the Labs team is the best qualified and best positioned service provider to deliver these services
The first part of this Temp Check requests DAO approval of the specific core services listed below which the Labs team believes are needed for the next 12 months. The DAOs of many other protocols have authorized significant payments to development teams, including for example AAVE, dydx, Uniswap and ApeDAO; so we feel that this request is firmly part of how a decentralized protocol must function. To alleviate any concerns with this vote excluding other development teams, the Foundation would have the right to cancel any of the services on 30 days notice and have the services performed by another service provider.
The second part of this Temp Check requests reimbursement of specific past out-of-pocket costs incurred by Labs to develop the Foundation.
Proposed Services and Payments
A. Services to be Provided
We propose that the DAO authorize the Foundation to sign a Services Schedule with Labs for the following services over the next 12 months:
- Develop upgraded or additional Governance smart contract(s) which allow distributions of INDY from the DAO Treasury where authorized by passed DAO Proposals. Currently, the DAO Treasury funds are locked and therefore inaccessible until a Protocol upgrade is implemented. Any implementation of these upgraded smart contracts will be subject to a vote of approval by the DAO Members.
- Develop upgraded or additional Protocol smart contract(s) on all aspects of the Protocol, including creation of any recommended white paper(s), contracting for necessary audits, subcontracting with other developers, and performing necessary launch services. Any implementation of these upgraded smart contracts will be subject to a vote of approval by the DAO Members.
- Continue to administer the calculation and distribution of INDY rewards which have been authorized by Indigo Proposal 1, through March 31, 2024.
- Continue to administer and improve the Indigo Protocol web app, oracles, and off-chain functions, through March 31, 2024.
- Continue to administer the Indigo Forum pages, through March 31, 2024.
- Support Working Groups authorized by the DAO, through March 31, 2024.
- Develop and administer the creation of a web app, email accounts, and social media accounts for the Foundation, through March 31, 2024 (unless transferred to direct Foundation control sooner).
- Develop proposals for additional improvements to the Protocol and the larger DeFi ecosystem, and present to the DAO Members through the governance system.
The Services Schedule will include relevant milestones and deliverables where applicable, allow the Foundation to cancel any of the Services on 30 days notice as noted above, and include other terms that the Foundation requires.
B. Payment for the Future Services
Labs proposes that its services be invoiced monthly on a time & materials basis. We believe that time & materials billing is more appropriate given that it is difficult at this early stage in the life of the Protocol to estimate the exact effort that will be needed for each of the listed tasks as would be needed to propose a flat-rate amount.
Monthly invoices would be approved by the independent Director of the Foundation after the services have been provided.
The requested hourly rates for various Labs team roles are listed below. These are based on our survey of what other independent development shops working on blockchain projects charge for services. The requested rates are, we believe, fair and reasonable considering what we understand others pay and the cost to Labs of providing the services to the DAO (personnel, equipment, third-party services, and overhead).
Positions and Rates:
Out of pocket costs incurred by Labs (such as for audits or outside developers from MLabs) would be reimbursed by the Foundation at cost without mark-up.
As for the payment procedures, we propose that Labs invoice the Foundation on a monthly basis with payment due within 30 days in INDY or fiat/stablecoin. The first payment will not need to be made, however, until after the Protocol upgrade called for in item 1 above (implementing the ability of the DAO to transfer Treasury funds to the Foundation). A summary of each invoice will be shared with the community on Discord.
If Labs is paid in INDY and decides it needs to sell any of it, Labs will commit to first share any proposed liquidity provision plans with the DAO for comment and to set expectations.
While we cannot accurately calculate what the total monthly fees may be in any given month, based on limited information available to us about what other teams are paid by DAOs for analogous work, we anticipate that the monthly average may range from $30,000 to $60,000.
While most current Labs team members are receiving INDY on a vesting schedule, that is not compensation for years of future work but the reward for up to two years of past work and future availability (as they will stop vesting if they stop being available to support the Protocol). As with any traditional tech business, in addition to an ‘equity’ upside, Labs and current or future Labs’ team members need some form of regular compensation to pay their real world bills. Labs expects to work closely with the DAO and Foundation for the foreseeable future, and in a decentralized structure we believe that requires the DAO to fairly pay Labs for the services it receives.
Reimbursement of Past Out-of-Pocket Costs
In addition to future work, the Labs team also proposes that the DAO authorize the Foundation to reimburse Labs for out-of-pocket expenses previously paid by Labs for the formation of the Foundation under the Cayman Islands Foundation Companies Act of 2017. These costs should be reimbursed by the DAO because the Foundation was created only to support the DAO.
We propose that these costs be reimbursed in INDY from the DAO Treasury following a Protocol upgrade referenced in item 1 above. Labs will commit to not sell any of this INDY without first sharing any proposed liquidity provision plans with the DAO community for comment and to set expectations.
The past Foundation-related expenses to be reimbursed are the following:
|Carey OIsen (Caymans law firm)||May 2, 2022||Legal services regarding Foundation structure and formation||$10,000.00|
|Zedra Cayman Management Services Ltd.||May 2, 2022||Incorporation fees; Pro-rated annual registered office, secretary, director and supervisor services; other related prorated annual fees.||$15,573.00|
|Zedra Cayman Management Services Ltd.||July 1, 2022||Incorporation fees; Registered office fees; Secretary services; Director services; Supervisor services; other related fees.||$14,900.00|
|Carey OIsen||July 31, 2022||Legal services regarding Foundation structure and formation.||$3,360.00|
|Carey OIsen||August 31, 2022||Legal services regarding Foundation structure and formation.||$3,195.00|
|Carey OIsen||Sept. 30, 2022||Legal services regarding Foundation structure and formation.||$2,960.00|
|Carey OIsen||Sept. 30, 2022||Legal services regarding Foundation structure and formation.||$1,510.00|
We look forward to answering questions on this Temp Check, and hope that DAO Members support retaining Labs to continue to help transparently build Indigo into an industry-leading financial protocol.