[Discussion] How might we think about budgeting - What should the DAO budget be?

When the Gitcoin DAO launched over a year ago, we were right in the first third of a crypto bull run. Interest in crypto was growing again, and the value of outside capital was much lower than it is today. This has meant for Gitcoin, lots of unchecked growth and a DAO that has seen only the sweet smell of summer. We didn’t have much of a fall season, we went from summer to brutal winter with drawdowns of nearly 80% within a very short time period.

As a DAO, we’ve grown permissionlessly – not without approval from Stewards, but often without first-principled, intentional decision-making. Contributor counts have increased, workstream budgets have ballooned, and yet we have workstreams that continue to struggle to actually be effective at building towards our (newly defined) Essential Intents. With this rapid growth, we have amassed a myriad of folks who are not in the right roles.

In S14 we saw a constructive reorientation with FDD; FDD was able to focus on the two core tenets of their mandate (Grants Approvals and Sybil detection), with some support for Analytics.This change has made it more clear what FDD is doing that’s essential and where it belongs in the DAO, more to come below.

It is common to have roughly 60% 6 of a tech startup’s costs 3 borne from development (engineering, product, design). The remaining 40% of the budget is in supporting functions. While the right breakdown for Gitcoin may vary somewhat from this archetype, we should at least be in this ballpark. Taking the 60% figure as a starting point, if we assume GPC is at a quarterly budget of $1MM, that means the rest of the DAO should fit into $670K a quarter. Moonshot Collective likely has half of their team also supporting protocol development (in Passport, and in partnership with Optimism)… perhaps we include another $200k from their budget in GPC (TBD on how best to do this).

One caveat to call out, we have a Grants program which delivers roughly $6MM in quarterly funding to the ecosystem and I want to ensure that stays intact. As a result, I could see us give some parts of PGF an immunity potion for this exercise. We also have a few roles that directly support the Grants execution function so perhaps they are immune - but not many.

Our burn as a DAO in S141 was $2.9M 2, or ~$1M per month. This is about 3x the burn of a typical US-based startup 2 – and those startups are typically generating early revenue, which Gitcoin is not. In addition, as a DAO whose capital structure is pretty much all in our (highly volatile) governance token today, we don’t have sufficient runway in case of a rainy day. It is generally recommended 2 that startups have 12-18 months of runway on hand – today, the Gitcoin Timelock has no stablecoin-based runway to rely on whatsoever. We have line of sight to $5-10M with the Treasury Diversification efforts, which under today’s spending, would bring us to ~4-12 months of runway – still leaving the DAO in a precarious position in the event of a further downturn, even if we are able to execute on those efforts.

I can hear what you are thinking - “Kyle, this is insane, you are out for blood.” I don’t think I am out for blood, and in fact I am really focused on ensuring we operate as a healthy (decentralized and autonomous) organization. As we contract, we should take care of those who may not be with us during this next phase of our build cycle with severance and offer support in finding their next role. We should also honestly invite them to continue to be part of our community, and to help us grow funding for public goods.

@lthrift did all of the heavy lifting of visualizing how this might be possible. One of those options are diagramed below but it is not the only way to reduce our spend, thank you to those who are brainstorming with me (@annika, @ceresstation, @krrisis).

I recognize this split may not be doable in S15 - it’s worth having the conversation though:

What would need to be true to reach something like this? What do folks think of this split (60/40 with carveouts for Grants Ops)?