Description:
I propose the creation of a “hot wallet” that enables API3 DAO sub-teams to more flexibly and opportunistically (in the good sense of the word) deploy API3 token allocations for purposes such as strategic long-term partnerships with enterprises, data providers and Web3 projects that go above and beyond simple oracle integrations and help scale the adoption of API3’s technology towards the Web3 and API markets - both of which are needed to realize the vision outlined in the original API3 whitepaper. Additionally, part of the tokens will be used towards the vested token allocations needed to bring more top talent to work on API3 itself. Any such token allocations would be reasonably related to existing DAO Resolutions, or may be included as line items in secondary DAO proposals, at the reasonable discretion of the multisig members.
What:
2M API3 tokens from the API3 Ecosystem Fund.
Where:
The tokens go from the API3 Primary Treasury to a Gnosis Safe 3/5 multisig operated by five founding-level members of the API3 project.
Who:
Burak Benligiray, Andre Ogle, Heikki Vänttinen, Erich Dylus, Dave Connor.
Respectively, the members managing the hot wallet multisig are co-founders (Heikki & Burak), long term contributors (Andre & Dave) and attorney-client duty-bound legal counsel (Erich) of the API3 project.
How:
The hot wallet multisig will serve all API3 DAO grantee teams when it comes to deploying tokens towards high-value, high-impact strategic partnerships, vested contributor allocations and other deserving causes. The tokens will not be used towards DAO governance and will not be staked. The multisig wallet address will be public to the whole DAO by the virtue of being included in the proposal, and when deploying tokens, teams will report the use of said tokens to the broader DAO as transparently and to the extent that they are able. This, of course, begs the question: Why would the teams not be able to disclose what the tokens are used for? …
Why?:
…because many of the partnership discussions we are and will be engaged in include limitations to the teams’ ability to disclose information pertaining to said partnerships to the public without prior written consent of the other party. Most commonly these limitations take the form of your usual NDAs and MNDAs, which are an extremely commonplace feature in the discussions between two organizations exploring mutually beneficial cooperation. Before agreeing that a strategic, high-value partnership is to take place and realizing the fruits of that partnership in a publicly disclosed manner, there is usually a lengthy building, PoC and go-to-market phase, which necessitates the ability to deploy resources before the reason for these deployments is disclosed to the broader set of stakeholders - in this case all API3 token holders. It is often in API3’s best interest of mutual incentive alignment with the counterparty (including involvement in governance) and treasury stablecoin preservation to offer a grant of API3 tokens as consideration to enter into a long-term relationship. As a precedent of this, we formed a 10-year development partnership with Open Bank Project, which had us extend a partner token allocation to OBP before the partnership was published. This token allocation came from the Partners & Contributors allocation of the original token distribution, which enabled it to be done directly from DAOv1. However, as outlined in this proposal, this is not possible going forward without a dedicated hot wallet that enables token distributions without a primary DAO vote.
Additionally, when it comes to more everyday things that include token deployments, like vested token allocations that are needed to attract highly capable contributors to the API3 project, it is not practical to require a primary DAO vote every time, as this requires majority support and causes both inertia and non-negligible costs (gas spent on achieving majority support) for growing the API3 project contributor base. However, it should be noted that the hot wallet would primarily act as a convenience and efficiency improvement in this regard. If a team needed to offer an allocation to its personnel and the hot wallet managers were to refuse to allocate these tokens from the multisig, the team leaders would be able to make a primary proposal for the tokens the same as they are able to without the hot wallet.
In a nutshell:
As it currently constitutes over $100M USD in value locked to the API3 project, there are very good reasons to keep the ecosystem fund behind the most robust voting requirements - that is, in the primary treasury of the API3 DAO. However, this robustness does not come without its tradeoffs in the teams’ ability to find productive uses for these tokens and the ability to deploy the tokens towards said uses in a manner consistent with common business development practices and compliant with the case-by-case contractual requirements. As such, I would urge everyone to vote for the creation of a hot wallet controlling, at current, 8% (2M API3) of API3’s total ecosystem fund (25M API3).
About the author of this proposal:
My name is Heikki Vänttinen and for a lack of a better title I would call myself one of the co-founders of the API3 project. Today, I focus mostly on advising teams on strategic decisions that require inter-team alignment and help out as much as I can on all of the non-technical aspects of the project.