MIP40c3-SP#: 30 Author(s): Robert Jordan @monkey.irish Contributors: Tags: core-unit, cu-ces-001, budget, mkr-budget, dai-budget Status: Formal Submission Date Applied: 2021-08-11 Date Ratified: <yyyy-mm-dd>
MIP40c3-SP30 adds the budget for Core Unit CES-001: Collateral Engineering Services.
Building upon the theme of sustainability of the Collateral Engineering Services Core Unit (CES), the budget reflects support of the Mandates and business continuity in MIP39.
Any elements of this budget reflecting a likeness to other Core Units is a principle of building on the shoulders of giants. Much appreciation is given to all the trailblazers.
The CES budget is designed with the following in mind:
- Paying for the operational costs to run the Core Unit
- Building a reserve for sustainability
Therefore, a vote to ratify this MIP means MKR holders make a commitment to:
- An initial six month budget for CES
- A continuous funding model that operates on a semi-annual basis based upon achieving CES milestones
- A MKR vesting schedule for CES based upon the SES MKR Incentive Plan
- Auditor’s multi-sig Wallet to honor and uphold MKR holders preference for the CES Budget Breakdowns
- Operational multi-sig Wallet to run the operations of CES
- CES commitment to the transparency and accounting of funds during all budget cycles
The team will consist of seven full and part time Core Unit contributors.
|Core Unit Facilitator||1|
|Technical Product Owner||1|
|Smart Contract Engineers||3|
Total Budget Cap for the Cycle
The Total Budget Cap is
$1,223,552, spanning a six month Cycle. The annual budget is projected at
|6 Months||12 Months|
|Benefits + Taxes||$75,000||$103,125||$103,125||$103,125||$384,375|
|IT & Subscriptions||$25,000||$8,333||$8,333||$8,333||$50,000|
|Referral & Sign-on Expense||$100,000||$0||$0||$0||$100,000|
|SC Verification & QA||$0||$0||$0||$0||$0|
A few notes about the Budget Detail:
The Budget Detail in the first Formal Submission of this MIP was
$3,133,211. This has been lowered to
$2,375,469. The decrease is primarily due to removing three headcounts. Also note this budget includes a
Benefits + Taxprovision of
Any business functions (HR, Legal, Operations, DevOps, etc.) not listed here will be contracted on an hourly basis as Professional Services.
The budget represents a fully populated team based upon a hiring schedule. The actual amount might be lower due to the availability of smart contract engineers.
Illustrating these details as a percentage of the total budget request for overall comparison (12 months):
Providing additional detail with regards to the above line items:
Salary: The initial team has three full-time Smart Contract Engineers, one full-time Technical Product Owner, one Facilitator/Team Leader, and two part-time Advisors (for a total of seven permanent members).
Benefits + Taxes: The overhead cost of an employee/contractor such as benefits (including healthcare), and taxes. This has been calculated by scaling salaries by 30%. This premium is likely an overestimation, and the realized cost is expected to be lower. That being said, paying salaries to a global remote team in a multitude of jurisdictions can be quite expensive.
Travel: The team may travel to present at industry events or participate in a team offsite. The budgeted amount is
$1000 per person per month. The goal would be to meet twice a year around an ETH event and Devcon. We get to attend the conferences and take a few days to meet/plan as a team. Consideration is given a geographic distribution of 5-7 people and the higher than normal costs for travel and expenses.
Hardware: An allocation of up to
$3,500 per new team member.
IT & Subscriptions: We anticipate a variety of costs relating to software subscriptions, cloud services, and contract service providers.
Referral & Sign-on Expenses: Provided at the discretion of the Facilitator to attract top talent to the team.
Audits: Initially, this work will be coordinated with the Protocol Engineering Core Unit. Budget modifications will be submitted when appropriate.
Bug Bounty: Initially, this work will be coordinated with the Protocol Engineering Core Unit. Budget modifications will be submitted when appropriate.
Gas Costs: Initially, this work will be coordinated with the Protocol Engineering Core Unit. A nominal amount has been allocated for administration. Budget modifications will be submitted when appropriate.
SC Verification & QA: Initially, this work will be coordinated with the Protocol Engineering Core Unit. Budget modifications will be submitted when appropriate.
Professional Services: Coverage for managing general operational overhead and services, legal costs including entity creation, legal officer/company insurance, as well as monthly and annual financial reporting.
Contingency Buffer: Approximately
15% of budgeted costs to be held in reserves for business continuity. The CES entity will mostly likely be a business in the United States and corporate tax rates may apply to these reserves.
The MKR vesting schedule for CES based upon the SES MKR Incentive Plan.
|MKR/USD lock-in Price (Post Ratification)||Trailing 6 month average|
|MKR/USD lock-in Price (OG)||MKR = $1,956 (11/12/20 - 05/12/21)|
|MKR Price Floor (Post Ratification)||-30% (Trailing 6 month average hire price)|
|MKR Price Floor (OG)||-30% ($1,369)|
|Vesting Period||3 years|
|Cliff Vest||12 months|
|Vesting Schedule||After cliff has expired, the Biannual MKR amount vests every 6 months|
The below forecast is based upon a fully populated team today.
|Vesting Date||Vesting Transfer Date||MKR Amount|
|30 Sep 2022||01 Oct 2022||966.49 MKR|
|31 Mar 2022||01 Apr 2023||483.24 MKR|
|30 Sep 2022||01 Oct 2023||483.24 MKR|
|31 Mar 2022||01 Apr 2024||483.24 MKR|
|30 Sep 2022||01 Oct 2024||483.24 MKR|
At the current (2021-08-11) MKR price and if CES was onboarding a full team, the MKR Incentive Total would be
2,292.46. An additional
607 MKR are allocated for Manual Repricing or if the trailing six month average drops below today’s MKR price. The actual MKR issued will fall in a range between
The Vesting Transfer Date is one day after that period’s Vesting Date. For example, a Sep 30 Vesting Date would have a Vesting Transfer Date of Oct 1.
The CES budget implementation is architected to build and sustain a stable Core Unit in relation to the volatility in our industry.
- Funding for the initial six months of the Core Unit with a contingency reserve
- Thereafter, a continuous funding model operating on a semi-annual basis
- MKR incentives with a Vesting Period of three years, a 12 month cliff, and six month vesting after the cliff
- Provide full transparency and accounting of funds during all budget periods
The Total Six Month Budget Cap, as specified in the Budget Breakdown, will be transferred to the Auditor’s Wallet after ratification. This wallet will keep the funds and transfer them as requested by CES, per the below.
The Auditors Wallet balance will never exceed the upper limit voted by Governance. If this limit needs to be raised, or we’re no longer expecting to ever need it, an additional subproposal MIP will be submitted to adjust it.
When the CES Core Unit is ratified:
- Core Unit begins
- Six month budget is transferred to Auditor’s multi-sig Wallet
- Initial requested budget is transferred into the CES Operational multi-sig Wallet
Within the first 5 days of each month, CES will submit a
Monthly Budget Statement to the signers of the Auditor’s Wallet with the following sections:
- For each month, provide an accounting of funds spent in the prior month
- Provide an updated budget for the remaining cycle
- Provide a MKR vesting overview, by month
- Auditor verification of accounting
- Requested additional budget allocation & MKR incentives transferred into the CES Auditor & Operational multi-sig Wallet
The Monthly Budget Statements will be added to the MakerDAO forum. The originals can be found in this git repository on Github.
- Reconciliation of budget, actual vs. spent
- Review results & achievements
- Present new budget, MKR vesting, & goals
- Entire committed budget transferred to Auditor’s multi-sig Wallet
- Initial budget transferred into the CES Operational multi-sig Wallet
MKR will be transferred from the Auditor’s multi-sig Wallet into the CES Operational multi-sig Wallet no later than Core Unit Monthly Budgeting Cycle before the month the MKR actually vests. For example, if a Vesting Transfer Date is 01 Oct 2022, the MKR will be transferred into the Operational Wallet no later than the August 2022 Core Unit Monthly Budgeting Cycle. Once DssVest is ratified and implemented, CES will investigate the use of automated MKR incentive vesting.
The following wallets are involved:
- The Auditor’s Wallet – A 3-out-of-4 multi-sig, controlled by trusted Maker DAO members. This multi-sig will hold the Total Budget Cap in DAI. All funds pass through this wallet before any are sent to the CES operational wallet. One of the signers is the Facilitator of the CES Core Unit.
The signers of the Auditors Wallet are still being confirmed and will be added to the MIP40c3-SPXX forum thread. No funds will be sent to this wallet before the signers’ addresses have been set in the wallet.
- The Operational Wallet – A 2-out-of-3 multi-sig, controlled by CES. This multi-sig will be used for Core Unit expenses. One of the signers is the Team Leader of the CES Core Unit.
Core Unit Budget Cycle Transfer
- What: Initial transfer of the Total Budget for the 6-month Budget Cap Cycle.
- When: Manually, upon executive vote approval.
Maker Protocol Surplus Buffer
Recipient: Auditors Wallet:
October 2021 Budget Transfer
- What: Operational Wallet for the requested budget.
- When: Manually, upon executive vote approval.
- Amount: Determined by the October 2021 Budget Statement
Sender: Auditors Wallet:
Recipients: Operational Wallet: