MIP40c3-SP#: 7 Author(s): Smart Contract Domain Team Contributors: N/A Status: Formal Submission (FS) Date Applied: 2021-03-03 Date Ratified:
MIP40c3-SP7 adds the budget for the Protocol Engineering Core Unit.
I am proposing this budget for the Protocol Engineering Core Unit to be able to succeed in its mandate, specifically; to extend the functionality of the Maker protocol, assist with the maintenance and operation of existing smart contracts and ensure the safety and correctness of protocol design and implementation.
The team’s scope involves a significant level of responsibility and exposure, demonstrated by over $7 billion of total value locked in the Maker Protocol. This is coupled with the constant and necessary addition of collateral types, executive votes and code reviews to ensure protocol safety and growth.
New Information: The title of the team has been updated from Smart Contracts Core Unit to Protocol Engineering Core Unit to better reflect the longer-term growth and our mandate to support ongoing protocol implementation, growth, and safety/security.
As per the recently updated Protocol Engineering Core Unit MIP (specifically; Motivation, Team Structure and Layer2 Development sections), this proposal has been updated to include two additional senior engineers focusing on growth and innovation, specifically Layer2 development. All data has been updated to reflect this addition below.
Protocol Engineering Core Unit
The following considerations have been taken into account when building the budget to ensure a competitive package that allows the DAO to retain and attract talent by providing:
- A competitive salary in-line with industry standards
- Healthcare to compete with traditional company offerings
- Travel budgets to promote team visibility and speaking at industry events
- A sign-on bonus to attract new employees
There is also recognition to support the team by removing blockers and covering overhead costs involved in daily work, including:
- Hardware for smart contract deployment and independent testing
- A bug bounty to promote engagement with community whitehat hackers
- Funds to support audit activities and code reviews for security awareness
- Funds to cover gas and contract deployments
- Overhead support for team filing, accounting, legal and reporting
- A buffer to accommodate unforeseen costs
Compiling the above considerations along with market/competitor research has helped define the following budget.
The yearly budget request for the Protocol Engineering Core Unit is $6.12m. This equates to a $510k monthly expense to support the team mandate.
This budget secures a team of 11 - 16 full-time and part-time smart contract engineers, including a team facilitator. It also includes coverage for all operational costs, audits and overheads as presented below;
|Referral & Sign-on Expense||$100,000|
|SC Verification & Quality Assurance||$376,000|
|Legal and Operating expenses||$28,500|
Illustrating these details as a percentage of the total budget request for overall comparison:
Providing additional detail with regards to the above line items;
Salaries: The current team has 9 full-time smart contract engineers, 1 part-time smart contract engineer, and 1 proposed Team Facilitator (for a total of 11 members). The team is seeking to grow this by 5 members to a total of 16 members. This opportunity to scale will enable us to better meet the demands of the community.
Healthcare: In order to align with traditional company offerings, this proposal includes a healthcare supplement averaging $1188 p/month for full-time employees, based on residency to account for local cost variations.
Travel: Engineers may travel to present at industry events or participate in a team offsite.
Hardware: In order to ensure we are able to run multiple ETH nodes to support testing and contract deployment, a supplement for a Dev machine (e.g. Intel Quad Core i7-8565U, 40GB RAM, 512GB NVMe) and test node (e.g. Intel NUC; i5-7300U 2.6 - 3.5 GHz Dual Core, 32GB RAM, 2TB NVMe M.2.) will ensure the team has the hardware in place to achieve this.
Referral & Sign-on Expenses: Provided at the discretion of the Facilitator to attract top talent to the team.
Audits: We have accounted for approximately 5 audits (depending on the size of the code base being assessed we may need to revisit the budgeted allowance - to be approved by Governance). Typically we work with Gauntlet, PwC, Certora, Quantstamp, Trail of Bits, Consensus, OpenZepplin and Peckshield.
Bug Bounty: Bug Bounties allow us to support whitehat involvement in the work we do. Payout amounts will be assessed and determined by the team. $100k is a conservative number for this line item, any increase will be discussed and assessed with Governance.
Gas Costs: Based on our deployer addresses in 2020, we spent $36,367 in gas. The 2021 budgeted amount has been extrapolated from the last quarter of gas usage which has seen significantly higher gas congestion.
SC Verification & Quality Assurance: Part of the team’s focus is on protocol security by verifying high-level properties of the system along with low level bytecode verification. This involves; full year engagement with a 3rd party, dedicated resources and the use of external tooling, to ensure repeatable quality assurance across smart contracts and the development of new tooling.
Legal and Operating Expenses: Coverage for managing general operational overhead, legal costs including entity creation, legal officer/company insurance, as well as monthly and annual financial reporting.
Contingency Buffer: Approximately 5% of budgeted costs to be sidelined in the event that we underestimated this budget cycle.
The Protocol Engineering Team is proposing to award 0.1% of the existing MKR supply to each full-time team member, (equivalent to 995 MKR) vested over 4 years.
Each person staying with the project for the full first year will be entitled to 25% of their award - the equivalent of 248.75 MKR. For our team of 16 (including both full and part-time employees) this is a total of 3855.625 MKR to be awarded at the end of the first year.
For reference, our current annual MKR burn is 34,054 MKR or 3.54% of remaining MKR.
|Current MKR supply:||~995,000 MKR|
|Current annual MKR burn:||3.54% (equivalent to 34,054 MKR)|
|MKR minting:||Governance using DssVest will mint MKR|
|Allocation per full-time individual over 4 years:||0.1% (equivalent to 995 MKR)|
|Allocation per part-time individual over 4 years:||0.05% (equivalent to 497.5 MKR)|
|1 year cliff for full-time individual:||25% of allocation (equivalent to 248.75 MKR)|
|1 year cliff for part-time individual:||25% of allocation (equivalent to 124.375 MKR)|
|Total vesting period:||4 years.|
|Vesting schedule:||25% at the end of the 1st year, 75% at equal increments over the remaining 3 years.|
|Number of team members:||16|
|Total team MKR over 4 years (15 full-time and 1 part-time member)||15,422.50 MKR|
|Total team MKR at the end of 1 year (15 full-time and 1 part-time member)||3,855.625 MKR|
Additional Audits: We have budgeted for up to $375k in audits, each audit typically costs between $50-$100k. If we exceed this amount, we will request further funding and approval from Governance.
Increased Gas Expenses: We have budgeted up to $150k in gas costs. If we exceed this amount, we will request further funding and approval from Governance.
Keeper costs: We expect a technical/operations domain team to maintain Keepers, including chief keeper, cage keeper, auction kickers and more. As a result, we have not accounted for maintenance or gas costs of keeping keepers operational.
To ensure 3 months of continuous operation in the event of emergency shutdown or protocol issues, the Protocol Engineering Team will be requesting an upfront lump-sum of $1.3m to sit in a protocol owned multisig.
The lump sum is the equivalent of 3 months of budgeted salaries and essential team expenses.
- The lump-sum will be held outside of the surplus buffer in a protocol owned multisig
- If normal protocol operation is not possible due to emergency shutdown or other protocol failure, these funds will be used to ensure employment resources get the system back up and functional
- At the conclusion of the year, the lump sum will remain in the multisig for the following year and may be increased at that point in time due to team growth or the desire for an increased runway.
Protocol Engineering Core Unit Multisig:
- Implementation: Initial distribution to the Core Unit multisig will be manual until the Keg is in place.
- Ownership: This multisig will be anonymous individuals selected by the Protocol Engineering Team.
- Frequency: Protocol distributions to the multisig will occur during the last week of the month.
Protocol Engineering Continuous Operation Multisig:
- Implementation: This multisig will be funded in full upon successful onboarding of the Protocol Engineering Core Unit.
- Access: In order for funds to be accessed from this multisig, the Maker protocol must be in a state where it is unable to pay team salaries due to protocol error, shutdown and/or under governance attack.
- Ownership: The Continuous Operation Multisig will require 2 of 3 signatures from the following keyholders. This may be expanded to other critical Core Units as they are formed:
Protocol Engineering CU Multisig: 0xe2c16c308b843eD02B09156388Cb240cEd58C01c
Interim DAO Multisig: 0x73f09254a81e1F835Ee442d1b3262c1f1d7A13ff
Growth CU: 0x7800C137A645c07132886539217ce192b9F0528e