This article sets out how Gro DAO will launch on-chain governance before the Gro DAO Token has been distributed, and what the DAO can expect to vote on in the coming weeks.
Some of the team behind Gro (🙋) are fascinated by how DAO governance can create an organisation that is both decentralised and autonomous to the fullest degree possible.
Gro DAO aims to be one of the first DAOs to start including automatic on-chain vote execution before the proposed GRO token distribution — and not after!
How do you create a DAO without a circulating token?
This ‘chicken-and-egg’ problem is the reason that most DAOs choose to distribute their governance token before starting automatic on-chain vote execution. This is operationally easier as it means the governance token can be held by the members of the DAO that need to vote.
However it does mean that initial actions — many of which are critical to the future of the DAO (such as an LBP) may be executed only via off-chain votes that then need to be translated by the team into on-chain outcomes.
In order to push the button on the distribution of GRO to the LBP pool, and in turn to the wider DAO, we are starting with a pure voting token: xGRO.
xGRO will be distributed to the Gro DAO in amounts equal to the currently existing allocations of GRO. These allocations include airdrop recipients from the community — both for providing liquidity to Gro protocol, but also for being a key community member (an OG!). xGRO will also be distributed to the team that built Gro protocol, and to early seed investors.
xGRO cannot be transferred and will effectively become redundant after the DAO has transitioned to be governed by GRO holders.
Until then it will be the on-chain representation of DAO participation, which can then be combined with on-chain execution in the form of Snapshot + SafeSnap….
xGRO + SafeSnap
After discussions with the team at Gnosis, we are integrating their SafeSnap module from the very start of the Gro DAO. This will allow the DAO to execute critical steps on-chain, and make sure that the tokenholders really are controlling the Gro DAO.
SafeSnap enables decentralized execution of crypto governance proposals, through on-chain execution of off-chain votes. It is a module that adds on to Snapshot, the off-chain gasless voting tool. This allows users to have gasless voting combined with on-chain execution.
To make this work for Gro DAO, there are a few steps to go through. But first — how will voting actually work?
Gro DAO voting process
The votes below have been discussed off-chain between different DAO participants in various channels including discord, telegram and even real life!
Gro DAO has now launched a community forum page to allow for more structured discussion of the votes as the Gro DAO governance continues to mature.
The members of the DAO who have spent most time building Gro protocol are encouraged to abstain from the following votes, although that is of course a personal decision for them.
With this in mind, set out below are the votes that are being proposed to the Gro DAO for discussion and voting….
Step 1: Vote to use GRO as governance token, with agreed tokenomics and with an LBP to distribute GRO
The first votes that will be put to the Gro DAO will be to ratify the deployment of GRO (including confirming the tokenomics), to distribute an initial 5mn GRO to the Gro DAO treasury wallet, and to set out the terms of a proposed LBP.
Although SafeSnap cannot deploy the Gro DAO token on-chain, the DAO Snapshot vote will ratify this action, and then automatically execute on-chain a series of actions:
- Send 5mn GRO to the DAO treasury wallet
- Set a new contract containing fixed tokenomics as future minter of GRO (based on agreed tokenomics set out in the vote)
- Create the actual pool used in the Balancer LBP (based on agreed terms set out in the vote)
Step 2: Vote to start LBP and prepare for liquidity mining programs
By this step if the first votes have passed, the GRO token will be ratified and the tokenomics locked in. Also, the LBP will be created and ready to be filled.
Votes can then be passed by the DAO on SafeSnap to automatically execute another series of actions on-chain:
- Approve GRO and USDC for the LBP
- Supply those tokens into the pool
- Set up the pool
Finally, we’ll need to push the button to start the LBP! For that we think that the Gro DAO multi-sig should execute the transaction without using the SafeSnap, because it gives users certainty that the LBP will start when it’s planned to. Otherwise there are timing and security issues in making the ability to call this start public (e.g. front-running bots, scam sites launched while the real LBP is delayed, etc).
At the same time as getting the LBP ready, the DAO can also vote on what happens straight after it finishes. This will involve delegating a number of actions to operational wallets so that team building Gro protocol can move quickly at the end of the LBP. One of these actions is liquidity mining — keep an eye on the proposals for what the team has planned there….!
Step 3: Transfer from xGRO to GRO
At some point after the LBP has finished, and all pools for liquidity mining have gone live, GRO will start to be distributed in the form of rewards. There will also be up to 5mn GRO held by participants in the LBP. At this point the xGRO holders will no longer accurately represent the Gro DAO, so the final step will be to transfer the ownership of the DAO from xGRO holders to the DAO.
The Gro team and key investors are committed to making this switch, and so this vote should be a formality as the Gro DAO treasury wallet is handed over to the new participants in the Gro DAO.
As part of the transfer from xGRO to GRO there will be further discussions in the community about voting rights for vesting vs unlocked GRO, and any other nuances and decisions can be decided in that forum.
DAOs are a very new structure and how to work with them best is a constantly evolving practice. It’s exciting doing cutting edge legal work and our external counsel and legal advisors have been working hard to make sure that Gro DAO is best-in-class in the actions it takes as it launches the GRO token and prepares for an LBP.
The skill is to give the operational team the ability it needs to run a safe and effective process, that allows all tokenholders and participants to have certainty, while also making sure that the DAO has ultimate authority and power.
Gro DAO are safe in the knowledge that all critical decisions planned to make the launch happen will be taken by the DAO, voted on-chain, and automatically executed on-chain!
We hope that Gro DAO will be one of the leaders in this field and look forward to engaging more around DAO governance and regulations over the coming years.