Authors: @phil @scottrepreneur.eth

Summary

A proposal to elect three positions to help support DAO operations:

Position	Goal	Number of Roles	Compensation
Revenue Chair	Grow the DAO's gross revenue	1	Commission
Grant Chair	Improve average grant quality	1	Flat fee
Security Council	Oversee DAO veto power	7	None

Motivation

Purple generates ETH through daily auctions and distributes it through grants.

Right now, there is no one responsible for either of these key activities. Daily auctions run autonomously and grant making is dependent on proposals from members.

In addition, our veto is currently held by a single trusted individual. If they are offline for even a few days, a malicious proposal could affect DAO operations.

This proposal would elect two individuals to oversee critical functions and receive market rate compensation for their time to attract highly qualified candidates. The proposal term would be limited to three months to review the results of the experiment and determine whether or not to continue or modify the position terms.

It would also elect an 3-of-7 Security Council with an indefinite term that would act as the Veto Steward without compensation.

Data

The daily auction price is a reflection of demand for Purple membership, which adds one new member per day.

Since inception, the Purple daily auction price has averaged 0.318 ETH per token. If we exclude the first two outlier months, the daily average auction price is 0.186 ETH.

Measure	Value	Notes
Local Monthly High	0.364 ETH	April '23
Local Monthly Low	0.087 ETH	August '23
Standard Deviation	0.088 ETH	-
All Time Average	0.318 ETH
Local Average	0.186 ETH	Ex. 10/22, 11/22

In the same time period, Farcaster has added several hundred thousand DAU as measured by paid accounts with at least one cast, reaction, or link.

This has translated to >$1M in protocol revenue from paid signups.

Proposal

Purple members elect paid managers to focus on revenue and grant making for a three-month term. The Revenue Chair would be compensated via commission while the Grants Chair would be compensated via a 1 ETH direct payment. The goal of appointing these managers would be to test the hypothesis that we can selectively increase certain DAO metrics by compensating qualified individuals to focus on them.

Metrics

Chair	Metric	Goal	Compensation
Revenue Chair	Average daily auction price	Increase daily auction price above trailing 3-month average	~50% of net ETH over trailing 3-month average
Revenue Chair	Gross revenue (e.g. grants)	Apply for and win 2 grants (e.g. Optimism, Base, Nouns)	10% of any grant directly received as part of work (e.g. submitting a proposal on behalf of Purple)
Grants Chair	Grant submissions	Increase top-of-funnel grant submissions for retroactive funding	-
Grants Chair	Average grant quality	Make sure the best* grants receive funding	-

*Valid teams working on public goods or other projects that align with Purple's mission of proliferating Farcaster

Elections

If the proposal passes, we will setup a JokeRace (or similar) to accept nominations for positions.

Qualifications:

• Must hold a Purple token

• Must have a Farcaster account >1 month old

• Cannot hold both Chairs simultaneously

Proposed Voting Criteria:

• Ranked choice voting w/ instant runoff

• User with plurality of votes wins

• 1 Purple token = 1 vote

FAQ

Q: How does the commission work?

A: The Revenue Chair receives payment if the auction closes above the 90-day trailing average price. In practice, the Treasury receives 50% of any auction price, plus a flat ~.047 ETH to prevent downside risk. The Treasury and Revenue Chair then split the remaining upside 50/50. This is achieved with a split contract.

Q: What are the specific onchain actions that need to take place if this proposal passes?

A: The proposal enforces the following changes:

• Updates the Founder Rewards function on the Auction House contract 0x73ab6d816fb9fe1714e477c5a70d94e803b56576 to an immutable Splits Waterfall contract 0x39A7E25f0EeA8B257fe1A901f8c68Cc2a693fca8 that pays out 50% of net ETH over the 90-day trailing average to the Revenue Chair multisig. As of this proposal submission, the 90-day trailing average auction price is

0.09304230338 ETH.

• Release 1 ETH to the Small Grants Multisig on Base (0x5d72757a576407df353cc94e18f38a43cee80a17) with a 90 day cliff to be paid at the end of the Grant Chair's term

• Transfer the Veto to the new Security Council multisig (0xEe9bF5b25d3326C0A41601997717cc9bF0010F9c) using the updateVetoer function on the Governor contract (0xc43b7a50a448ad9d65283a1819daf3da5cf5d66b). To prevent a lapse in coverage, the multisig will be temporarily administered by the current signers while the JokeRace is underway. After the conclusion of the vote, the signers will be updated to the 7 winners of the JokeRace Security Council election.

Then we'll host elections for each position using JokeRace with a ranked choice vote format.

Hats protocol will automatically issue NFTs to the selected winners, allowing them to be signers on a designated multisig for each position. Three multisigs have been created for use by Hats holders as part of the elected roles:

• Revenue (1/1): 0x784a8a66623275c455b0dcb770db7ca5196f89e5

• Grants (1/1): 0x8718e795abe3e75d6c30d55f14dba53dfa5c55ff

• Security (3/7): 0xEe9bF5b25d3326C0A41601997717cc9bF0010F9c

Once the Security council has been elected, the current Veto holders will transfer the vote to the Security multisig.

Q: Why is the first tranche of the Splits Waterfall contract only 50% of the 90-day trailing average?

A: The maximum BPS allowed for the Founder Reward is 5000, meaning that 50% of the auction price will automatically go into the treasury. To make the Splits contract work, this changes the logic for the maximum amount required in the first tranche to prevent downside protection to the DAO. Here's a visualization for an Auction that closes at 0.5 ETH:

• The Treasury receives 50% of the proceeds upfront (.25 ETH)

• The Treasury receives a flat ~0.047 ETH as part of Tranche 1 to prevent downside risk

• The remaining ETH (0.204) is split 50/50 with the Treasury and Revenue Chair

Q: How do we unwind this change if need be?

A: Submit a proposal to call the setFounderReward function on the Auction House contract and set the BPS to 0.

Context

• "Reflections on Purple"

• "Managing Purple"

• "Revenue Chair"

• "Average Auction Price"

Data

• Waterfall Calculation

• Treasury Revenue and Voting Data

Related Proposals

Feedback

Discussion with @scottrepreneur.eth to incorporate similar proposal involving Hats protocol and Security Council elections with a 3/7 multisig.

Reflected in it further. No additional comments. Nicely done

@benersing

Interesting idea. Thanks for writing it up.

1 ETH for 3 months of work for a grants chair seems less than market rate, doesn’t it? @links

The Revenue split seems like it could be a windfall for that person if Grants do a good job in their role driving up treasury & per nft book value. Do we really need the Revenue role?

Leaning No if Revenue role is included.

1:1 seems risky

How can this be changed prior to 90 terms ending?

Heard. 🙏 Put the 1:1 aside for a min might be a negligible point How about the other questions?

• Revenue role is a call option for the elected person: do nothing & see if grants role does it for you via increasing book value.

• How easily reversed is this if initially passes? ie speed & cost to unwind

Can’t see 90 days being enough time for Revenue role to accomplish much. Get elected, no pay, no funds to invest in campaigns, only 90 days & the impact of your work likely to lag your efforts

Longer term resources for the yes Comp fixed w variable kicker

Does book value via grants significantly impact token price?

@kmacb.eth