AGP Idea: Formalizing an AGP Budget

#1

Wanted to quote some discussion that occurred in the AGP discussion: Treasury Stabilization that I felt warranted a new thread.

While I’m not sure there is sufficient time to fully discuss and submit a proposal for this current voting cycle, I think this is an important issue that we should start discussing.

  1. Should there be a budget imposed on the AGP process to limit the burn-rate of the project?
  2. If so what should that budget be? Should it be a percentage of treasury funds, or a fixed amount that is raised or lowered by vote as necessary?
  3. If a budget is imposed, how should we handle instances where approved proposals exceed the budget?
3 Likes

AGP discussion: Treasury Stabilization
#2

This is an extremely important AGP to think about.

0 Likes

#3

Some suggestions: perhaps one new Flock team is admitted per cycle.

Use the Survey app for people to dot vote new Flock teams, top team wins. (or modify Voting app to have a multi-option, select one method)

I think Flock proposals for new teams are the main AGPs that can really tip the scales.

After new Flock team is admitted, the expectation isn’t that they are just on for 6 months. The Network should have a better understanding of the monthly burn. The increase in burn can be from: 1) New Flock teams being added 2) Current Flock teams requesting additional budget for new team members, or for the next year of funding.

This multi-option, select one (or dot voting) for new Flock teams can be good because it may also be too much to coordinate onboarding more than one Flock team every 3 months (we haven’t fully locked down how to prioritize as a network yet…)

I think some other standards for Flock and budgeting can be things like:

  • ANT package per employee, incl. vesting cycles
1 Like

#4

My take is to minimize budgeting as much as possible and keep taking risks and invest as much as possible in the current decision-making tools Aragon has.

  1. Budgeting can be bad. It can:
    • Be an incentive to spend what is left on useless stuff through FOMO
    • Have an undesired impact on decisions made by both internal and external network actors who may start planning according to a budget instead of what really matters (Ex: dissuade a great team to apply to Flock/Nest)
    • And therefore, undermine initiative and the property of ‘emergence’ of a system like the Aragon Network

Usually, forecasting (budgeting) is hard. It seems more relevant to me to remain alert and make decisions as information uncovers.

  1. Therefore, I think that instead of using a budget, Aragon should keep investing aggressively in the processes and tools that enable fast and relevant decision making.
    • The AGP process is new, I’d be happy if the network makes some mistakes misallocating resources through it so we can learn quickly and make it better for when stakes are even bigger. Also, If it sounds relevant one may want to explore new processes/tracks for quicker decision making on certain areas such as a treasury.
    • Another important tool is the Transparency Framework. I think the network should keep working on that (one thing we plan to do at AA). It should provide the community with a clear vision of the current treasury and liabilities of the network as per previous Finance AGPs.
    • The right decision-making processes and the right information are our best tools to foster debate, harness community intelligence, and scale the Aragon Network without slowing down innovation.

Note that through the AGP process, budgeting is already present but at a ‘business unit’ level.

  1. In regard of the two points above, I think that the best thing to do here is to adopt a minimal budgeting approach at the AGP/network level in the form of stop-loss and anti 51% attack mechanisms.
    • This is a fancy way of saying that the network should agree on a maximum treasury spending for one AGP round as suggested above by @lkngtn. I think that this max should be very generous and change in function Aragon’s treasury size.
    • The goal here is to ensure that in case of unexpected event/crisis, Aragon still has sufficient resources to survive and recover
    • Example: MAX50% of treasury spending per AGP if treasury >$50M
    • I see three main cases which would trigger this:
      • In case there is an attacker trying to suck out funds with token voting
      • In case the market crashes very hard
      • In case AGP voters want to spend excessively

This is a laissez-faire and risky approach and also one that is aligned with the current goals/future needs of Aragon imo

2 Likes

#5

I think the flipside to this is it forces difficult conversations and tradeoffs, which are important to have. The scarcity imposed in a budget forces strategic decision making and allocation, in a way that having an abundance mindset does not.

Furthermore, imposing a strict periodic budget makes it possible to more accurately forecast runway and effectively manage the treasury to support long term sustainability.

Forecasting may be hard but imposing a budget by default is easy. I wouldn’t conflate these two things.

To clarify you mean that you would set a cap on expenditure in an AGP Round (eg ANV-2) and not per AGP. I agree that setting it “quarterly or by round” makes sense. Though I think 50% of treasury spending seems very high and therefore not all that meaningful from a budgeting perspective.

1 Like

#6

This is a good point. Although I am not convinced yet that difficult conversations can happen only in the presence of a budget, maybe that the community scrutiny is not as constraining (in a positive way) as a budget.

One thing I fear with tight budgeting is that a lot of energy from AGP submitters (and voters) may end up being spent on politics and planning according to this new parameter instead of focusing on Aragon. I’m not convinced at the moment how costly this could be VS. overspending/misallocation in the absence of a budget.

I get your point, would make sense if the budget is a percentage of the treasury.

It is indeed a cap in an AGP round thanks!
I said 50% as an example to illustrate the fact that on the spectrum tight-to-loose budgeting I’d go for a looser option. 50% may be abusive but the general idea is to not put too much restriction for the sake of control (I do not mean that it is what you intend to do ofc!)

0 Likes