[RFC]: Q3 & Q4 2024 | DAO Teams Budget Request Proposal

Governance Discussions DAO team funding
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[RFC]: Q3 & Q4 2024 | DAO Teams Budget Request Proposal

12-month funding request: 706,500 USDC + 2464 wNXM
Funding period: 1 August 2024 to 31 July 2025
RFC review period: 2–16 July
NMDP review period: 17–24 July
NMDP Snapshot voting period: 26–31 July

Overview

In the last two quarters, the active DAO teams–Communication, Research and Development (R&D), and Investment Committee–have worked on behalf of members and focused on the priorities outlined in the NMDP: Q1 & Q2 2024 | DAO Teams Budget Request Proposal forum post.

Now that the six-month funding period is coming to an end, we, the DAO team leads, have outlined the proposed teams, their current priorities, and the DAO teams’ 12-month budget request in this proposal. We’re shifting to a 12-month funding request format but plan to share bi-annual updates on our progress and priorities going forward.

Mission and Values

Our mission is to build an ecosystem in which anyone can protect anyone else by sharing risk. We often refer to this as the global risk marketplace.

Learn more about our mission and values by reviewing the Nexus Mutual DAO website.

In Q4 2023, the Community team shared the updated Nexus Mutual Roadmap for Q1 & Q2 2024, which outlines the high level priorities for the Nexus Mutual DAO teams and the Foundation teams.

Funding renewal for existing DAO teams for Q3 & Q4 2024

Product & Risk team

Purpose

Ideate on existing cover products and develop new cover products to drive cover sales, reach new markets, and provide members with superior protection against the greatest risks onchain and offchain. Support new and existing syndicates/distributors building on top of the Mutual. Research new risks, develop risk frameworks and pricing models.

Priorities

Over the next six months, the Product & Risk team will prioritise projects that don’t require engineering support beyond the basics of new listing requests. We’ll also be initiating research projects on new types of risk.

New Cover Product Development

  1. Launch products currently in development over the course of Q3/Q4. The Product & Risk team has developed several products, some of which have gone live already and some that are pending launch. They’ll work to finalise and launch these new products, so the Mutual can pursue deals and new cover listings to drive cover sales.

  2. Enter R&D on a new bundled-type product designed to provide cover across multiple protocols. Given the success members have seen with Bundled Protocol Cover, the Product & Risk team has begun researching a new product that can bundle cover for popular protocols to give users greater flexibility in how they protect themselves against risk with just one (1) Cover NFT. They’ll aim to develop this product and, if the research indicates demand, they’ll launch this in Q3/Q4.

  3. Enter R&D on a new yield cover product. The Product & Risk team has identified a new cover primitive, which they believe can help the Mutual scale cover sales significantly. This new product requires working with the Foundation Engineering team, so development may take longer than a typical product. However, the team is getting feedback on the product spec and looking forward to further development in Q3/Q4.

  4. Conduct market research for Depeg Cover before moving forward. The Product & Risk team has been developing a new Depeg Cover product but it requires engineering resources to get the product across the finish line. Because engineering resources are limited, the team will assess demand in the market for this product before moving forward with the engineering work. The team will conduct research and assess where this new product fits into the engineering pipeline.

  5. Support new and existing syndicates on new product development. As new syndicates launch and existing syndicates develop new products, the Product & Risk team will provide support on cover wording development and work with teams to get new products listed. The team will work with syndicates on go-to-market plans for these new products, as well.

  6. Support the Business Development team with point-of-sale (PoS) integrations. Now that the Mutual can offer PoS integrations, the BD team will be actively working with existing protocol partners to get more PoS integrations in frontends where users are actively depositing. The Product & Risk team will support these efforts any way that they can in Q3/Q4.

Risk Research Projects

  1. Start bridge risk research project. The Mutual sees regular requests for Bridge Cover but it isn’t a product that’s offered at this time. The Product & Risk team will begin a research project, with the goal of creating a risk framework that will be used to create a pricing model for this risk. Once the team can assess pricing, they can begin development on a Bridge Cover product to satisfy market demand.

  2. Start lending market research project. The lending market landscape has changed drastically in the last year and with new innovations comes new risks. The Product & Risk team will begin a research project on lending markets, with the goal of creating a risk framework that will be used to create a pricing model for this risk. This pricing model will provide a baseline for how the Mutual assesses risk with the Community Staking pool. The Product & Risk team will share a report on their findings once the project is completed, as well.

Ongoing responsibilities

  • Monitor the Mutual’s ongoing correlation risk across cover products
  • Manage the listing review process, coordinate new product type and individual listings with the Engineering team
  • Develop new cover wording documents with the Foundation Legal team
  • Communicate with staking pool managers when new listings are live
  • Work with the resident data analytics wizard on the R&D team to maintain and create new Dune dashboards to track the Mutual’s exposure and risk in the broader DeFi ecosystem

Team

  • Head of Product & Risk (FT). BraveNewDeFi

    • Description. BraveNewDeFi has moved to a full-time position on the Product & Risk team, where he conducts research on new risks and feasibility assessments for new cover products and cover wording development. Brave manages the Product and Cover listing process within the Mutual and regularly reviews new protocols for listings in the Nexus Mutual UI. He also works with the Legal team to create new cover wording, schedule, and annex documents to support product development and listings. In addition to this work, he reviews correlation levels across active cover and works with the BD team to track cover expiries, so the BD team can perform outreach and source demand for upcoming open capacity. As part of this role, he will work closely with staking pool managers in the Nexus Mutual ecosystem and manage the Community Staking pool. BraveNewDeFi will continue to serve as the point person when claim events occur.

  • Actuary, Risk Expert: Hugh Karp

    • Description. Hugh performs many duties within Nexus Mutual. He serves an important role on the Product & Risk team, as he focused on new product development and identifying edge cases. Hugh works with the Legal team to draft new cover wording documents and conducts outreach with potential cover buyers who are looking for new products or risk experts interested in building syndicates on top of Nexus Mutual.

Q1 & Q2 2024 Performance

During the last six months, the Product & Risk team developed and launched:

  1. Bundled Protocol Cover. Since launch, the Mutual has sold $60.18M in cover, earned $785.6K in premium, and generated $117,844 in commissions for the DAO Treasury. Bundled Protocol Cover has quickly become our second most popular product.
  2. Fund Portfolio Cover. This product just launched at the end of Q2, and we’ve already sold $20.5M in cover, earned $230,211 in premium, and generated $23,149 in commissions for the DAO Treasury.
  3. Sherlock Bug Bounty Cover. The Product & Risk team developed a new Quota Share product to support Sherlock’s syndicate, as they are selling a new type of coverage focused on covering critical bug bounty payouts on code previously audited by Sherlock. While no cover has been sold under this product yet, the Product & Risk team will work to support Sherlock as they scale sales for their Bug Bounty Coverage product.
  4. ETH Slashing Umbrella. To support our ongoing partnership with Liquid Collective, the Product & Risk team developed a modified version of ETH Slashing Cover to update the Mutual’s protection for Liquid Collective stakers. To date, the Mutual has sold $5M in cover and earned $29K in premium.

The Product & Risk team also added 84 cover listings in the last six months. Many of these listings generated considerable sales and premiums for the Mutual, such as the Pendle, Aerodrome, Velodrome v2, Hyperliquid, and numerous Bundled Protocol Cover listings.

The new products developed in Q1/Q2 have contributed significantly to the Mutual’s growth in cover sales, and the new products we’ve launched and will be launching will also contribute to future growth in sales, as well, as the Product & Risk team works with the BD and Engineering teams.

Community team

Purpose

Provide support to and educational content for members, staking pool managers, DAOs and our wider community in order to expand coverage. Design communication channels to drive community engagement, member retention.

Priorities

  1. Create Guides for Members and Staking Pool Managers: Develop video guides and written resources to assist staking pool managers in creating staking pools and help members navigate the Nexus Mutual UI. Collaborate with the Marketing team to develop effective communication strategies.

  2. Design, Launch Onboarding Program: Create resources and design a program to onboard active contributors to the community, covering the basic responsibilities of mutual members. Organise the creation of further resources that document the mutual’s technical architecture, mission, and other important details.

  3. Add More Resources to the DAO Website: Enrich the DAO website with useful resources, including new content on risk, guides, and more.

  4. Collaborate with R&D on Governance Research Project: The Community team and R&D have initiated a research project to explore potential governance models for a possible upgrade to the Mutual’s governance contract. The objective is to enable more members to contribute to core activities within the Mutual and to encourage sustainable participation from critical stakeholders. The research will be conducted in four phases:

  • Understanding the Governance Landscape: Analyse existing governance models and their effectiveness.
  • Defining the Target Audience for Governance: Identify and characterise the primary participants and stakeholders in the governance process.
  • Synthesising Insights: Integrate findings from the first two phases to develop a comprehensive understanding.
  • Clarifying Product Scope for Engineering: Define the requirements and scope for Engineering to implement the upgraded governance model.

  1. Coordinate Governance Reading Group: Prepare reading lists, coordinate sessions, and spread awareness about the Governance Reading Group. The goal is to nurture an open platform with volunteers discussing ways to improve coordination in DAOs, while also benefiting our background research for the Governance Research Project.

  2. Continue “Covering DeFi” Interview Series: Continue hosting public conversations with teams from listed protocols, notable builders, security experts, and active contributors within the Nexus Mutual ecosystem. Drive greater engagement within the Discord server and on Twitter to help educate more people about the Mutual’s mission.

  3. Experimentation & Research: Conduct research or support existing research to create useful content or to plan further community-oriented initiatives, such as the Safe in DeFi Writing Contest, to support sustainable community building.

Ongoing responsibilities

  • Writing, distributing the weekly newsletter
  • Holding the bi-weekly community call and further events to further the mutual’s mission
  • Providing community support on Discord, Twitter
  • Regular updates on ecosystem news, governance discussions, development progress, DAO initiatives, etc. in alignment with the Marketing team
  • Improving the overall member experience in the Mutual’s communications channels and in governance through research, design and implementation

Team

  • Head of Community (FT). Sem
    • Description. Responsible for community management, content production and coordination across the social channels, including content delivery in targeted channels. Conducts regular research on ways to improve member experience within Discord, governance forum, etc. Supports knowledge and project management.

Q1 & Q2 2024 Performance

  1. Update Zerion, DeBank, Zapper and other portfolio management sites with the Nexus Mutual V2 contracts. The DAO Community Team has maintained contact with some of the leading portfolio management sites to enable members to view their covers and NXM deposits in staking pools. Nexus Mutual V2 staking contracts and cover NFTs are now integrated to varying degrees on Zerion, DeBank, and Zapper. Below is an overview of the integration as of June 9, 2024:
Aggregator Integration
Zerion In progress
DeBank Complete

We’re just waiting for PRs to be completed to finalise the these integrations, so positions within the Mutual’s smart contracts appear on Zerion and DeBank. Zapper is overhauling their platform, so we’ll wait until that work is complete before requesting an update with the V2 smart contracts on Zapper. In addition, if any arise, we will assist in executing further integration requests from our community.

  1. Develop Discord Stages and Twitter Spaces series with ecosystem leaders. The Community team launched the “Covering DeFi Interview Series” on Twitter Spaces in March. This series features interviews with team members from listed protocols, notable builders, security experts, and active contributors within the Nexus Mutual ecosystem. In the first two episodes, BraveNewDeFi and Sem from the DAO Community team interviewed Justin Leroux (CEO of GridPlus) and Ryan Rodenbaugh (Wallfacer Labs & vaults.fyi). This initiative aims to educate more people about staying safe in DeFi and support the Mutual’s mission. Additionally, the Community team hosted Twitter Spaces in partnership with DeFi teams to highlight new product listings, enhancing community engagement and driving product sales.

  2. Collaborate with R&D on governance research project. The R&D and Community teams have initiated a research project to explore potential governance models that could be adopted to enhance the Mutual’s governance contract. This upgrade aims to increase long-term member participation and contribution while ensuring timely decision-making processes. This project has evolved from its first outline in the past roadmap to encompass more research questions and is detailed in the recent team roadmap. We have outlined milestones, formulated research questions, and developed a research plan. Our first findings will be published soon.

  3. Create Nexus Mutual Governance Hub. The first iteration of the Nexus Mutual Governance Hub is now live on the DAO website. This hub provides practical guides for individuals and teams wishing to contribute to Nexus Mutual. The initial feedback has been positive, and the DAO Community Team plans to add more resources for members, teams, and contributors to the governance process in the second iteration, which will coincide with the launch of the updated UI.

  4. Collaborate with Engineering on technical documentation project. The first iteration of the integration resources for the Nexus Mutual V2 smart contracts has been published soon in the Nexus Mutual documentation. This project is ongoing and more comprehensive documentation on the Nexus Mutual V2 protocol will be added to the documentation in a separate Developer Documentation section.

  5. Create Nexus Mutual Staking Pool Managers Hub. The creation of the Staking Pool Managers Hub had been deprioritized as growth initiatives took a higher priority. As of June 2024, BraveNewDeFi is in the process of interviewing the current staking pool managers and is creating resources to create the Staking Pool Managers Hub on the DAO website.

  6. Create Community-branded Visuals, Animations. The DAO Community Team collaborated with talented professionals to create visually appealing and accessibility-enhancing assets for community channels. These assets are now used for important announcements, such as new product listings, community event recaps, and more. In the next six months, the Community team will work with the Marketing team to secure a long-term design solution for the Mutual’s future announcements and messaging.

R&D team

Purpose

Overcome hard problems faced by the protocol and ecosystem. Decentralise the problem-solving function, increase transparency, and attract skilled members who want to solve difficult problems.

Priorities

As the main priority of Nexus Mutual becomes Cover growth, the priorities of the R&D team are to help with growth initiatives where possible and also to ensure that the protocol can cope with target growth.

  • Product & Protocol

    • Pricing input on new products using actuarial expertise
    • Support on design and edge cases for new technical products
    • Business-side design and for Engineering-heavy projects as required

  • Dune Analytics

    • Create new Dashboards - Support Foundation BD, Marketing & DAO Community teams with necessary growth and customer metrics; Create Revenue/Value of NXM live statement; work with ecosystem partners who need analytics support
    • Clear backlog of minor issues in current dashboards, improve speed
    • Keep up to date with any protocol changes

  • Governance Research (together with Community team)

    • Gather feedback and clearly define the main pain points in our current governance set-up (in progress)
    • Understand the existing landscape (in progress)
    • Define and engage with our target audience and how we want them to participate in making decisions on behalf of the Mutual
    • Synthesise the above to pick best technically-viable plug-in solution
    • Come up with a Product Spec alongside the Foundation Engineering team.

  • MCR calculation

    • Can’t be deprioritised anymore. Much harder to change when we’re at Capital Pool ~= MCR compared to changing now when we have a buffer
    • R&D to deliver v0 calculation & plan for implementation

Ongoing responsibilities

  • Maintain Dune dashboards on an ongoing basis and adapt them quickly to any protocol changes. If necessary, create new dashboards to capture new elements of protocol.

  • Act as lead of Investment Committee and as the liaison between the Investment Committee and the Nexus Mutual DAO and Foundation, especially around the prioritizing and technical integration of upcoming investments.

Team

  • Head of R&D (PT with the DAO alongside Foundation role): Rei

    • Description. Responsible for leading projects, managing contributors, working with DAO and Foundation members to increase participation in research, analytics, protocol design and product design.
    • Bio. Has served as Head of R&D since Q1 2023. Began working on Nexus Mutual in May 2018 as the first full-time employee, covering economic design, legal set-up, actuarial modeling, documentation, and early business development. Advisory Board member since February 2020. Previously qualified as a UK actuary, held a variety of back-office and front-office corporate roles in reinsurance and brokerage.

  • Dune Wizard (FT): Tomasz

    • Description. Responsible for writing SQL queries in Dune, capturing accurate current and historic information across the Nexus Mutual smart contracts.
    • Bio. Experienced Data Engineer specializing in analytics engineering with a wealth of hands-on experience contributing to the Dune Spellbook repository. Proficient in SQL, dbt, and Python, with a keen ability to build robust analytics dashboards utilizing platforms like Dune Analytics and Power BI.

Q1 & Q2 2023 Performance

Product Support. Conducted actuarial pricing and structure review on the Cover Re investment.

Dune Dashboards. Guy, our previous part-time Dune Wizard stepped away to focus on his full-time role. Conducted an extensive interview process for a replacement and onboarded a new Dune Wizard - Tomasz - who has recently become a full-time contributor to the DAO. Fully refactored the Capital Pool and Ownership dashboard and committed the key underlying queries to the Dune Spellbook.

Investment Committee. Considerable effort spent on investments by the R&D team in the first half of 2024. See Investment Committee section below.

Governance Research Project. Created a systematic approach and roadmap to revamping Nexus Mutual’s governance, driven by the need to have a more appropriate framework since the launch of V2 and new tokenomics.

Tokenomics Part 2. Deprioritised due to resources being allocated to growth initiatives over the next year. Likely to be picked up in second half of 2025.

MCR Revamp Project. This was somewhat deprioritised in Q1 & Q2 2024 due to having no direct impact on growth targets. However, will remain a goal for the next year as needs to be solved before the MCR approaches the Capital Pool (see Priorities above)

Investment Committee

Purpose

Invest Nexus Mutual’s assets in a way that maximises the return without negatively impacting the Mutual’s ability to pay claims on a timely basis.

Priorities

The Investment Philosophy is due an update to allow for our updated Capital Pool position and Nexus Mutual’s overall priorities, risk outlook and investment priorities in 2024.

We will also prioritize executing on DAO Treasury management and ensure that a portion of the DAO Teams’ budget is paid for via investment returns.

Due to the state of the market and the preference for members to be long-ETH in the short-medium term, for any new investments the focus remains on ETH-denominated assets, especially ETH staking.

Ongoing responsibilities

  • Conducting new research on investment opportunities and proposing these ideas to members
  • Researching changes in existing investments
  • Maintaining the Investment Philosophy
  • Investment proposals for the DAO treasury
  • Execute the Divestment Framework as needed
  • Ensure that the Cover Re-associated Aave V3 loan is protected from liquidation

Committee

  • Investment Advisor & Coordinator (PT): Rei

    • Bio See above in R&D Team section.

  • Investment Advisor (PT): Gauthier

    • Bio. Former M&A analyst, I have moved on to invest in Real Estate. However, during the first lockdown in 2020, I dived deep into the crypto rabbit-hole and have been investing with a strong focus on DeFi protocols ever since. I’m serving as a discord moderator in the Nexus Mutual community, and as a multisig signer for the DAO treasury. I have been a very vocal advocate for Nexus Mutual on Twitter, and also wrote a guide about Nexus Mutual’s tokenomics. I have a strong vested interest in Nexus Mutual and going forward, I aim to identify what are the best investment opportunities for the Mutual.

  • Investment Advisor (PT): Guillaume

    • Bio. Business professional with more than 15 years’ experience, with a good analytical and structured approach to all types of problems. My skills in project management and risk management can be complementary to the profiles of the initial team. Also a retail investor in both DeFi and TradFi (a long-time investor in insurance stocks). I’d like to keep contributing to the Investment team around both set-up/structure as well as the process to surface and implement direct DeFi investments in line with the strategy.

Q1 & Q2 2024 Performance

  • Worked on putting two new ETH investment opportunities forward to the community - Stakewise V3 and EtherFi - and coordinated the governance process.

  • Early stage engagement with external teams to invest the DAO Treasury in DeFi for a return.

  • Put forward a Divestment Framework as we require more cash (ETH), including minimum cash asset thresholds held for Claims and the Ratcheting AMM, as well as proposed a way of steadily divesting and diversifying our asset exposure while retaining steady investment earnings

  • Put together the strategy and numbers for taking out an Aave V3 USDC loan against ETH collateral to meet the Cover Re investment. Created a liquidation prevention framework for the loan.

  • Worked on improving our monitoring and published a regular newsletter, capturing monthly investment returns, capital pool movements

Marketing team

Purpose

Expand Nexus Mutual’s brand awareness, engagement with target audiences and drive growth in new membership. Create and execute marketing campaigns; develop and distribute content; and manage Nexus Mutual’s marketing channels.

Update on Marketing team

The Nexus Foundation has hired a new team member to manage marketing for the Mutual. The previous funds earmarked for the Marketing team ($97,000.00) will be held and used to fund marketing initiatives and new hires for the Marketing team, as directed by the Head of Marketing role that sits within the Foundation.

As the Foundation will direct marketing activities, the DAO Marketing team will existing to support these efforts, as a new brand and content strategy are developed in the coming months.

Priorities

The Marketing team will focus on hiring a Social Media Manager to develop a cohesive content strategy across the Mutual’s social channels to define the growth funnel and engage with the existing membership base.

The team will also work with a design agency to define the Mutual’s visual and video content, as well as pursue advertising opportunities and develop earned and owned media strategies. To support these efforts, additional funds will be requested to grow the DAO Marketing team and support the Foundation’s direction on marketing.

Total DAO team funding requests

The DAO teams are requesting 12 months of funding, which will be distributed on a quarterly basis from the DAO treasury.

In total, the DAO teams request:

  • 706,500 USDC
  • 2464 wNXM

Compared to the last two 6-month funding requests, this represents a:

  • 113% increase, which does not reflect the funds the DAO teams used from our existing surplus to reduce costs in the last year
  • 44% increase when the surplus funds are combined with the previous 12 months of requests

The DAO teams have hired on one (1) new full-time contributor and plan to hire up to two (2) more full-time contributors, which is reflected in our 12-month funding request.

If cover sales continue at current rates, commissions generated from cover sales should offset more than 2/3 of this funding request. If the Mutual is successful in grow cover sales, we estimate that the entire request will be offset by commissions earned from growth in cover sales.

RFC review period

This RFC proposal will be open for review and comment from 2–16 July.

NMDP review period

If no substantial comments are received, this funding proposal will transition to a Nexus Mutual DAO Proposal (NMDP), which will open for comment from 17–24 July.

After the review period, this NMDP will go to a Snapshot vote from 26–31 July.

We look forward to the community’s review and comments!

Proposal status

  • Open for comment
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