ReserveDAO: The Budget
Consistent with earlier messaging, Residual Token has been supporting our Dev team-originated and community led efforts to form a DAO; ceremoniously named, ReserveDAO. The purpose of the DAO, as outlined in the linked article, is to buy a U.S.-Treasury chartered bank or make a control investment in a U.S.-Treasury chartered bank. The rationale behind the purchase or investment is outlined in the article and for the sake of brevity will not be expanded upon here.
Thank you for your support. There will be a Snapshot and Twitter poll related to this budget article. See the roadmap for next steps following this vote.
The budget contemplates three epochs: 1) setting up the DAO, 2) what it takes to “Buy the Bank” and 3) initial operational support. The amount set for bullet 1 will be the reserve required to be funded for the project to move forward.
The mechanism for that funding including investment criteria, where the funds will be held, through what entity the funds would be raised, etc., will be established after the budget is voted on. It is possible the funding of the reserve amount, if executed domestically, will have to be done in accordance with U.S. regulatory guidelines; meaning, accredited, U.S. investors only through typical 506(c) Reg D guidelines. This limitation, if capital is raised in this manner, will impact the qualified audience to fund the initial DAO setup. Consider that since a DAO is completely decentralized, there will be questions around how this investment interest would be represented within the DAO.
Cohort 1: The DAO Setup
The DAO setup consists of legal, technology, marketing, payroll and other SG&A. The technology team has offered three scenarios by which the RSRV token, the governing token for ReserveDAO, could be created and bonded.
1. DAO: OHM fork with treasury
- Create a new token
- Use Liquidity Bootstrapping Pools for initial liquidity
- Create DAO with treasury
- Create eRDSL, USDC, ETH bonds
- Setup Governance system
Budget: 25k/sprint (2 weeks).
Time to start: 6–8 weeks to gather a team
2. DAO: no treasury
- Create a new token
- Use Liquidity Bootstrapping Pools for initial liquidity
- Setup Yield Farming for a new token
- Create pools eRDSL / USDC, eRSDL / ETH, etc
- Setup Governance system
Budget: 12k/sprint (2 weeks).
Time to start: 2–5 weeks to gather a team
3. DAO: no treasury and no yield farming
- Create a new token
- Use Liquidity Bootstrapping Pools for initial liquidity
- Governance: DAO will use forum and Snapshot votes.
Budget: 6k/sprint (2 weeks).
Time to start: 2 weeks to gather a team
To vote, please refer to our recent Twitter poll as well as the snapshots below!
A sprint is equal to 2 weeks. Let’s assume Option 1 for budgeting purposes as Trail of Bits, unFederalReserve’s security auditor gave a high level, cursory review of our OHM fork and found no variances to the extant OHM protocol. That’s not a blessing, but it’s a starting point. At $25,000 per sprint, and assuming 5 sprints, we can comfortably say $150,000 to $175,000 with overages will cover the work. Another security audit of the DAO would run $100,000. Total technology budget: $200,000 for phase 1.
The technology cost to buy the bank, which entails expanded bonding programs, control adjustments and other data processing elements is a complete guess. There would likely be some type of developer interaction, but since the DAO is just providing capital to buy the bank, the technology discussion would likely be part of the due diligence process; namely, why buy a bank whose technology from jump is in compatible with unFederalReserve’s technology base. The ongoing operation of the DAO is probably close to $100k per month. The budget for objectives 2 and 3, combined, should be assumed to be around $2 million to cover costs over 12 months or so.
Marketing is interesting. We want a lot of folks to help Buy the Bank, but if the DAO is funded under U.S. regulatory compliance guidelines, then this is an old-fashioned SEC exempt raise for U.S., accredited investors only. This means the acquisition funnel has a smaller mouth and population from which to draw capital. It is safe to assume that a $125,000 marketing budget for a 90-day sprint to fill the DAO reserve makes sense, and then another $325,000 for the next 90-days to gather funds to hit objectives 2 & 3, respectively. So total marketing budget is $400,000 and phase one is $125,000.
Legal is fun, right? Regardless of the jurisdiction, it is ideated that a Wyoming DAO will need to be setup, funding documents generated, execution of filings related to the funding, etc. Even if the initial capital is raised in a foreign-company based foundation with the intent of migrating, separately creating, the WY DAO after the funding, the expenses are generally in line with one another. We estimate the legal costs to setup the entities, review documents, calls, memos, etc. would be around $75,000 for objective 1 and an additional $325,000 for the remaining objectives.
General overhead will include paying contractors, accountants, auditors, investment bankers, vendors and employees of the foundation or DAO. Just like construction folks generally estimate labor to equal that of materials, we can assume that general overhead costs would mimick the dev charges. To complete the first objective, the DAO will probably want about $100,000 in the bank for labor and overhead. For objectives 2 and 3, again mimicking technology, the DAO is likely looking at around $1.925 million all-in for the first year of operations.
The actual preferred investment or acquisition of the bank could be for as little as $2 million to as much as $20 million depending on the facts and circumstances of the investment. These funds would come from the DAOs Treasury and be the basis for any return net those costs described above.
Here is a summary table:
Table I: Estimated ReserveDAO Budget (Subject to Change)
Conclusion
After you’ve had a chance to review the numbers, and consider whether the estimates are appropriate, please proceed to voting. Per our roadmap article, upon approval of the budget, a funding structure and process for the first objective will be established. The funds will be sought to create the DAO, and progress will not continue until the reserve is met. The window to fund the reserve will be time limited. If after the time limit, adequate funding for objective 1 has not been obtained, the project will be suspended and the funds (net gas fees or other transaction costs) will be returned to the sponsors.
If funding for Objective 1 is obtained, then monies committed towards this objective will be spent at the risk of complete loss. Determination of how funding for Objectives 2 and 3 and the consequences for capital raise fails related to those two objectives is to be determined.
Thank you for your time and attention to this announcement and make your personal financial choices accordingly.
Stay connected with unFederalReserve ⚓ https://linktr.ee/unfederalreserve
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Although the material contained in this website was prepared based on information from public and private sources that Residual Token, Inc. d/b/a unFederalReserve believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and Residual Token, Inc. expressly disclaims any liability for the accuracy and completeness of information contained in this or any article.
This article, our website, social media posts and other public forum materials are distributed for general informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. The information, opinions and views contained herein have not been tailored to the objectives of any one individual, are current only as of the date hereof and may be subject to change at any time without prior notice. Residual Token, Inc. does not have any obligation to provide revised opinions in the event of changed circumstances.
All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
Any ideas or strategies discussed herein should not be undertaken by any individual without prior consultation with a finance, tax or legal professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal objectives, needs and risk tolerance. Residual Token, Inc. expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
Thank you for your time and attention to this announcement and make your personal financial choices accordingly.
Stay connected with unFederalReserve ⚓ https://linktr.ee/unfederalreserve
🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊🌊
Although the material contained in this website was prepared based on information from public and private sources that Residual Token, Inc. d/b/a unFederalReserve believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and Residual Token, Inc. expressly disclaims any liability for the accuracy and completeness of information contained in this or any article.
This article, our website, social media posts and other public forum materials are distributed for general informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. The information, opinions and views contained herein have not been tailored to the objectives of any one individual, are current only as of the date hereof and may be subject to change at any time without prior notice. Residual Token, Inc. does not have any obligation to provide revised opinions in the event of changed circumstances.
All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
Any ideas or strategies discussed herein should not be undertaken by any individual without prior consultation with a finance, tax or legal professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal objectives, needs and risk tolerance. Residual Token, Inc. expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
