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0047_Vested_Allocation_Release_DAO_Founding_Partner.md

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PGP47: Vested Allocation Release for DAO Founding Partner

  • Author(s): @arkitoure
  • Start Date: 2025-01-14
  • Category: Economic
  • Governance Role: Council
  • Original PGP Pull Request:
  • Tracking Issue:
  • Vote Requirements: Council

Summary

This proposal seeks approval to release 25.6M PHY from the DAO’s Reserve Treasury to a strategic Founding Partner contributing 1683.56 SOL. This funding marks a new stage for the project, moving the DAO from a pre-build phase to a more formal, capital-backed expansion.

Impact

  • Why Now:

    • This influx of SOL will allow the Physis DAO to advance development without delay.
    • Delaying further capital infusion will stall growth and prolong timelines.

  • Opportunities:

    • Immediate infusion to sustain and scale the DAO and its ability to grant to its core mission.
    • Improved community standing and network opportunities through Founding Partner connections.

  • Challenges:

    • Releasing 25.6M PHY can raise concerns about dilution and market stability.
    • The DAO must ensure proper vesting/lock-up measures to protect against immediate sell-offs.

  • Future Vision:

    • With this capital, the DAO can accelerate R&D and broader ecosystem initiatives, strengthening the position of Physis and its governance.
    • A successful deployment of these resources can pave the way for additional expansions and accelerated growth.

Stakeholders

  • Affected Parties:

    • PHY & ASTRALIS Holders: Potential impact on circulating supply, governance, and market activity.
    • Community Developers & Physis Labs: Anticipated grant of resources to drive ecosystem development.
    • Founding Partner: Receives a premium PHY allocation aligned with early-stage DAO development.

  • Engagement for Feedback:

    • Publish proposal for discussion in Council forum.
    • Council Q&A session for direct input.
    • Gather written feedback from key contributors.

Explanation

  • Concept Introduction:

    • This proposal allocates 25.6M PHY. The arrangement rewards the Founding Partner for contributing at an early, pre-build stage and incentivizes long-term collaboration and governance participation.

  • Implementation Overview:

    • Upon approval, the DAO Reserve Treasury will provide vested 25.6M PHY.
    • The Founding Partner deposits 1683.56 SOL in the DAO’s Reserve Treasury.
    • A lock-up schedule prevents the Founding Partner from immediately liquidating PHY. Suggested structure: an 18-month hold followed by an 18-month vest, for a total 36-month period plus PHY Rewards program participation.

  • Practical Examples:

    • If PHY’s baseline is $0.02, this “premium” effectively sets a contribution rate of $0.015.
    • Over the vesting period, the Founding Partner receives portions of PHY until fully unlocked after 36 months.
    • Released PHY will remain locked with the PHY Rewards program until the Founding Partner wishes to unlock their allocation.

  • Addressing Corner Cases:

    • If the Founding Partner does not deposit SOL, the DAO will reverse the allocation.
    • If PHY’s market value changes drastically during the proposal period, the reference value is the time of receipt of SOL in the DAO Reserve Treasury.

Pitfalls

  • Reasons for Hesitation:

    • Some community members may worry about a single large allocation, fearing potential governance centralization or sell pressure.
    • An early-stage premium might be seen as setting a precedent for future deals.

  • Potential Problems:

    • An inadequate vesting period could lead to sudden market impact.
    • Misalignment of goals if the Founding Partner approach diverges from the DAO’s long-term vision.

Rationale

  • Optimal Design Justification:

    • Offering a premium is a common practice to reward participation at a pre-build stage of development.
    • 25.6M PHY represents a meaningful but not excessive slice of the Reserve Treasury for the funding the DAO needs to grow.
    • Governance centralization is not possible due to how the DAO functions via its approved protocol.

  • Considered Alternatives:

    • Proposing a smaller allocation at a lower premium, but that might not secure enough capital for the next critical development phase.
    • Multiple micro-contributors rather than a single strategic partner, which could complicate administration.

  • Consequences of Inaction:

    • Physis, as a whole, may continue with constrained capital, slowing progress and prolonging timelines.

Queries

  • Pre-Merge Resolutions:

    • Finalize vesting schedule specifics (e.g., 18-month lock, 18-month monthly distribution).
    • Confirm Founding Partner governance privileges as pertains to PRIVÉ layer protocol.

  • Post-Approval Developments:

    • Deploy the vesting contract on-chain.
    • Provide quarterly updates on how the SOL accelerates development.

  • Future Considerations:

    • Potential to open another allocation round if demand grows or additional capital is needed.
    • Evaluating stable approaches for subsequent opportunities with other contributors.

  • Dependencies and Timelines:

    • Founding Partner’s SOL to arrive in the Reserve Treasury prior to releasing PHY.
    • Smart contract work to be completed within 24 hours of receipt.

Deployment

  • User Impact:

    • PHY holders may see slight dilution, but the aim is to boost long-term growth.
    • Grants to Physis Labs and other mission-aligned entities can accelerate hiring, ecosystem development, and releases.

  • Documentation Updates:

    • Tokenomics references should be updated to reflect this allocation and vesting.
    • Add references to the new smart contract addresses in governance docs.

  • Compatibility Considerations:

    • This proposal does not alter existing user flows; it simply assigns more PHY to a vesting schedule.
    • Reversal post-deployment is difficult without a buyback or burn mechanic.

  • Reversibility:

    • Once PHY is released and vesting commences, reversing would require renegotiation.
    • The lock-up mitigates risks of abrupt distribution.

  • Migration Strategy:

    • Not applicable, as this is a one-time allocation rather than a structural overhaul.

Metrics

  • Performance Indicators:

    • Increases in development velocity (commits, features shipped).
    • Treasury stability and capacity for additional initiatives.

  • Stability Metrics:

    • Minimal market disruption from the gradual release of PHY.
    • Steady or increased trading volume without drastic price shocks.

  • Complexity Reduction:

    • Single larger capital sum is simpler to manage than multiple small contributions.

  • User Acceptance:

    • Engagement in DAO discussions and final approval via vote.
    • Positive sentiment observed in community channels and feedback sessions.

  • ETL Reporting Needs:

    • Quarterly data updates reflecting how SOL is allocated and its impact on growth.
    • Track vesting contract to confirm timely distributions.