Sommelier’s mission is to develop a platform on which Strategy Providers can make DeFi strategies available to all market participants in a decentralized way.
In order to execute on this mission, Sommelier must incentivize Strategy Providers to create high performing Cellars. Adding performance based incentives for Strategy Providers is a crucial component of executing on that goal, and further aligns incentives between Cellar creators and Cellar LPs.
This proposal would establish a mechanism and process by which Strategy Providers can request KPI-based incentives be added to an active Cellar.
KPI Incentives Council
This proposal establishes a KPI Incentives Council (KPIC) that will oversee the distribution of incentives to Strategy Providers upon achievement of pre-defined Cellar KPIs. This council will control a multisig that escrows funds, approved by token holders and transferred from the community pool, to be distributed to Strategy Providers on a quarterly basis, contingent upon achievement of KPIs.
A multisig on Ethereum Mainnet, at address 0xdda5b441e486E89D290Bc1bD09ca762ca6ac9E39 and operated by the Council, will have administrative powers to govern the parameters of KPI Incentive programs under an 2-of-3 signing scheme.
The multi-sig is able to perform the following actions:
- Schedule a certain amount of tokens owned by the contract for distribution (via notifyRewardAmount)
The initial set of signers will be:
- Lead: Flipside Crypto
The KPIC will be responsible for:
- Determining whether or not a Cellar has achieved pre-defined KPIs. A 2-of-3 vote will be required for the Council to confirm that a Cellar has achieved the pre-defined KPIs. Any Cellars that do not meet the Council’s approval threshold will not receive rewards.
- The Council Lead will publish a forum post within 10 days of the end of the quarter outlining which Cellars will receive rewards and the basis upon which decisions were made. Council members must disclose any conflicts of interest pertaining to a given Cellar in this post.
- Distributing KPI-based incentives to all Cellars that the Council has determined to be eligible within 15 days of the end of the quarter.
- If a Strategy Provider believes the Council has made an error in rejecting KPI incentives for their Cellar, they may appeal the decision within 15 days of the end of the quarter (or 5 days after the publication of the KPIC’s quarterly report) using the template provided in [Forum post below.] Appeals posted after the deadline specified above should not be considered valid.
- The Council may not distribute or spend funds in the KPIC multisig for any other purpose than distributing KPI-based incentives to qualifying Cellars and distributing governance approved rewards to signers.
- Apart from the above responsibilities, the Council Lead will be responsible for managing the Council’s operations (such as scheduling regular meetings, assigning responsibilities among Council members, ensuring the deadlines outlined above are met, and publishing forum posts/proposals).
- The Council must establish a line of communication so that community members and Strategy Providers can easily get in touch with Council members.
For fulfilling these responsibilities, each multi-sig signer will receive initial compensation of 20,000 SOMM per quarter (March 31, June 30, September 30, and December 31). The Council Lead will receive initial compensation of 40,000 SOMM per quarter. Quarterly stipends are to be distributed to Council members upon completion of all responsibilities for the quarter. The Council should notify the community when these distributions have been made.
Upon formation, the KPIC will register as an LLC within the state of Delaware. LLC registration ensures that the KPIC is legal and tax compliant. A one-time budget of 1,000 SOMM is necessary for state registration as well as an annual budget of 9,000 SOMM is required for LLC renewal and tax compliance services.
This proposal, if accepted, will transfer the six month compensation budget (80,000 SOMM) and the LLC budget (10,000 SOMM) from the community pool to the KPIC multisig identified above according to the parameters of this proposal. Additional funds will be transferred to the KPIC multisig each time a Strategy Provider successfully passes a proposal to add KPI-incentives to an active Cellar. The multisig shall be responsible for enacting KPI Incentive programs according to the parameters of this proposal once the corresponding SOMM is transferred.
The Council budget will need to be renewed at the end of six months, which gives tokenholders an opportunity to assess the Council’s fulfillment of the above responsibilities. The Council Lead is responsible for creating a renewal proposal, if appropriate. In the event that the Council has not fulfilled its responsibilities, token holders have the option of rejecting the Council’s budget and/or putting forward a counterproposal with different Council members. Council renewals may request an expanded budget to accommodate additional signers or sub-councils, as necessary.
All Council proposals (including any counter proposals) should follow the basic format of this proposal and must be posted to the Forum within 20 days of the end of the Council’s current term, to move to a vote 3 days thereafter. If there are multiple Council proposals, all valid proposals will go to a vote 23 days after the end of the Council’s current term and the proposal with the highest number of “Yes” votes will be implemented. Although the Council may not be renewed at the beginning of the quarter, rewards will always be calculated from the beginning of the quarter.
In this post we outlined the need to establish a KPI Incentives Council (KPIC)
We would appreciate any feedback on how to ensure the proposal best reflects the interests of the Sommelier Protocol and Community.