[DISCUSSION] BitDAO x Alastor Partnership

Proposal Title: BitDAO + Alastor Partnership

Authors: SamB from Alastor

You can reach me directly on Telegram at Sam_Bronstein

Date: July 7, 2022

Project Overview
More than any other large-scale DAO, BitDAO is a financial organization. It receives contributions from Bybit and uses those to grow the Web3 ecosystem. BitDAO’s core product is capital, and as a result, should implement financial best practices to manage it. This becomes significantly more important in a bear market as treasury size is smaller and future contribution sizes are less certain.

We propose that Alastor implements those financial best practices for BitDAO. We elaborate on the specifics more below, but some of the key deliverables would include:

  • Quarterly reports on the state of the treasury, its buyback program, and the financial performance of funding initiatives
  • Financial diligence and pricing reports on candidates for BitDAO funding
  • Multi-year financial forecast, with “toggles” for the key inputs that drive future treasury size, publicly available to the community in Google sheets

We would plan to work closely with Windranger, Mirana, and Alameda to layer Alastor’s specific capabilities in strategic finance on top of the work that these groups have been doing for BitDAO.

Why Does This Benefit BitDAO
The objective of our proposal is to provide BitDAO with standardized processes to manage its treasury, monitor the performance of its funding initiatives, and provide standardized diligence and pricing reports ahead of funding proposals being voted on. All of these would be available to the community, and the quarterly reports would be presented at pre-scheduled town halls.

“But BitDAO is so simple right now, why do we need this?”

Yes, BitDAO is simple from an inflows / outflows perspective. But in the same way that companies can incur “technical debt” early in its lifecycle, organizations can incur “organizational debt” by not implementing the proper tracking and reporting mechanisms from the outset. And while the inflows and outflows are small from a quantity perspective, they are significant from a $s perspective, and are likely to continue to grow. And, while BitDAO is not investing solely to make a profit, the ROI on its funding initiatives have meaningful impacts on the size of its future treasury and its ability to continue to grow the Web3 ecosystem. As such, funding proposals should be subject to standard diligence processes by the community before approval, and the ROI of approved funding proposals should be tracked and monitored.

Proposal Terms
Alastor is proposing a $25k grant for a 3-month engagement. This engagement would include one quarterly report, a multi-year financial forecast, and financial diligence and pricing reports for funding proposals that occur in that 3-month time-frame. Our objective here is to establish a long-term relationship between BitDAO and Alastor, and the intent of this proposal is to provide a transparent way for the community to judge the value of Alastor’s contributions. Upon completion of the 3-month engagement, we would plan to propose a longer-term engagement that builds upon the work of this initial one.

The objective of this proposal is to implement financial best practices to best position BitDAO for long-term success in its mission of growing the Web3 ecosystem.

Deliverables

  • Quarterly reports to be presented at town-halls with the BitDAO community. These reports will include a summary of donations and completed funding proposals for the past quarter, a summary of future donations and funding proposals for the next quarter, an update on the buyback program (BIT purchased, cost basis, ROI) and a read-out on the performance of its completed funding initiatives
  • Financial diligence report ahead of every funding proposal that has moved to a Snapshot vote. These reports would include an overview of the recipient’s financials, valuation, & tokenomics
  • Pricing reports ahead of every token swap that has moved to a Snapshot vote. These reports would analyze trading-price history and valuation of funding recipient to inform a “fair” exchange ratio for both parties
  • Multi-year financial forecast that will sit publicly in Google sheets. The model will have “switches” for the community to analyze key inputs (future Bybit contributions, BIT price, $ of buybacks, $ of funding, ROI on completed and future funding proposals) and outputs to quantify their impact on future treasury sizes

Who is Alastor?
Alastor is a crypto-native strategic and financial advisory firm for the Web3 world. Its founders, Sam Bronstein and Jordan Stastny, were previously M&A advisors at Qatalyst, where they advised leading technology companies on M&A and corporate finance, which included the preparation of detailed financial reports for the company and its board of directors.

Examples of publicly-filed fairness opinions we prepared at Qatalyst:

We are core contributors to Llama, a community that is building economic infrastructure for DAOs like Aave, Uniswap, Gitcoin, and others.

Alastor also publishes deep-dives on the intersection and application of TradFi principles to Web3, as well as a weekly newsletter recapping key strategic and financial events across the ecosystem.

We are happy to provide references to the BitDAO community who can speak to the quality of the Alastor team.

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Nice project. Hope to see more great news next time

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This partnership would make the funds more transparent and make the votes more valuable, which is great for the BitDAO community. The price report would be nice to have just for convenience, but people should also do their own research to make sure.

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Welcome Sam, thanks for sharing more details. Welcome everyone to share their thoughts on this!

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Thanks for the feedback @CauseZ. The right way to think about the price reports is that it would be a 3rd party “sanity check” on what a “fair” exchange ratio would be based on some recent trading data. People could use it as one additional data point when deciding whether or not to support a proposal

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Thank you for clarifying. I think the additional data point can also helping people to avoid scams too. It’s an honour to follow up on this discussion.

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Interesting project there @SamB23!

How many financial diligence and pricing reports would be included per a quarter?

Follow up question; Do you have any sample reports you could share? (for expectation management)

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The proposed engagement would include as many reports as there are funding proposals that make it to snapshot in addition to a regular quarterly report on existing investment and treasury performance.

While we don’t have example reports, because this would be a new service we would be offering specifically for BitDAO, they would be multi-page investment memos that would include a qualitative summary of the recipient, a financial summary of their historical performance (to the extent available), and a range of potential price / exchange ratios.

If you are interested in seeing a few examples of grant work we have done for other protocols, here are some examples: Alastor Catalogue – Google Drive. I would point you to our most recent work for Lido as one of the more relevant examples of some of the quantitive data and performance projection processes and output styles we would follow.

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