Please describe your proposed solution.
As more projects begin to build on Cardano, it will be vital to have frameworks for common DAO elements. One such element is the management of an endowment or treasury that utilizes Cardano's Proof of Stake (POS) mechanism to generate yield. This will be achieved through the combination of tool development, legal inquiries, and establishment of best practices.
The output of this solution would be a pre-constructed framework that any DAO can use to setup and manage an endowment that leverages the power of POS. This will be achieved through the utilization of tooling such as Roundtable (by ADAO), Staking portal (by ADAO), governance token minting, on chain governance via AGORA and more.
The first application of this solution will be used to build the ShelterPets Endowment. ShelterPets is a charity project developed on Cardano who has been working to onboard charities and provide financial support. However, the plan is to turn the charitable aspect of ShelterPets into an endowment controlled by those who contribute. This endowment will then use the yield generated from staking to provide support to shelters chosen by on chain governance. But this is only just one of many use cases for how a Cardano endowment can be utilized.
Therefore, this solution can have great impact by making these types of funds more feasible, promoting use cases such as charities, scholarships and more.
Please describe how your proposed solution will address the Challenge that you have submitted it in.
One of the biggest ways to increase the amount and quality of DAOs on Cardano is to provide easy to use tooling and best practices that make onboarding easy. With the establishment of endowment management tooling, DAOs and other organizations can safely and effectively manage funds while generating yield via Cardano’s POS protocol. Not only do DAOs benefit from the use of staking their treasury funds. They are never locked and can provide instant liquidity in times of financial need.
This feature of Cardano (consistent yield/liquidity) along with an endowment management framework will be an enticing feature for a lot of DAOs in and outside of Cardano.
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
Loss of Endowment Funds
The worst thing that can happen to an Endowment fund is that the funds could be drained/stolen via an exploit in the storage method (smart contract/script address), careless team member(loss of keys), or unhonest member of a team (embezzlement). However, through the recommended use of tooling such as Roundtable (by ADAO) and best practices laid out previously and developed through the successful funding of this proposal will mitigate the risk of losing the endowment funds significantly.
Lack of interest/Participation
One thing that you can never guarantee is that people will be interested or want to participate in the testing and development of new tooling. Tools that are impactful and useful can only come about through the thorough testing and utilization of users who care.. To help promote participation in building this endowment framework we plan to let users have direct say in how things progress. We also plan to educate the average user while also learning ourselves from other projects in the space to best develop a model that can be widely used and provide a rewarding experience for users.
While other risks my occur, implementing our goal of being transparent and open about everything will help mitigate many issues or problems that could be faced. The best way to avoid or overcome problems is through collaboration and open source efforts.