Token-Delegation-And-Voting-Policy

Model Token Delegation & Voting Policy (Work in Progress)

//co-drafted by Erich Dylus and Sarah Brennan

Token Delegation & Voting Policy

EFFECTIVE AS OF _____________

POLICY STATEMENT

We believe that decentralized finance protocols are meant to be governed by broad communities of stakeholders and that optimizing community-led governance is essential to unlocking the underlying value proposition of these protocols so that they continue to remain open for all to use and build on them.

In our role as a stakeholder, we are committed to advancing the overarching goal of decentralized governance. We also realize that having effective stewardship of the governance tokens we hold (the “Tokens”) is essential, including responsible, active ownership that includes both engagement with the core teams and communities in a manner that we believe will maximize the long-term value of the protocol. In furtherance of these objectives, we [commit to delegate any and all Tokens] that we and our affiliates FN1 hold **[that comprise [ ]%/ over [ ]% / what we view in our discretion as a control stake FN2] of the voting power with respect to the governance of a protocol,] including future acquired tokens, have put in place this Token Delegation & Proxy Voting Policy (the “Policy”) to govern such delegations and provide transparency around our procedures and guidelines with respect to the same.

SCOPE OF POLICIES AND PROCEDURES

This Policy, as amended from time to time, shall apply to (i) our delegation of governance tokens (the “Delegated Tokens”) representing [[>X/X]% of the voting power] of [list protocols] (the “Protocol[s]”) to [ ] (the “Delegate[s]”) and (ii) our policies and procedures with respect to any Tokens we may choose to vote directly from time to time.

In addition, this Policy will control how our Delegates vote Delegated Tokens on our behalf. Except as outlined below, we will not provide advice to our Delegates on how to vote and there exists no other limiter on the specific delegation of authority for our Delegates, whether by contractual agreement or otherwise.

Voting Philosophy

We have adopted this Policy to ensure that our Delegated Tokens are voted in the best interests of the Protocol, without regard to any relationship or interest that any affiliate of ours or the Delegate may have with the Protocol or any proposal. We expect our Delegates to exercise their governance function and responsibility as a fiduciary to the Protocol with the goal of maximizing value for the Protocol[s] and their stakeholders.

While our Tokens were not purchased to exercise control or to seek to effect change through activism, we support sound governance practices at the Protocols in which we are a stakeholder.

Delegates

We have engaged the Delegate(s) and may engage additional delegates to vote Delegated Tokens in the future based on their independence, knowledge of the decentralized finance space and the Protocol[s] as well as their commitment to perform certain functions to ensure they are informed and active participants in the Protocol, as detailed below:

1. Providing research on governance matters, including with respect to proposals to upgrade the Protocol and voting;

2. Participating in forums for governance-related discussion and facilitating the sharing of research and discussions related to governance votes;

3. Vote Delegated Tokens in accordance with this Policy;

4. Handle any administrative and reporting items necessary or desirable in connection with their role as a Delegate;

5. Maintain records of such research and their governance activities and provide copies/analyses to us upon request; and

6. [Disclose any other responsibilities].

Delegate Guidelines & Procedures

Any Tokens we retain, together with the Delegated Tokens, will be voted in a consistent manner in accordance with the following principles:

(i) We believe that core teams should have strong, independent leadership and should adopt structures and practices that enhance their effectiveness and will generally engage in deference to the opinions of the core team for operational issues (such as [adding support for additional assets]) except in the case of a conflict transaction or there is another compelling reason to do otherwise:

• For instance, we generally vote for proposals that increase transparency in governance and operations to avoid potential conflicts of interests and those that address security concerns.
• We recognize that the optimal governance structure, including, among other things, quorum thresholds, proposal submission processes and voting procedures can vary by circumstances specific to the Protocol and we will generally defer to the core team on these matters, although we reserve the right to vote on a case-by-case basis.

(ii) Generally speaking, we believe projects should have procedures in place to ensure the security of the multisig, including without limitation, that [(i) there are, at a minimum [MIN # OF MULTISIG SIGNERS] [and (ii)] [each multisig signer must use reasonable care and commercially reasonable practices in generating their address and private key thereto, and in maintaining the strict confidentiality of such private key and their exclusive control thereof].

(iii) We generally support forming grant-making DAOs and allocating funds to independent third parties engaging in activism and public goods for purposes like ecosystem health and community building, but only in the absence of conflicts of interest and involving transparency around the use and the impetus for the use of these funds.

• We believe the funds should be earmarked and the grant-making DAO or third party should be accountable for compliance with the earmarking to ensure they are not engaging in waste or self-dealing.
• We also believe that there should be limitations for the timing and thresholds around the sales of any tokens allocated.
• Further, we feel strongly that there be policies and procedures in place to regulate the behavior of controlling persons entrusted with community funds.

We reserve the right to vote on a case-by-case basis when voting on these proposals based on the above principles.

(iv) We believe that Protocols should strongly encourage the adoption of guidelines similar to this Policy, or otherwise implement procedures to ensure large stakeholders are not engaging in bad behaviors such as buying or selling votes, colluding, obfuscating their control over tokens through delegation or otherwise soliciting votes for conflict of interest transactions.

(v) While we expect our Delegates to be active in governance and use their reasonable best efforts to vote the Delegated Tokens, in certain circumstances, they (or we) may be unable to vote in an informed manner or may have a conflict of interest that will prevent them (or us) from voting. We expect our Delegates to refrain from voting in the case of a conflict of interest that cannot be reasonably mitigated by disclosure and to otherwise use their independent judgment in governance decisions and acts to vote in the best interest of the long-term health of a protocol and its stakeholders rather than solely in our interest.

(vi) [Insert additional guidelines]

OTHER PROVISIONS

Policy Review and Ad Hoc Meetings

We expect to annually to review this Policy and consider any appropriate changes, including changes suggested by the communities and core teams in which we are a stakeholder. Meetings may be convened more frequently to supplement our coverage around our default voting principles and guidelines. To the extent that we make changes to this Policy, we will disclose the rationale for such changes.

Delegate Records

We expect our Delegates to maintain the following records (the “Records”) relating to the implementation of this Policy:

• A copy of Policy, as amended from time to time;
• Records of proposals introduced and votes cast on our behalf and on behalf of other delegators (without divulging personally identifiable information) and the rationales therefore;
  • Any research or documents prepared by the Delegate that were material to making a decision or introducing a proposal.
• Such Records shall be maintained by the Delegate in a manner that is secure but can be easily accessed for our inspection for a period of six (6) years. [We will make these Records available on our website for review as described below.]

Compliance

We expect our Delegates to comply with this Policy and to disclose any instance of non-compliance or deviation from the procedures and principles set forth herein. We reserve the right to terminate the services of any delegate as a result thereof or for any other reason. Absent extenuating circumstances, we do not expect to make public the underlying rationale for a change in any Delegate [absent a termination for cause] but we do anticipate making public this Policy, and any amendments [or deviations] hereto by posting on our website from time to time at [INSERT WEB ADDRESS].

Approved: [ ]

FN1 Consider further defining to provide additional transparency / clarify if not using the Rule 405, Securities Act / Rule 12b-2, Exchange Act definition, which would include officers, directors, large shareholders, parent, sister and subsidiary companies.

FN2 This should be tailored to the circumstances – the delegator could commit to delegate the entirety of tokens held or tokens that push their % holdings over a certain threshold (and retain a de minimis amount) or they could retain the flexibility to decide delegations based on the facts and circumstances around each protocol and the relative distribution of voting power, which would then be disclosed in the next section (consider providing the rationale if choosing this path).