TL;DR: Thanks to the Budget Proposal initiative, the operations of DAO are 10x more efficient on ADAM. In a graphical user interface, members can propose and approve the different kinds of usage of a budget.
Budget — say bye to voting everytime
Generally, DAO members vote on their transactions on a case-by-case basis. Businesses in the real world, however, state everything in a budget plan all at once and seldom approve every payment separately. So ADAM adopts a similar concept in order for the DAOs to boost their efficiency in executions. That is, DAO members create and vote on Budget Proposals. The assigned Executor could start to spend the Approved Budget within the approved period stated in the proposal. Multiple items are also allowed in a single Budget. With Budget, DAO wouldn’t need to vote every time, but monthly, quarterly or even annually only. Contributors can act in the most efficient way on behalf of the DAO.
Budget Proposal Template
Since the Budget Proposal is indeed a smart contract, preventing rug pull from voting to execution with the spirit of DAO 2.0, not many people can enjoy its benefits if coding is needed. By adopting the modular architecture of ADAM, DAOs members can create and configure the Budget Proposal in a graphical user interface. Or even edit Budget Proposal templates by changing the metrics inside, then submit for vote.
No outflow transactions by default
As for the current practices in the market, outflow transactions are allowed anytime simply by the multi-signature of the DAO treasury controllers. Yet, such a practice could possibly cause a risk of rug pulls. On ADAM, no outflow or swap transactions are allowed to be executed from the treasury by default. An Approved Budget is the only gateway to the transactions of a DAO, which is strictly enforced by the voting results of the members.
Start a Budget Proposal
Every member of a DAO can start a Proposal with the templates provided on ADAM for their DAO. As for the Budget Proposal, different options and parameters are allowed to configure, including but not limited to:
- Transaction type (Pure outflow/swapping)
- Transaction destination (e.g. Uniswap)
- Outflow token type (e.g. ETH, USDT, USDC)
- Inflow token type
- Maximum amount (maximum amount of tokens to be used)
- Usage limit (maximum number of execution of the proposal)
- Usage period (an indefinite/specific period for spending the budget)
- Executor (who can execute the transaction)
- Approver (who can approve the budget/how many approvals needed)
The interface allows DAO members to raise any Budget Proposal without any coding knowledge. Here is an example: TestDAO wants to appoint a trade to swap 10% of their ETH reserve to any other tokens within a certain period. A member then can go to create a Proposal to trade 10% out of the total amount of a DAO’s ETH reserve on Uniswap, accompanied by the parameters of Unlimited times of usage and a Specific period of time, appointing that trader’s wallet as the executor shown as below.
After getting enough votes to approve the Budget, the trader can carry out trades on behalf of the DAO without asking for permission every time using the allocated ETH. However, guarded by smart contract, the trader could not spend more than the allocated 10%, could not spend other tokens than ETH, could not spend after the specific usage period.
Enforce Approved Budget
DAO treasuries on ADAM are the places where Executors carry out transactions and swapping. Before every action, the treasuries will match with the relative Approved Budget. If there is any mismatch between them, it would automatically decline and terminate the transaction to protect the treasury.
Briefly speaking, what you voted on = what exactly would happen
On the path to safeguarding DAOs’ treasuries, the Approved Budget initiative is only the first step. ADAM aspires to improve the entire structure of DAO so as to further address the issues of rug pulls and scams. To know more, stay tuned to our next article — DAO 2.0: Fully On-chain, from Proposal to Execution.