Allocating an emergency fund for situations that require immediate action.
This proposal draft is in no way related to the ongoing discussions about the off-chain multi-signature funds. This is a general proposal for future handling of an emergency fund for several cases.
Recently two proposals passed, namely #10879 (Terra Station) and #8813 (Terra Station).
The first one was kind of signaling proposal that showed that a majority of the (voting) community thinks all community-related funds should only be distributed by governance proposal and not be managed in a centralized way.
The second one was a proposal to establish the Grants Foundation (initiated by Edward Kim). In short: The Grants foundation shall help projects being reviewed before applying for a community spend in their favor. This shall build trust in the project if it has been approved by the Grants Foundation.
I acknowledge the demand of the community to have all spends from the community voted on by the community. Nonetheless, I think that there are situations in which it is not good for the chain to wait 7+ days for a decision.
This is a signaling proposal and numbers will be discussed and “fixed” before an actual governance proposal goes up.
It is proposed to allocate a small emergency fund to an on- or off-chain multi-signature wallet. This should be a quite small amount, for example worth 10-20,000 USD. The emergency fund should cover expenses for the chain that are imminent and for which the full governance process (agora post, discussion, governance proposal) would take too long.
This multi-signature wallet would have to be funded by a governance vote (Community Pool Spend proposal) initially and each time it has been used to a certain extent.
Examples – using the emergency funds:
In my opinion there are some situations that might require immediate action that is paid for. Future projects developed as community-owned will need budgeting. So this can be handled by the normal governance procedure. Let us construct an example and assume that re-opening IBC would have been a budgeted project. It would have passed governance and is paid by milestone to the corresponding developers. In the final steps there occurs a problem that was not budgeted and requires work that needs payment. Passing full governance again would delay things quite a bit and brings further hassle in explaining to a broader community what exactly has to be done.
Second example for this: A severe bug in the code is found and needs fixing. The emergency funds could then be used to pay this development and maybe a bug bounty.
Third example: A community-owned DEX is built at some time and has a temporary liquidity problem in one of the liquidity pools that has to be fixed to remain operational.
There are probably more situations in which immediate action (and such spending) would be beneficial if not mandatory.
Judging the “emergency-case” would be up to the multi-signature holders. As the funds in there are very minor, misusing it would not bring any benefits. The community would refuse to re-fill it later and the reputation of the holders would be permanently damaged.
As the work related to this should(!) be minor, I do not propose a compensation for the holders, but that should be open to discussion.
As to who the holders should be:
As the initiator of the Grants Foundation and a very trusted member of the community, I think Edward Kim should be part of it if he agrees to. Also Tobias (Zaradar) and at least one member of the validators should be in my opinion. Furthermore, the community could vote on two additional members that are suited for doing this.
I reckon that the emergency fund would not need to be used very often (best-case never), but in my opinion it is essential to be prepared.
As this is only a signaling proposal draft, it would require at least two further votes if it passes.
1.) voting / approving the proposed holders of the multisig
2.) approving a community spend to that multisig wallet