DAO long-term treasury management

Problem & Introduction

Governance minimization is in the core thesis for RAI and Reflexer. We believe that the only way for cryptoeconomic systems to be fair and neutral, in order to achieve social scalability, is to remove human decision as much possible. Token voting is fundamentally plutocratic, prone to attacks and very inefficient.

However, there are areas where code alone can’t rule everything. The first that comes to mind is capital allocation. At Reflexer, we’ve spent a lot of time thinking about how to solve this problem. For capital allocation to be efficient it needs to be centralized to a small group of people with skin in the game that are highly committed and well informed. This requirement conflicts with the ideals of decentralization that this industry aims for.

The RAI community will be left with a significant FLX treasury to be used to invest in the growth of the ecosystem. We need to decide on the process by which these funds will be allocated.


To address this trade-off between efficient capital allocation and decentralization, I would like to propose to the RAI community to adopt Tally Safeguard for the DAO long-term treasury management.

Safeguard is set of smart-contracts still under development, audited by OpenZepplin. It is a system where the treasury is controlled by a multisig behind a timelock where token holders retain ultimate veto power over all proposals.

A 6-out-10 multisig is configured in the Safeguard contract to spend the FLX treasury with a one week timelock. FLX token holders can at anytime during the one week interval, initiate a vote to cancel the spending and/or revoke all funding rights of the multisig.

Token voting to veto is being done by the standard Compound Governor Bravo contract. The multisig can be a simple Gnosis Safe.

Safeguard is a compromise between an efficient but centralized multisig treasury and a decentralized but inefficient token voting DAO treasury (Uniswap’s UNI style).

Quick temperature check…

How should the Reflexer DAO manages its treasury ?
  • Tally Safeguard
  • Standard token voting
  • Direct multisig
  • Other, comment

0 voters


FLX token holders can at anytime during the one week interval, initiate a vote to cancel the spending and/or revoke all funding rights of the multisig.

What happens if the funding rights are revoked? Does the treasury stay in the multisig? Do the token holders assign rights to someone else?

If funding rights are revoked, standard governor Alpha token voting takes over. It either stays that way or a new committee has to be elected.

I think this is generally the right idea, but with some caveats:

  • If the plan is to put 100% of the treasury in the mutlisig, I think the timelock might need to be fairly long (1-2 weeks) which makes it less useful for quick coordination and spending
  • If the plan is to put <10% of the treasury (at any one time) in the multisig for 6mo-1yr budgets, topping up periodically, then I don’t think a timelock + guardian is really worth it
  • If we did want to use a timelock + guardian, then our voting period for the bravo to veto proposals would have to be shorter than the timelock on the multisig, so if the multisig timelock is 1 week, the guardian voting period would have to be 3-4 days (5 max) to give voters a chance to veto & revoke the multisig permissions
  • since we’re already planning running a compound governor alpha/bravo with a 1-2 week time delay for protocol governance, I think it might be more straightforward to simply keep 90% of the treasury in the main compound governor used for protocol governance, and issue up to 10% every 6mo/1yr or so to the multisig to manage and distribute for grants/expenses/incentives

After 1 year of operation, we could revisit this question and re-evaluate our “long-term” treasury management system, with the benefit of hindsight and learning from the other experiments and developments in the ecosystem.