CIP- 39
title: <Continued funding for development services - Service Agreement No 3>
author: <@Kowrigan>
status: Voting
created: 2024-03-04
Simple Summary
This CoW Improvement Proposal (“CIP”) requests the DAO to approve the allocation of 3,850,000 USD from the treasury to Nomev Labs, Lda (the “Service Provider”) for the execution of the Services under the terms of the Service Agreement hereunder (the “Agreement”). The compensation will cover the Service Provider’s labor and expenses on a per-use basis for the period from 1 March 2024 to 31 December 2024 (the “Term”).
The requested funds, if approved, would as:
- 1,500,000 USDC of KYCed funds that was previously set aside in the DAO treasury; and
- 1,500,000 USD of non-KYCed funds.
The addition of non-KYCed funds to the request answers the necessity for the DAO to keep a substantial amount of KYCed funds for potential activities requiring KYCed funds.
Overall, this will leave a total of more than 700 thousand USDC KYCed funds at CoW DAO’s disposal (of which 2.2M currently in use by CoW DAO’s Core Treasury Team, cf. passed CIP-19 proposal here, and the remaining 49,876 USDC in the CoW DAO’s Daughter Safe).
Please find here the link to:
-
the passed proposal of the first Service Agreement (CIP-6) covering the period from 1st of March 2022 to 28th of February 2023;
-
the passed proposal of the second Service Agreement (CIP-24) covering the period from 1st of April 2023 to 29th of February 2024; and
Effect on Previous CIPs
This CIP encompasses Services related to MEV Blocker in its scope in order to consolidate the Services provided to CoW DAO by the Service Provider. For this reason the approval of this CIP will provoque the early termination of CIP-32 MEV “Blocker Funding” one month before its previously approved term.
Motivation
The Service Provider remains committed to fulfilling CoW DAO’s vision of a decentralised future where digital assets can be traded in a fair, efficient and reliable manner among people and communities around the world. Trades, liquidity provision, and any blockchain transaction must be securely protected, no matter who the user is.
We consider this CIP critical to ensure ongoing development and refinement of the CoW Suite and for keeping a competitive edge within the decentralised exchange ecosystem, including strategic pivots.
The past year in a nutshell
A significant amount of work has gone into the past year and the team is really proud to successfully close the Second Service Agreement:
First and foremost, servicing users with better than the best prices, a total of 85 million USD surplus was created during this year.
The past year, in review, saw a big uptick in user engagement, builders and contributors to the CoW Protocol. To name a few, the solvers grew to a number of 16 in production, ensuring better prices for users and increasing the robustness and decentralisation of the protocol.
The Grants Sub DAO went through its second year of operations, fostering the CoW ecosystem, with more than 75 applications and already more than 40 grants distributed.
The CoW Protocol trading volume in the past year was 13.575bn USD worth in assets on Mainnet (plus 28M USD worth in assets on Gnosis Chain). Assets that were protected from MEV. CoW Protocol’s market share grew to surpass Matcha and Paraswap to become the second largest DEX aggregator in the past year.
With a current team of 27 members, the team is focused heavily on the development of the CoW DAO product suite, expanding the development activities to MEV Blocker. This was done while keeping an extended presence at many conferences and Hackathons, growing the CoWmunity.
In terms of technological advancements, 2023 saw the launch of MEV Blocker a private RPC focused on MEV Protection and revert risk reduction - already in use by key players like Uniswap Wallet, Ambire Wallet, Rabby Wallet, Crypto.com DeFi Wallet; hardware wallets such as keepkey. Additionally, an important set of tools was made possible with the launch of Programmatic Orders, allowing the CoWmunity to develop refinements and advanced order types, such as TWAPs. Lately CoW DAO launched 2 key products, the CoW widget was launched, which allows for an important diversification of Order Flow origination and the CoW AMM, the first MEV-Capturing AMM tackling the issue of loss-versus-rebalancing
Everything developed, decided and spent was and is done with CoW DAO’s and its users’ benefit in mind!
The past year in a nutshell - financials
Looking at 1. March 2023 to 31.December 2023 a total of 4.5M USD were spent on (values in thousands):
| Cost Center | CIP estimate | Actual execution | Delta (CIP-Actual) | Delta % |
|---|---|---|---|---|
| Team compensation (aggregate) | 3,150 | 3,352 | -202 | -6.41% |
| Third party services | 843 | 541 | 302 | 35.78% |
| Events & Travel | 147 | 175 | -28 | -19.09% |
| Network fees & testing | 139 | 0 | 139 | 100.00% |
| Hosting | 88 | 94 | -6 | -6.73% |
| External tooling | 29 | 77 | -48 | -167.85% |
| Office | 22 | 18 | 4 | 16.56% |
| Tax provision | 491 | 280 | 211 | 42.88% |
| Total | 4,909 | 4,538 | 371 | 7.55% |
With an estimate of remaining funds of 800k USD per 1. March 2024 and considering an overlap of half a month in funding to ensure continuous liquidity, we intend to commit any remaining funds to the extension of this service agreement over its expected end.
I. Service
I.a Services
The Service Provider will provide the CoW DAO with the services as outlined hereunder (the “Service”).
- Code development and design based on Section 1.b below ;
- Continuous improvement of the existing product and user experience;
- Executing relevant user research and proposing development focus adjustments based on its findings;
- On behalf of CoW DAO, hosting relevant interfaces, upkeeping and housekeeping of forum.cow.fi;
- Assisting the CoWmunity in the promotion of the CoW Suite, including at and for conferences and with promotional materials;
- Engaging in, and maintaining the activity of participating in the consensus of proof of stake blockchains such as but not limited to Gnosis Chain as part of the DAO’s treasury management
- Fostering collaborations and partnerships on behalf of CoW DAO;
- Any other assistance and advice that may be provided by the team’s expertise, e.g. computer engineering, design as well as relevant project management, accounting services, legal, compliance, and other relevant fields of expertise;
- Facilitating solver onboarding, vetting and assisting with payouts on behalf of CoW DAO;
- Ensuring system security, providing development operations and security personnel. Per need, driving bug bounties for CoW DAO’s settlement (incl. via Grants DAO);
- Engaging the CoWmunity in the decision making process using the regular governing mechanism;
- ;
- Effective outsourcing to specialists and external parties.
Other Services may be included in further CIPs for CoW DAO to decide upon separately (they can but must not lead to additional funding requests, dependent on scope, timing and efforts).
I.b Main Development Focus
In the spirit of fostering a collaborative and inclusive environment, our main development focus follows the collective wisdom and insights of the CowMunity and our users.
This approach ensures that the development aligns with the needs and aspirations of CoW DAO, resulting in a more impactful and user-centric product. However, it’s the responsibility of CoW DAO and its members to propose and decide the way forward - we want to comply with this ethos: it’s important to keep this focus flexible to adjust to community voices and successful proposals, changing competitive environments as well as improving and changing technological advancements.
We propose that the rest of the year 2024 be dedicated to the below items and features. This list is not exhaustive and may evolve based on the CoWMunity feedbacks, decision and change of priorities:
- Network expansion: deploying CoW Protocol to other Ethereum based networks
- CoW AMM: expanding on the functionality of CoW AMM
- MEV Blocker: improvements to MEV Blocker
- Continuous experimentations around fee models, according to CIP-34
- Continuous decentralization of the CoW protocol
- Development of a Smart Contract Version 2 for CoW Protocol enabling advanced functionalities such as NFT support; enforcement of post order interactions; etc.
- Support for additional smart orders (such as DCA, stop loss, etc)
- Support for a CoW Hook UI and SDK allowing for easy integration by partners
I.c Budget
From 1st of March 2024 - 31 Dec 2024, the USD budget estimate comprises the following significant positions:
| Cost Centre | Budget |
|---|---|
| Team compensation (aggregate) | 2,630,000 |
| Third party services | 230,000 |
| Events & Travel | 240,000 |
| Hosting | 240,000 |
| External tooling | 100,000 |
| Office | 60,000 |
| Tax provision | 350,000 |
| Total | 3,850,000 |
These categories are estimated to include the following positions:
Team compensation - Includes total compensation of team members for the rest of service period.
Third party services - Includes all outsourcing providers and financial intermediaries & banking fees as well as third party development providers.
Events & Travel - Covers relevant presence in conferences, business development events as well as team meetings.
Hosting - Covers mainly DevOps related expenditures (AWS and nodes).
External tooling - Covers softwares and subscriptions.
Office - Includes fees supported for temporary rental of spaces.
Tax provision - lump sum provision of 10% for potential tax costs (unforeseen and relating to various tax categories)
Accounting provisions (such as tax provisions) that are dissolved, arising in a positive cash-flow, will be reinvested in line with CoW DAO’s vision of a decentralised future and mission of enhancing the CoW Suite. Remaining funds from the execution of this CIP as well as other financial decisions in the upcoming year may prolong the estimated length of the Service Agreement.
The team
The team that plans to execute this Service Agreement and the development of the CoW Suite part of the Services, has been doing so, not only for the past year, but also before that as part of Gnosis and is dedicated to continue working towards making the protocol successful. We have carefully recruited and will continue to do so in the future. The leadership team is stable with Anna George on the product and Felix Leupold on the engineering side. The team consists of 27 full-time positions. The team’s expertise include roles such as engineers, cryptographer, mathematicians, user researcher as well as business development, operations and HR. Furthermore, we have built up a range of ecosystem, legal, and academic advisors who will help us achieve the success of the CoW Suite.
II. Terms of the Service Agreement
Validity
This Agreement is subject to the approval of CoW DAO’s Governance Mechanism as defined in CoW DAO’s Participation Agreement. In the event CoW DAO does not approve this Agreement through its Governance Mechanism, this Agreement shall be null and void.
Term and Termination
This Agreement shall commence on the 1st March 2024 and shall remain in full force and effect until the 31st December 2024 (the “Term”). CoW DAO and the Service Provider agree that this Agreement cannot be terminated before expiry of the Term. Notwithstanding the foregoing, should funds remain available to continue the mandate provided by this Agreement, the Agreement shall continue in effect until such funds are exhausted. The Service Provider shall notify CoW DAO in advance regarding the continuation of the Agreement and the estimated period for which the remaining funds will support its operation.
Compensation
CoW DAO will compensate the Service Provider a fee of 3,850,000 USD for the delivery of the Services.
This fee represents the Service Provider’s estimated costs for the Term. Estimates are based on projected labor, materials, and other direct/indirect costs to provide the Services.
The budget agreed upon for delivery of the Services is effective for the current term of this Agreement. In the event of any substantial changes to the budget or Services requiring an increased allocation requires the Service Provider to submit CIP to CoW DAO to adjust the fee on a monthly basis to account for actual costs incurred. Any such CIP is subject to the approval of CoW DAO’s Governance Mechanism as defined in CoW DAO’s Participation Agreement. In the event the Service Provider submits a fee adjustment proposal, it must provide a detailed account of costs incurred in the preceding months.
In the event the Service Provider releases or sell any accounting provisions (including but not limited to tax provisions), the resulting positive cash flow shall be reinvested solely into the Service Provider’s operations, in accordance with CoW DAO’s vision of a decentralized future and its mission to enhance the CoW Suite.
Payment
Upon approval of this CIP, CoW DAO agrees to a prepayment in full of the approved fee to the Service Provider.
Unless the Service Provider asks for further compensation due to incorrect estimation no detailed time report will be provided by the Service Provider to CoW DAO.
This prepayment constitutes the only compensation owed to the Service Provider for delivery of the Services over the engagement term, unless amended by a future DAO vote.
Upon approval of this CIP the prepayment of funds to the Service Provider will be transferred from the DAO’s treasury via the established financial processes.
Intellectual Property
All rights related to works, new products and processes, or correction or improvement of products or processes already existing in the CoW Suite in addition to works, inventions or creations, designs or models, trademarks, trade names, logos, software, databases, domain names or other materials and know-how (including trade secrets), whether registered or not, and regardless of their patentability, registrability or fixation, that the Service Provider, individually or jointly, has created or whose creation has provided during the execution of the Agreement to provide services that relate, directly or indirectly, to the business of the CoW DAO, (hereinafter, “Intellectual Property”), belong by origin and since their creation to CoW DAO in accordance with the CoW DAO’s Participation Agreement.
This effect occurs when the Intellectual Property is generated during the provision of Services by the Service Provider, regardless of whether or not the creation, or the cause of the creation, of the Intellectual Property is, wholly or partially, directly or through a third party.
Miscellaneous (in no particular order)
Subcontracting. The Service Provider may subcontract any portion of the Services to be performed under this Agreement and remains responsible for the obligations under this Agreement.
Assignment. The Service Provider may at any time assign, mortgage, charge, subcontract, delegate, declare a trust over or deal in any other manner with any or all of its rights and obligations under this Agreement.
Confidentiality. All information obtained privately (i.e. not via public discourse, such as blockchain transactions or on the CoW DAO Forum) shall remain the sole and exclusive property of the disclosing party (including CoW DAO and the Service Providers).
Definitions. Terms in thisAgreement shall have the same meaning as in the CoW DAO Participation Agreement. In the event of any conflict or inconsistency between this Agreement and the terms of the CoW DAO Participation Agreement, this Agreement shall take priority as between them to the extent that is necessary to resolve the conflict or inconsistency.
Independence of the Parties. The Service Provider is an independent contractor and is not an employee, agent, partner, joint venture, legal representative, an affiliate, or a member of CoW DAO. Nothing in this Service Agreement is intended to, or shall, operate to create a partnership or joint venture of any kind between the service provider and CoW DAO, nor authorise either Party to act as agent for the other. Neither Party has the authority to act in the name or on behalf of, or otherwise bind, the other Party in any way.
Disclaimer. CoW DAO and the Service Provider expressly disclaims all representations, warranties, guarantees, conditions and undertakings, including warranties of merchantability and fitness for a particular purpose.
Limitation of liability. the Service Provider’s total aggregate liability for all and any claims arising under or in connection with this Agreement, regardless of form of action and whether in contract, tort, warranty, or other legal or equitable grounds (including in each case negligence), shall be limited to a maximum amount of USDC 50,000.00. the Service Provider shall not be liable for any actions taken by or on behalf of CoW DAO including Services and actions taken pursuant to this Agreement.
Force Majeure. If the provision of the Services are affected, hindered, prohibited or made impossible in whole or in part by a Force Majeure, this shall under no circumstances be deemed a breach of this Agreement.
Severance. If any provision of this Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable.
Disputes. In the event of any dispute, claim, question, or disagreement, CoW DAO and the Service Provider shall use their best efforts to settle the disagreement. To this effect, they shall consult and negotiate with each other in good faith (using the CoW DAO forum forum.cow.fi or any other Interface) and, recognising their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties. Any such amicable decision to resolve a dispute shall go through the CoW DAO Governance Mechanism. If no agreement is found within thirty (30) days, the disagreement shall be referred to and finally resolved by arbitration by one arbitrator in London, United Kingdom, under the rules of the London Court of International Arbitration.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of England and Wales.
Execution
Safe Transaction Data:
- Send 1.500.000 USDC from the KYC’ed pool from the treasury safe eth:0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669 to TBD_before_snapshot
- Send 1.500.000 USDC from non KYC’ed pool from the treasury safe eth:0x616dE58c011F8736fa20c7Ae5352F7f6FB9F0669 to TBD_before_snapshot