Funding Doodles LLC with 69% of Doodlebank and part of royalties

[ayhth]

tl;dr

1. Give Doodlebank and Doodles LLC defined and distinct roles to improve brand growth, execution, and governance.
2. Doodlebank (DB) funds Doodles LLC with a one-time transfer of 69% of DB treasury (About 1,143 ETH at time of writing) to execute 2022 plans and adjust 1.5% of royalties to flow to the LLC.
3. Doodlebank to operate as the community’s DAO; Doodles LLC, as the operating company to build web3 entertainment.

kudos to: @Bitty @LedroitTiger @Clout @itsmechase @jerjer.eth @AceNFT @passion @Pickle who helped with the discussion in one way another!

Why now?
The successful snapshot vote of the recent SXSW /extended experiences proposal shows the community’s support for the founders. Founders have also demonstrated commitment to involve the community and be accountable.

However, the process took a couple of weeks with 2 votes needed due to a failed 1st vote. We want Doodles to achieve its vision sooner rather than later and for the team to be productive with the treasury.

This proposal also seeks to clarify the roles of Doodles LLC and the Doodlebank and to enable speed without compromising on the ideal of community involvement.

Rationale

1. Enable the team to move fast and make significant progress towards building a global Web3 entertainment brand in 2022.
2. Reduce the opportunity costs of keeping a large amount of idle funds in treasury (1600+ETH at time of writing).
3. Shift DB to a DAO structure governed by the community with the i) what and ii) how to be defined in a separate proposal.
4. Enable Doodles LLC to interface with the broader entertainment and investment industry with a standard corporate setup, revenue stream and financial accounting.

What are the proposed changes?

We are proposing 4 changes.

1. Doodles LLC to operate as the entertainment company with all revenue and operating expenses, including team and contractor payments accounted for under the company. Company decisions need not pass through DB, only requests for additional funding from DB are a matter of a community vote. Team to continue the practice of keeping the community involved in the feedback and ideation process, but not for approvals.
2. Approve 69% of DB one-time transfer from DB to Doodles LLC.
3. Change to royalty split from Opensea + Looksrare: 1% to Doodlebank, 1.5% to Doodle LLC and 2.5% for founder royalties (no change to Founder portion or total royalties).
4. Doodlebank converts to operating as a DAO that uses the treasury for community-led initiatives to build the brand and Doodleverse ecosystem.
   1. Multisig to treasury by elected community members (number to be determined).
   2. DAO can vote to set policies on what qualifies as community-led initiatives and appropriate use of the (what)
   3. DAO can determine how we intend to govern ourselves and make things happen (how) - see example → Creation of Doodlebank Council & Delegation on a Doodlebank council.
   4. DAO can set policies on use of treasury.

How the DAO is designed and operates can be discussed in greater detail in a separate proposal and community consultation.

Potential concerns and our responses:

1. We’re giving away most of our Doodlebank money! We can’t do stuff anymore.
The reality: DB treasury funds were largely idle until the Q1 extended experiences proposal. A better Doodlebank process will help with more meaningful uses. With 500ETH remaining in DB @ 10ETH or less spent per project, we can keep the party going indefinitely. DB receives 130 to 160ETH in royalties weekly and 20% of that means 25ETH at the minimum. To start running out of money, we would need to launch more than 3 projects a week. This gives ample room for occasional large community-led projects and plenty for small community projects and fun stuff.

2. How about taking things one step at a time? Why such a big change now?
This is a fair point. We can certainly opt for an incremental approach. The trade-off here is time. 2022 is a crucial year for transitioning Doodles from just an ‘NFT’ to a global entertainment brand. A slower pace of change may feel easier, but at the bigger cost of time and missed opportunities.

3. Before we fund the company, can we know the business plans of Doodle LLC?
The team has been giving us hints of their plans. In Poopie’s words, they are careful to avoid revealing too much to prevent ‘’front running.” Similar to how startup investors know the gist but not the exact details, we have to trust in the team’s ability to deliver. What have we observed in 2022? Space Doodles! Merch. Extended experiences. Let’s stay tuned to the updates in #newsstand and keep engaged in the community. More will be revealed closer to release dates.

So how will this impact Doodles holders? Some hypothetical scenarios:

1. Community initiates proposal to start a music band consisting of community members + Evan Keast as lead singer. Doodlebank funds the band, and individuals are rewarded as individuals including Evan who is acting in a personal capacity. Spotify revenue flows to Doodlebank.

2. Community proposes to buy Sandbox land to be ‘owned’ by the community under Doodlebank. Digital land asset is not in Doodles LLC books.

3. Team hires a producer to create an animated series – Doodles LLC expense.

4. Animated series sold to Netflix for $40m - Revenue and expenses under Doodles LLC. LLC’s discretion as to how much it wants to fund back to Doodlebank.

5. Team organizes a $1m music and art IRL experience - Doodles LLC expense.
   Team proposes to have a community experience as part of $1m concert costing a further $500k – Doodlebank proposal and voting process.

6. Community votes to provide all holders with official merch produced by LLC – Doodlebank pays Doodles LLC.

7. Doodles LLC IPOs and raises $100m - All Doodles LLC. LLC’s discretion as to how much it wants to fund back to Doodlebank or how holders are rewarded.

8. Community tip jar / Doodles Dust incentive proposal - Doodles for fractionalization funded by Doodlebank. Optional contribution from team’s Doodle treasury for fractionalization.

Okay, this makes sense, so what’s next?

1. Community consultation phase in Doodlebank: We’d love your feedback, dissent, and suggestions for this proposal. Share your thoughts here.
2. Proposed AMA / town hall with founders on the plans for 2022 (need not be before the vote).
3. Prepare POAP for this significant vote.
4. Initial vote - to take place on a Snapshot Saturday at the end of February 12th
5. Final proposal vote (assuming initial passes) - 15th Feb to 17th Feb
6. Send 69% of DB to Doodles LLC (amount locked at time of preliminary vote).
7. Modify OS royalty flow.
8. Continue discussion on how to organize the DAO with Doodlebank, probably in parallel to the restructuring discussion.

Thank you! Let’s make 2022 the year of Doodles!

[mm_mo]

can’t wait. Let’s rock in 2022. Support all 4 changes you mentioned, but can you clarify how these 4 changes implemented in terms of timeline, like parallel or in orders?

[ayhth]

Thanks!
1 and 2 are coupled - the way expenses are treated and how the company is funded.
3 can happen shortly after and will depend on the devs and how simple it is to make changes to the royalty split.

4 is about setting up how Doodlebank should operate as a DAO. The discussion will likely take us into March with implementation happening in the latter part of March.

[CrawfishKiller]

I understand the high-level reason and I absolutely want to keep the team moving quickly.

A few questions and comments I have from the above proposal.

1. What is the 2.5% for founder royalties in the recommendation of the “owning and funding” section? Is that on top of what they are getting now? I see you said no change to the founder portion but just want to clarify that it means truly nothing is changing.

2. I thought we already voted to front-load the team to do things by quarter? Was that not enough? Is this 69% in addition to what they already received?

3. Is there thought of the Founders giving up a small portion of their royalties (2.5% to 2%) so the Doodlebank does not have to give up so much of their royalty %? This is common for start-ups to help fund future growth and initiatives. This shows the founders are also serious about the growth and bullish on where this is going.

4. With a change this significant, has there been any thought to actually setting up a call to actually talk with the entire community? It is well known that doodlebank suffers from engagement. Forcing the communication seems to be needed to ensure there are no surprises for those who may have missed the doodlebank voting.

5. Is there anything beyond “keep an eye on the newsstands” that can be shared. A change and ETH ask this significant should be met with something more than what I noted above. Definitely not saying the team has to front-run but no investor would give up this much without more details of the goals, initiatives, and expected outcomes of this.

6. Has the team thought about resetting the Doodlebank royalties back to 2.5% after 2022? This also could boost confidence that the goal of 2022 being a big year is just that. Making this structural change in perpetuity just seems way heavy-handed for the actual proposal provided.

I would appreciate any feedback and clarification to my questions above.

Best,

Crawfishkiller

[macdaddy]

I dont know enough about the subject regarding finance distribution and safety of moving money as many of you do.
But I am following along and looking to network and love good artwork w long term potential in web 3 value so whatever the founding team and majority decide on I will participate and add a cent or two if I can
Best wishes for a safe week ahead and stay warm…
Macdaddy dood

[Bitty]

Thanks for putting this proposal together @ayhth! I agree that Doodles is sitting on a lot of money right now that could probably be better put to use to drive the project forward, and the team has done a fantastic job of delivering thus far so I trust them to continue doing so. Personally, when I invested in Doodles, I was investing in the art and the team and their vision, so from that perspective it makes sense to facilitate them doing their thing, which will only further drive the value of Doodles. I support activating the treasury potential in this way rather than just sitting on a mountain of ETH, and also the clarification between what is Doodlebank and what is Doodles LLC will go a long way I think in helping some of the tension that has occasionally popped up around various expenses. It looks like under this plan, the Doodlebank will continue to get plenty of funding from secondary market royalties, so we should still have plenty to do whatever we wanna do when people come forward with exciting proposals.

[ayhth]

Good questions!

1. Status Quo 5% royalities split → 2.5% to DB, 2.5% royalties to founders. No change to founders portion (remains at 2.5%( but change proposed to DB portion (2.5% split to 1% to DB and 1.5% to LLC)

2. I believe you’re referring to the Q1 extended experiences vote: Snapshot
   That was a vote for approving a budget to execute extended experiences in a Q1 timeframe. Not a vote on the process of how the team can move faster (i.e. Front loading)

69% of DB is on top of that for funding the company to execute operations including doubling down on successes from Q1 extended experiences and whatever the business plans to execute for 2022. Had this proposal been voted on earlier, Q1 extended experiences would be covered by the LLC instead of DB.

3. I see where you’re coming from. That’s for the founders to decide after they review this proposal and what the community thinks

In terms of actions, that’s been the spirit of how the founders operate using their own funds (presumably from royalities) for growing Doodles. While bullish, it’s prone to misunderstandings (such as miami) and bad form for accounting.

4. Good point! I think aside from a call (which people miss anyway), an FAQ section similar to the #space doodles FAQ could be set up for discussing this and answering questions as well as pinning responses. The point I appreciate is that since this is a community-led initiative, the community should feel involved and vested into making this decision together. No one should feel like they weren’t listened to. Ironically that’s what this forum is for, but DB has seen a decline in engagement with all the 2022 NFT furor.

5. Fair point. Personally, I’m 50:50 on this. Since DB was an experiment and the bet on doodles is a bet on the team, we see this as a rebalancing of resources to reflect that. Furthermore, a roadmap hasn’t never a part of the ‘sell’ and not a reason for buying our doodles. IMO, bringing up a 2022 business roadmap now to convince the community feels like an odd move to me.
   Just my personal opinion: we’re not ‘giving up’ anything, because monies with team can potentially yield a greater return for holders than money under the community’s management.

Not on blind faith though: If ‘don’t trust, verify is the maxim’ here, I would say Space Doodles is what we can reference as a community to feel at ease that the outcomes in 2022 will be positive with this investment. Subsequently Q1 extended experiences.

6. This probably comes after we as a community discuss what how we want Doodlebank to work and what it should achieve. For instance, if we realize that accomplishing the goals the community wants requires a large amount of funding, restoring the status quo becomes pertinent. However, if our community DB initiatives remain small-ish (not to say small isn’t valuable), then 1% of royalties already gives us an infinite, inexhaustable piggy.

That said, given how community and team has been operating, nothing voted here is to be etched into perpetuity.

[M.N_wbi.5]

I support these changes, i also like the idea of getting a poap for voting, this gives ppl a momento of the journey we’re on and how we helped participate.

Very excited to fund LLC and get this ball rolling

[goldendoodles]

Thanks for putting this effort-

After sending 69% of Treasury to Doodles LLC, all the major decisions of Doodles LLC (e.g., use of funds) would be made by the founders? Agreed and support the direction of more aggressive expansion and fully empowering the core team to do that, but just curious,

(1) What do you think of the governance of Doodles LLC if it’s not governed by the community

(2) How can we design a proper structure for the incentive alignment between Doodles LLC and Doodlebank (and the community), more than just the community’s trust in the team?

[ayhth]

Thanks for the support dood!

Yes, your interpretation is correct.

1. As with any company, the leaders have to be accountable to its employees, customers, shareholders and board. Typical early stage companies don’t have much of a board of directors, but may have a board of advisors that coaches & guides the leaders. I would say this arrangement is sufficient for the scale Doodles is at.

2. To understand your question: Do you mean: ‘How can we ensure Doodles LLC is always aligned with the community’s interest?’

Because if it’s about incentive alignment I think at least for 2022, we’re somewhat aligned on the need for the brand to be a global brand. A bigger brand serves both the LLC’s entertainment ambitions as well as NFT holder’s capital appreciation. It’s just the distribution of rewards that needs a future discussion.

About a system to ensure that the team is aligned with the community’s interests, I would say that’s potentially the wrong focus?

The community of 6,000 is too diverse. Our collective focus should be on the vision of the project. Community, LLC and founders aren’t optimizing for specific parties but to achieve the vision we all bought into. I assume that we’ve all already made that bet on the team when we bought into Doodles.

A member of the community who disagrees with the team’s actions or loses trust can ultimately make the decision to leave the project and sell their dood.

It might be easier to answer the question by laying out the risks associated with giving the team greater financial autonomy and power:
Risk 1: Team walks away with funds and essentially rugs us. Likelihood: V. Low. Mitigating factor: Founders with track record and care about reputation.

Risk 2: Team makes a serious error that crashes the price of Doodles. Likelihood: Low. Mitigating factor: Founders with experience and also operates with good product principles (validate, make bets). Mis-steps are likely situations that can be recovered from with time.

Risk 3: Team sells company to an entity that doesn’t know how to take care of holders. Likelihood: Medium. There will likely be many offers a long the way up.
Mitigating factor: same as risk 1.

There can be more, but what I’m trying to show here is that any processes or systems should solve something. Perhaps it’s better to be overt about our concerns so that they can be addressed more directly.

[jxl]

Re-surfacing my 2c reply in Discord on some high-level thoughts about this proposal (Original Message)

I 110% support this proposal and let’s give our founders the money & power to move quickly and do stuff. They have well proven themselves at this point.

My reasoning is simple: I work in tech and I have seen so many examples of how “bottom-up” approach slows things down and destroys a company cuz most of the times we really do not need consensus, as long as the leaders know the shit. If you look at most successful web2 companies like Amazon, many are super “top-down” (Bezos was known to be the boss), but they are successful as a company.

I feel like for Doodles to reach next level, we have to ramp up our branding efforts asap. Crypto world is quick and we have to speed up even more. This is an intense race and let’s clear all the hurdles for our founders to do the right things.

I know I may sound like very “un-crypto” (kinda centralized etc), but I really feel like this is a great proposal to pivot ourselves to potentially be much much bigger, which at the end will benefit us as doodle holders vastly (just think about if you bought $AMZN 10 years ago and still holding). Plus, if I am reading it correctly, we still have 31% in our community bank after initial transfer, which is more than enough for us to do a lot of things.

Let’s do it and get it rolling!

[Thegoodwei]

Is this not antithetical to our brand, to push centralization of what was promised and intended as a progressively decentralized organization? I just wonder if Doodles community would have another chance to revisit this change of royalty rates back, should we decide on some huge community projects. Or is this going to happen like with all governments, that power taken is rarely ever returned.

I have major concerns with the permanence of this proposal. Is not the even split between founders/company and community bank fair? It sounded fair on launch, it was the agreement we bought into.

If the team needs regular funding from our community assets I would so much rather them keep providing proposals to the DoodleBank for specific works in progress, so that the community can always buy into the collaboration. A lump sum for a big development? Sure I can get behind that much. But the royalties must stay as is, or else we are sacrificing so much of the potential that is community driven content, which is exactly what makes us unique.

[Jingaling]

Yay! My favourite topic

To start off, I really want to express the following - What no one really seems to realise about this discussion is that, at the end of the day, the DB is not owned by the community in any shape or form. The Founders are the 3 signers of the MultiSig wallet and if they wanted to use all of the funds tomorrow they could do exactly that and it would be 100% their right to do so. I do appreciate that they have made the gesture to the community allowing us to feel included in how these funds are used but I do think it has created the illusion that the DB funds are ‘our funds’ and this frames a lot of the questions /concerns people have around Doodles LLC being accountable to the community for the use of these funds. With the above in mind, here are my thoughts:

First off, I am a huge proponent of this proposal. Very well thought out and written, although I expect nothing less from the People’s Champion @ayhth

We love and back the team!! That’s why I bought Doodles and I’m sure that’s why most of the community did too. The 69% allocation to the operations of the funds is a great idea and will be the best use of these funds. Let’s do this asap so that @Poopie and @tulip can weave their magic. Hella excited to see what the remainder of the year brings.

I particularly like the idea of a DAO being set up for the remaining DB funds that are controlled by members of the community. I think this will be a good start to stimulate more community ownership of these funds and hopefully get more community led initiatives moving. Excited for the separate proposal on the formation of the DAO because I’m keen to get stuck in and contribute. Let me know if you want any assistance in putting that together?

My only hesitancy around this proposal is effecting the split in the royalty payments now. There are a few reasons for this:

1. According to Tulip’s estimate for the Q1 Funding Proposal, his initiatives are going to result in a net profit with funds being returned to the DB. If this is the case, and he is able to replicate such a performance with the 1143 eth funds from this proposal, then there would be no need to have royalties flowing to Doodles LLC as it will be a self-funding entity.
2. If the opposite is true and the ramp up to making Doodles LLC a self-funding entity takes longer or requires more funds, then the royalty split to Doodles LLC might need to be even larger (2% LLC /0.5% DB).
3. I’m not sure how much effort/cost it requires to change the royalty split but rather get it right the first time with an informed split than have to do it twice (including coming back to the community asking for another change)

Essentially, I feel that the proposed split is a bit of a thumb suck and I would like to have more data on the execution of the plan before changing the split. I understand the desire to get funds to the founders asap but they would potentially be getting 1143 eth with this proposal and I don’t think 120 eth (3 months of 1.5% royalty) would make any material difference.

Thanks again for your awesome proposal and will be backing you in the discord to push this through

[mm_mo]

have we got any updates on this? let’s get this moving. This is gonna be huge for the whole doodles community

One more opinion, as mentioned in the think-tank, since the community is injecting a significant funds to Doodles LLC, it would be great to have some financial and Roadmap updates like once per 3/6 months.

[ayhth]

Apologies for the radio silence. And thank you @Jingaling for the thoughtful response and royalties comment. Your feedback is always appreciated!

I’ve been discussing with some doods and loodle (doodle laywer) over the last couple of weeks and there are some challenges towards the execution, including some of the challenges raised by Jingaling.

We’re getting further feedback before coming back to this and pushing it for another round of Doodles community feedback.

In the meantime, SPACE DOODLES! This is what’s keeping the team busy along with extended experiences and merch.

Thank you all Doods for your feedback and your desires to see Doodles achieve its vision faster aren’t going unnoticed! We’ll get back to this shortly.

[lord_of_vapes]

Very nice suggestions dood! I really think they should give us a sort of business plan, no fund would invest in a start-up without it

[cdl]

I like this core tenet of this idea.

I do think that if the DB is funding Doodles LLC for the team to then operate out of, it would be a good idea to provide some additional upside to the DB. Agree that the team will benefit from the additional autonomy that the LLC will create and we’ll benefit from DB being handed over as a community run DAO.

Would love to see a commitment to putting 20% of Doodles LLC annual, post-tax profit back into DB. That would be my only suggestion of note.

[ayhth]

Hi everyone! So much has happened since we first mooted this proposal.

1. Space Doodles
2. SXSW
3. Successful 690ETH team funding proposal

You know what they say, if it ain’t broken…

After some discussions with various Doods and team members, it’s our opinion to leave it status quo and shift attention to how we as a community can better utilize Doodlebank to create value for holders and support the team’s efforts.

Thank you all for your contributions!