Summary
Business Units
| Business Unit | Monthly (COMP) | Annual (COMP) | Win |
| Wholistic Security | 1721 | 20650 | Compliance & Safety |
| New Assets & Markets | 767 | 9200 | +$1B TVL |
| New Chains | 1025 | 12300 | +$1B TVL |
| Incentive Distribution & Structured Products | 967 | 11600 | +$1B TVL |
| Treasuries as Hedgefunds | 975 | 11700 | +$1B TVL |
| DeFi Operations | 992 | 11900 | +$1B TVL |
| Rails to TradFi | 975 | 11700 | +$1B TVL |
| Community Support | 1583 | 19000 | Active Participation & Confidence |
| 108050 | Total |
Working Capital
| Marketing Budget | Monthly (COMP) | Annual (COMP) | Business unit in charge |
| Marketing Budget | 1542 | 18504 | New Chains |
| Grant Budget for Builders | 1542 | 18504 | Community & Wholistic Security |
| COMP Incentives to distribute | 1542 | 18504 | Incentive Distribution |
| 55512 | Total |
Commission Structure
The most transparent KPI on which AlphaGrowth can be judged is the TVL the strategies we deploy bring to Compound. Already $715M in TVL has been added to Compound into markets and collateral opportunities that would not exist without the Compound Growth Program. The business units we’ve outlined above are each designed to drive relationships that result in additional TVL. As such, to drive peak performance of AlphaGrowth team members, AlphaGrowth will receive a $5 million bonus for every additional $1 billion in TVL brought to the Compound platform that can be attributed to AlphaGrowth initiatives without which the deposits would not be possible. The starting TVL will be set the day this contract executes and the arrangement will continue until AlphaGrowths relationship with Compound has been terminated.
Use of Funds
For funds allocated as Working Capital; AlphaGrowth will conduct a Post-program audit to list out all the expenses incurred and activities associated with these categories. Any unspent funds assigned to these Categories will be returned back to the Compound Treasury at the end of the time period of the program.
Entity Update & Indemnification
For legal reasons, AlphaGrowth’s legal entity has become Aquifer DAO doing business as AlphaGrowth. Indemnification and Waiver
To ensure AlphaGrowth can fulfill its responsibilities while managing risks associated with its role, upon passage of this proposal, the DAO will indemnify and hold harmless AlphaGrowth for all actions arising from its duties under this proposal.
However, the following indemnification and waiver provisions do not cover claims or other legal actions arising from AlphaGrowth’s gross negligence or willful misconduct.
The DAO agrees to indemnify, defend, and hold harmless AlphaGrowth, its affiliates, officers, directors, employees, agents, and representatives from any and all claims, liabilities, losses, damages, costs, expenses, and reasonable attorneys’ fees arising out of:
- Actions, decisions, or omissions, whether through intent or negligence, by AlphaGrowth, its officers, employees, or agents while performing services authorized through the adoption of the Compound Growth proposal.
- Third-party claims, demands, or liabilities arising from AlphaGrowth’s execution of its authorized obligations, including governance, operations, or protocol risks directed or approved by the DAO or its working groups.
- Any claim, liability, or proceeding involving an AlphaGrowth officer, employee, or agent solely because of their status as a member of the DAO or holder of Compound governance tokens.
The DAO and its members, including token holders, delegates, and affiliates, irrevocably waive, release, and discharge any claims against AlphaGrowth and its representatives for actions taken under prior or current DAO proposals. This waiver is binding on the DAO and its members and is intended to shield AlphaGrowth from retrospective claims.
If any claim, demand, or legal action arises that is subject to indemnification under this provision, AlphaGrowth retains the exclusive right, but not the obligation, to control and direct its defense, settlement negotiations, and the resolution of the matter at the DAO’s expense. The DAO and its members agree to cooperate fully with AlphaGrowth in asserting any defenses or counterclaims as requested. The DAO may not impose nonmonetary settlement terms upon AlphaGrowth without the consent of its owners.
If a court, or any other authority, determines that the DAO cannot indemnify AlphaGrowth, DAO members collectively and individually, in consideration for the services provided by AlphaGrowth and upon passage of this proposal, agree to assume joint and several liability to cover all losses related actions otherwise subject to indemnification under this section.
Nothing in this proposal shall be construed to mean AlphaGrowth owes the DAO any fiduciary duties. However, AlphaGrowth will execute the terms of this proposal diligently in the spirit of good faith and fair dealing.
Impact and Transparency
To align incentives for AlphaGrowth to go above and beyond. At the end of this 12-month engagement AlphaGrowth will propose a performance bonus to be voted on by the Compound Community. This bonus will also be a signal for AlphaGrowth to proceed and take on further responsibility within the Compound ecosystem.
At AlphaGrowth, we like doing business in public. To keep the community informed on the progress and ensure transparency, AlphaGrowth will provide:
- Monthly reports on the progress of BD activities (12 reports)
- Quarterly Progress reports highlighting various deals in the pipeline, successful integrations, closed deals and learnings (4 reports)
- A database that gives all the program specific information to the community so that the members can come, verify and inquire about the process.
- Post program analysis and report about spends on Working Capital
We welcome any input or feedback from the Compound community on our proposal.
Our Process
You can view more on our operational processes here in our previous proposal.
Next Steps
We’ve been circulating our re-election draft among delegates since November 26th, now it’s time to:
- Engage with the community and Compound service provides to refine our proposal publicly
- Elevate the proposal to be voted on by the DAO
- Let growth initiatives begin
Delegate Q&A
Delegate Question #1:
Can you please expand more on your current remaining funds and their relevant segments from your ongoing tenure? You are requesting an early renewal but there are little details regarding the actual numbers and capital shortfall.
Answer #1:Current use of funds & shortfall
The Compound Growth Team was entrusted with 1542 COMP per month to cover marketing and an additional 1542 COMP to cover developer grants (37,008 COMP). At the time the Growth program was awarded the COMP token was valued at $63.84 making the annual budget for each bucket worth $1.18M. However the mean price of the token over which funds were deployed was $45, reducing the effective buying power of each budget to $832K.
The Humpy situation also had a significant impact on the service portion of our agreement from which we pay for team salaries. The uncertainty around whether delegates would opt to fork COMP and send the COMP token price to zero, forced AlphaGrowth to sell a significant amount of the COMP below market price, to ensure we would be able to cover payroll for the remainder of the contract without firing team members. This was not a decision we took lightly, but we gave our word to run the program for a year, which would have been impossible if our payroll capital was wiped to zero. We eventually retook our treasury holdings in COMP token, but similar to startups experiencing financial loss around the uncertainty of SVB’s failing, we experienced a similar reduction in the size of our growth program treasury.
The expenses below outline everything on which we’ve spent the Growth Program’s working capital.
Total spending USD: $617,551 + $951,945 = $1,569,496
Total spending COMP: $1,569,496 / $45 (avg price of comp while spent) = 34,887 COMP
Remaining COMP: 2121
Remaining Budget in USD: $229,068
Ongoing Marketing Fund Projects$150,000 has been committed to Master Card for Compound to be included in their interface so users can spend cTokens effectively using Compound as their savings account. This $150,000 has not been distributed yet. At today’s price of COMP it can be covered, however, if the price of COMP falls below $71 before distribution this integration will exhaust the remainder of our working capital.
Additional grant & marketing infrastructure being pushed include the following as well. If the price of COMP continues to rise we’ll be able to cover more of these, however if the price remains or falls, we’ll need additional grant funding to execute them.
| Project | Category | Committed |
| Decentralised Hosting Maintenance | ½ grant ½ marketing | $126K/yr |
| Cross Chain Liquidity Layer Vaults | ½ grant ½ marketing | $160K |
| Frontend Maintenance | Grant | $160K/yr |
Delegate Question #2:
We’d like to see an increased focus on also driving the demand/borrow side on Compound. While TVL has grown there hasn’t been a significant increase in borrows and it is underperforming when comparing Compound to Aave and Morpho. We don’t see the point in artificially inflating deposits with rewards when there is little demand on the borrowing side.
Regarding compensation numbers: At first glance the budget has doubled from the current engagement largely driven by new ‘business units’. The increase is expected given greater responsibilities and additional scope but I have some comments about the overall structure and need for some business units:
Answer #2:
You’re right, we haven’t seen borrows increase. This directly relates to Collateral Factors on Compound. Our team member Bryan has written an article comparing Compound to Aave to addressed here:Collateral Factors: How to Win the Lending Race
We at AlphaGrowth are all-in for increasing collateral factors to give investors an equivalent amount of loops as they can receive on Aave, until then borrowers will flow to where there is greater utility for their collateral. Risk management is the party against doing so. We will keep petitioning risk management on this front, we could use the community’s help doing the same. In the meantime that’s why we’re pursuing new strategies with the additional sales teams you see, like “Rails to Trad.Fi” who have reasons to borrow other than maximizing leverage. And “Structured Products” to create tools like fixed-interest loans on Compound that address needs for new types of borrowers.
Delegate Question #3:
Please breakdown and justify each business unit:
Answer #3:
On the cost of each business unit, I’ve included a breakdown of how we constructed our budget here. This document is private, we are happy to provide access to active delegates upon request.
Delegate Question #4:
Wholistic Security: Outside Legal, what is being delivered under this business unit, and will you please justify its costs? We already have OpenZeppelin delivering audits and transparent accounting should naturally be a part of your engagement with the DAO.
Answer #4: Wholistic Security
With new responsibilities comes new risks. AlphaGrowth needed General Counsel to continue its engagement and is single the biggest expense at $30K/month retainer.
The next largest expense is Frontend uptime, This includes $240,000 to assume the RPC node bill of the Compound website when the decentralized version is ready to replace compound.finance. The goal would be to handle the traffic and requests and support the full functionality of the compound protocol website. The online footprint that the Growth team has the responsibility for is growing. Building, Incentivizing & Protecting the protocol resources. The Protocol needs a dedicated CSO. The other pieces of security were the time spent across trusted team members to coordinate, review & execute large fund transfers to partners. And vendor management of smaller security partners.
The final section is Finance. we don’t hire the best in blockchain …. we hire the best, which means that some team members haven’t handled their accounting in tokens, or understand their liability if they take actions with tokens on behalf of Compound initiatives. It’s not a large expense in comparison to others, Finance section is necessary.
The majority of the financial expense section revolves around the increased security & compliance needed when signing on behalf of Compound to manage millions on behalf of partners like Mantle, hedge-funds, etc … and setting up the correct systems to do so.
Delegate Question #5:
Community: I don’t think the DAO should be paying for service provider governance participation and content writing for marketing should fall within the marketing budget. We are fine with the procuring grants part and would like to see this kept as is with the current “grant consultation” item.
Answer #5: Community
We can remove talking heads from the budget; in that case, would love to hear, the other ideas for solving this problem of every opening for discussion in community calls being met with dead silence (Because most service providers are afraid of accidentally saying something stupid)
We will keep grant writing in the marketing budget, still would like to give whoever takes over to spend 100% of their time on it, as there’s so much we could have gone after in free grants, programs, etc … and we were limited by time & capacity. If you look and say “a writer doesn’t get paid that much” they’re actually a DAO sales expert, writing is just the main channel, and their returns to the DAO more than justify the expenditure.
DevRel would be two people to provide around the sun support. These are highly technical people who understand the Compound ABI and are highly available.
Delegate Question #6:
Treasuries as Hedge funds: This section needs concrete goals to justify its costs.
Answer #6: Treasuries as Hedge funds:
The budget for, “treasuries as hedge funds" is a dedicated sales team that is entirely focused on closing deals with DAOs & foundation treasuries. The treasury team will help manage and strategies by partially (or fully) depositing it onto Compound. The goal here is to get incredibly sticky long term TVL on Compound that is the opposite of using incentives to attract sharks our term for short term investors.
The overall goal is to see if this strategy can directly increase TVL on Compound by $1B through deals that are struck with treasuries, which should increase compound reserves by an additional $5M per year that the funds are deposited.
More granular goals could be the number of foundations that have deals with Compound (1 x $1B, 10 x $100M, 10 x $50M). We could openly track how many deals have been signed, executed, and deposits made over the course of the year.
https://defillama.com/treasuries
Here is example language the sales team will use on treasuries (written as though speaking to the COMP treasury managers)
Currently the COMP Treasury has 1,108,492 COMP, valued theoretically at $119M, but most of which has a $0 carry through liquidity depth and diminishing returns. Strategic deployments of COMP that return other assets to the treasury replace potential sell-pressure with potential buy-pressure, and the ability to continue operations with the selling of non-COMP assets. In addition to the important resulting diversification it should be both revenue generating and used to assist with deal-flow and partnerships, helping facilitate the growth of Compound in markets, deployments, users, liquidity, and of course further revenue.
Our north star working with your treasury will be the revenue in non-COMP assets the strategies we help you execute add to your treasury.
During our negotiation with one particular chain we realized the end game of most treasuries should be to be a hedge fund. Our aim will be to educate and create strategies specifically for treasuries to take advantage of the Compound protocol to its fullest.
Delegate Question #7:
For Treasuries as Hedge funds, we’d prefer compensation for this to be structured on deliverables and KPIs.
Answer #7:
There needs to be an initial budget to hire the team to execute this strategy, it’s not realistic or feasible to find high quality talent willing to work on pure commission on to sell products with 6 month sales cycles. Whether or not the strategy shows signs of potential or has experienced any successes should factor into whether it’s funded during the next re-election.
Delegate Question #8:
For DeFi Operations:
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I would like stricter KPIs here and cost justifications
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What does “pools on 5+ chains mean”?
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In general, I’m not a huge fan of bridging pools as a use case for COMP
- 1) Because of security risks and 2) Most widely used bridging protocols use intent-based architecture which does not really require pools.
Answer #8: DeFi Operations:
DeFi Operations consists of 2 parts Token Listings & Token Health.
The implementation is a sales & operations team whose only focus is to close and implement partnerships that increase the utility of the COMP token. These include providing leadership to Staked COMP, increasing COMPs presence across all of crypto.
It is the belief system of the Growth Program that there are 7 things that generate fees in crypto.
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Staking
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CDPs
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Money Markets
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Dexes
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Perps
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Bridges
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Interest Rate Swaps
The Goal of DeFi Operations is to make each of these primitives a sustainable and fiscally responsible partnership for the DAO. Either through Grants, Incentives, Liquidity Deals, Tokenswaps or Fiscal Mechanism Design DeFi Operations can sustain the DAO thru bull and bear.
Let’s look at Dexes for example, the COMP token itself has incredibly thin DEX liquidity. But we can increase Token Velocity to Increase Token Health.
Velocity is a measurement of the health of a token. Right now tokens like Aave have 10x the DeFi volume as Compound which leads to better token health.
COMP → $4M 24 hour volume on DEXs
Aave → $38M 24 hour volume on DEXs
Faster and better bridges are absolutely imperative as they lead to greater utility and velocity. For example in DeFi Ops we specifically plan to integrate COMP with the ACROSS bridge, in a manner which generates revenue for the DAO, and unlocks significant utility on-chain.
Additionally, custom vault strategies developed by the DeFi Ops team enable the closing of more robust and complex deals for the ‘Treasuries as Hedge funds’ team, so that other DAOs liquidity can be hypothecated strategically through Compound, directly raising our TVL.
Additional KPIs that can be measured and benefit from proper DeFi Operations include
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% of on-chain liquidity growth in DEXs, Perps, Bridges, Etc for the COMP token
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% of on-chain velocity growth for the COMP token
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DAO revenue generated from DeFi positions & partnerships established
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DAO-to-DAO deals secured by DeFi Ops custom vault solutions
This also leads to more marketing opportunities, partnerships, and fuels further inbound requests and deal flow.
Summary Notes: There are 2 cycles of business life: Fast growth, or slow death. Inactivity and cost minimization is slow death. We want to grow revenue, market share, users, usage, and more. Don’t settle for 2nd best and declining.