Governance
Hats.Finance is committed to building a decentralized and community-driven ecosystem. To achieve this, we are implementing a DAO governance model that empowers the community to actively participate in shaping the platform's future.
The initial members of the DAO will be the current members of the core team.
Legal Entity and Liability Framework
Hats DAO, operating as a decentralized autonomous organization, is affiliated with the Incentive Alignment Foundation in the Cayman Islands. This foundation acts as a legal entity and liability shield, protecting DAO members from potential legal exposure and legitimizing the DAO's governance protocols. The foundation's role includes compliance oversight, particularly concerning Anti-Money Laundering measures for the DAO Treasury. Despite this affiliation, Hats DAO retains its autonomous operational ethos. The involvement of the Incentive Alignment Foundation does not imply any direct control over DAO activities, nor does it assume liability for the outcomes of these activities.
Governance Structure
Instead of a single, monolithic governance body, Hats.finance will utilize specialized Guilds focusing on key areas of the platform's growth and development:
Product Guild: Responsible for ideation, development, and iteration of new features and products.
Marketing Guild: Focused on promoting Hats.finance, building brand awareness, and expanding community reach.
Growth Guild: Dedicated to driving user acquisition, partnerships, and overall ecosystem expansion.
Management Guild: Oversees operational efficiency, treasury management, and platform sustainability.
Quarterly Funding and Proposal Evaluation
At the start of each quarter, each Guild will be allocated a predetermined amount of $HAT tokens from the DAO treasury. These funds will be managed within a dedicated Guild Vault. Community members can submit proposals to the relevant Guilds outlining their ideas or plans for executing initiatives within the Guild's scope.
Proposal Submission and Reward Mechanism
Each proposal should clearly outline:
Problem or Opportunity: A concise description of the problem being addressed or the opportunity being explored.
Proposed Solution: A detailed explanation of the proposed solution or initiative.
Implementation Plan: A clear roadmap with defined milestones and timelines.
Budget Request: A breakdown of the requested funding and how it will be utilized.
Proposal evaluation
Guilds will evaluate proposals based on the following criteria:
Potential Impact: The potential impact of the proposal on achieving the Guild's objectives.
Feasibility and Viability: The practicality and likelihood of successful implementation.
Budget Efficiency: The responsible and effective use of requested funds.
Alignment with Hats.finance Vision: The proposal's alignment with the overall vision and values of Hats.finance.
Reward Distribution
Guilds have the authority to approve and reward proposals in two ways:
Immediate Reward: Full funding is provided upfront for smaller initiatives or proposals with a clear and immediate impact.
Milestone-Based Linear Release: Funding is released incrementally as the proposer achieves predefined milestones. This approach ensures accountability and minimizes risk for the DAO. Guilds retain the right to revoke funding if milestones are not met.
Voting Power and Quarterly Votes
At the end of each quarter, the community will participate in votes to determine the allocation of the next quarter's funding for each Guild. Voting power will be determined by $HAT holdings, with varying weights to encourage long-term commitment and platform utilization:
Regular $HAT Tokens: 1x voting power (delegated or undelegated)
Locked $HAT Tokens: 2x voting power
$HAT Tokens in Hats Vaults: 3x voting power (tokens actively contributing to bug bounties or other platform services)
This tiered voting system encourages active participation, long-term commitment, and utilization of the Hats.finance platform, ensuring that those most invested in the ecosystem have a greater influence on its direction. However in the future, Hats Finance will move towards ve tokenomics, so $HAT will have to be locked and converted to veHAT to accrue voting power. We will notify the community when this happens.
Becoming a Guild Member:
Hats.finance encourages active community members to participate in Guild activities. Individuals who consistently demonstrate their commitment and expertise to a specific Guild can apply for membership.
The application process will involve:
Submission of Contributions: Providing evidence of meaningful contributions to the Guild's area of focus, such as code contributions, marketing initiatives, growth strategies, or operational improvements.
Community Endorsement: Receiving endorsements from existing Guild members and the wider community based on the applicant's demonstrated expertise and commitment.
Guild Approval: The Guild members will vote on the applicant's acceptance based on their qualifications and the potential value they bring to the Guild.
Multisig Governance
Hats DAO employs Multisig wallets for decision execution and treasury management. Comprising elected delegates, these Multisigs ensure responsible governance and effective management of DAO operations.
Treasury Management
The DAO's treasury income is allocated towards ensuring the long-term sustainability and growth of the Hats ecosystem. Governance decisions on fund allocation are made with ethical considerations and alignment with DAO principles.
Legal Considerations
Membership in Hats DAO is structured to avoid legal liability for DAO activities. All legal matters are managed through the Incentive Alignment Foundation, delineating a clear boundary between the decentralized operations of the DAO and its legal responsibilities. This setup ensures that DAO activities remain within the ambit of legal compliance while upholding the principles of decentralization.
The abovementioned operational processes will be managed by the management guild, and the initial team comprising the management guild will be from the Hats Finance team.
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