2022 Prime Reflections

To increase long-term resilience and short-term efficiency, PrimeDAO is slimming down its operations. In the current economic climate, minimizing burn while focusing on the activities that are the clearest value-add is perceived by the Prime stewards as the best way forward.

  • Burn rate down to ~$50.000 a month from a peak of $250,000+ in May, giving the organization ~ 12 months run-way.

  • Launch and Deals to become the core products due to value, team, and technical overlap.

  • Rating, Proposal Inverter, Badger to explore spinning out while continuing to be partners, Pools product to be paused until further notice.

  • New tokenomics and governance designs will be created in the coming months.

Reflection of 2022 developments
At the start of this year, PrimeDAO had just launched the Prime Launch product and was building up the internal capabilities and scaling up while having multiple teams operating to progress the Prime Launch BD, Engineering and Design work related to Deals. When Deals launched in May of this year, we saw a good amount of interest and usage during the first weeks, with OlympusDAO, Celo, Paladin, FiatDAO, and Prime completing deals. Prime Rating was picking up steam with 180+ protocols covered, 60 raters+, 7 (sponsored) events, and multiple API integrations and sales. Meanwhile, the launch team was building a solid pipeline of upcoming launches, and the engineering teams were already preparing for Launch V 1.5 and Deals V1.5.

However, the market for both launches and deals decreased tremendously from early May onwards. With macroeconomic pressures increasing and sell pressure on DAO tokens reaching new highs, almost no DAO was interested in launching a public token or engaging in a deal. PrimeDAO was working towards finishing its initial product suite and growing the team with the intent to do a strategic round in the second half of 2022 to fund Prime’s next stage of growth. However, due to the lack of usage of our leading two products and thus little revenue, the operations and development costs started to burn our runway quickly.

At the peak of development in May, Prime had four teams contributing to the development cycle and over 23 FTEs contributing to PrimeDAO for a burn of about $290,000 a month (budget overview based on past proposal here). After the decrease in product usage in the second half of May, the Prime Stewards gathered to decide how to move forward. The steward swiftly chose to try their luck before potential further market crashes and established a working group to test the water for a PrimeDAO strategic round. While the initial interest for the round was positive - continuous market pressures and uncertainty in the weeks following forced the valuation of Prime to go down quickly and potential backers to not feel comfortable contributing to PrimeDAO. Meanwhile, the Ops team was already preparing for a plan B in case PrimeDAO could not attract new capital. This Plan B focused on slimming down PrimeDAO in terms of projects and contributors.

In July, this Plan B was put forward to the Prime stewards and set in motion. This means that some of the Prime incubated products will spin-off, while the remaining product team will work closely together as one big group. The burn has been brought down from $260,000 in June to ~ $50,000 in October, with the primary focus on executing the ReFi Launchpad in collaboration with Celo and maintaining the Prime Launch and Deals products. These two products were selected as the core products due to the overlap in the value proposition, building team, and technical standards.

The following will happen with the other Prime projects: Prime Rating will function as an autonomous unit and explore spinning out of PrimeDAO, as it has always operated as a semi-autonomous team inside of PrimeDAO and has , Proposal Inverter has become the Inverter Network and received development grants from Radicle and TEC from which it will continue to build, Badger is being designed on top of Gnosis Safe and may be developed into a standalone product in the near future, while Prime Pools developed has been paused until further notice due to a saturated market with with Aura Finance and StakeDAO both operating effective solutions…

With the current burn rate of $50,000, PrimeDAO has about 12 months of runway in stables and partner tokens. In addition, PrimeDAO still owns 60M (60%) of all D2D tokens in its treasury, putting the total treasury value at ~ $4m.

While the circumstances aren’t ideal - the new focus of PrimeDAO will make the organization more resilient and allow the remaining contributors to continue to support DAOs in launching their token and engaging in Deals while designing the next iteration of PrimeDAO.

Short-Term Priorities
The following objectives are set out for the next 6 months of PrimeDAO and aim to provide a clear focus for the coming period.

O1: Successfully run the ReFi Launchpad with Celo - The ReFi Launchpad is the most straightforward market fit for PrimeDAO - providing both support and launch technology to emerging DAOs in the ReFi industry that have vision overlap with PrimeDAO. The majority of the remaining contributors will focus on this program.

O2: Successfully support the potential spinning out of Prime Rating, Proposal Inverter, and Badger - The projects incubated in PrimeDAO have all been able to show some sign of product-market fit and ecosystem demand. PrimeDAO will support the project team in their effort to successfully spin out and maintain a long-lasting (token) relationship with these projects.

O3: Create a process to value and reward contributions to Prime. Before PrimeDAO can genuinely become a scalable DAO 2 DAO coordination hub, it is critical to improving the incentives and policies around D2D to create a Schelling Point where DAOs can collaborate and co-own the tools they need to thrive. PrimeDAO will iterate on the D2D Tokenomics in the coming months.

O4: Establish a Governance Framework that facilitates more fluid governance - Prime has constantly innovated on DAO governance, using the Reputation systems and shipping a prototype of a Badge system in January of this year. Improvements must still be made on how we set up the right governance processes and what technology to use. PrimeDAO will research and design a system that balances the interest of different stakeholder groups inside of PrimeDAO to be a more welcoming organization for new and existing stakeholders.

After completing these objectives, PrimeDAO is likely in a better spot and, if the market allows, would be able to attract new resources.

Learnings and points of Improvement

Building DAOs is hard - building cross-DAO collaboration is even more challenging. Below I’ve noted some pain points and takeaways on how we can improve.

  • Hard to appropriately value and correct the amount of resources: PrimeDAO has been supporting multiple initiatives simultaneously, and it has been increasingly complex to budget different initiatives correctly. We should improve our methodology and establish better frameworks for valuing initiatives and contributions.

  • Lack of co-funding and co-development: The initial vision of PrimeDAO was to maximize co-funding with value-aligned DAOs. In practice, finding the alignments with other DAOs to co-fund progress was more challenging, which is one of the reasons the Inverter development was started. In the future, Prime should leverage its existing partner network to pursue co-funding and co-development opportunities.

  • Shared vision not strong enough: With multiple teams and products, it has been challenging to establish an overarching vision for Prime. In the future, it may be better to develop a simple vision with key values that different contributor groups can embed into their vision to ensure alignment while allowing for diversity in cultures and visions.

  • Depleting treasury: Burn rate was too high with not enough product income. The burn-rate of Prime should match the income better, especially in an environment where capital is expensive. Also, the current Product Fees are too low to become self-sufficient.

While the development trajectory of PrimeDAO was planned differently, there are quite some things to be optimistic about, and the organization still has a lot of options to come back stronger. From PrimeDAO becoming a Gnosis Guardian, Inverter gaining initial traction to the ReFi Launchpad establishing an effective and connected deal-flow. Prime is still positioned to become a leading DAO 2 DAO builder hub, especially in the ReFi niche.

Thoughts, suggestions, and actions are very welcome. DAOs are still a novel innovation, and the only way forward is by constantly analyzing, learning and building - and that’s what we will do at PrimeDAO.