DOT 2.0 2023 Year Review

As we conclude 2023, this review summarises the key activities of the dYdX Operations subDAO. In this review, we highlight the milestones and objectives we have achieved, acknowledge any we may have fallen short of, and delve into the factors contributing to these outcomes.
We are holding ourselves accountable to the purpose of the dYdX Operations Trust and the basis of the dYdX v3 governance proposal for DOT 2.0.

Projects:
- dYdX Operations Services Ltd (“DOS”)
- Genesis
- Validator support
- Indexer Service Provider
- RPC & Archival Nodes
- IBC Relaying
- Frontend
- User Support
- dydxopsdao.com

Administrative:
- Legal Restructuring / DOS
- Accounting and Audit
- Hiring / Building out the dYdX Operations subDAO team

dYdX Operations Services Ltd.

‍
In previous updates, we have discussed the incorporation of a Cayman Islands Exempted Company, named dYdX Operations Services Ltd. (“DOS”). The primary purpose behind establishing DOS was to streamline our operational processes, as we encountered difficulties in entering into contracts directly with the DOT. This is due to the fact that the Trust lacks legal personhood, requiring contracts to be executed by the trustees instead. Furthermore, the limited liability protection offered by a Cayman Islands Exempted Company is an advantage of this structure.

Incorporating DOS:

DOS was incorporated with the assistance of Ogier Global, and we engaged an independent Director, Glenn Kennedy, responsible for overseeing operations within DOS. Christoph Sonn, in his capacity as a trustee of the DOT, serves as the sole shareholder of DOS (legally termed “on the bare of the Trust”). This structure ensures full oversight and ultimate control of DOS by the DOT while maintaining the separation necessary for a reliable liability shield.

While this was not part of the original mandate of DOT 2.0, this was deemed necessary and strongly recommended by stakeholders to create a resilient legal structure enabling the dYdX Operations subDAO to manage and deploy community-owned dYdX Chain infrastructure securely. The individuals leading this workstream were Callen and Joanna, as this was started before the first hires by DOS were made. As soon as the Operations Lead, Valentin, was onboarded he was able to support the trustees in this workstream.

Making the DOS operational:

This was a big focus for the Operations Lead starting out. The focus was to initially establish the necessary foundational infrastructure for DOS since it is a newly formed legal entity. We expedited the setup of crucial infrastructure components for the launch of the Front-End user interface, dydx.trade. This included securing a credit card/bank account, obtaining legal advice for Terms of Service and Privacy Policy, and setting up a MultiSig.

What does DOS do?

‍
DOS serves as the central entity through which all main activities of the Operations subDAO have been conducted. All major contracts entered into by the dYdX Operations subDAO so far have been executed by DOS.

Who is on the MultiSig?

‍
The DOS MultiSig operates a 2/3 Safe MultiSig, with Christoph Sonn, Dimitar Petkov, and Valentin Prossliner serving as signers. These individuals are contractually bound to exercise the utmost care and diligence in their roles as signatories.

Legal documentation:

‍
Incorporation documents and relevant contracts entered into by DOS can be found here.
Genesis Contributions
Genesis of the dYdX Chain occurred on October 26, 2023, at 17:00 UTC,a significant milestone achieved with the participation of validators who added their signatures to the genesis file. We worked diligently to enable coordination between validators for this important event.

Validator Support

‍
While the dYdX Operations SubDAO does not directly operate the dYdX Chain nor any dYdX Chain validators, we provided important support to validators to ensure they stay informed and up to date at all times. This has been crucial for the dYdX Chain community. We established Slack Connect channels with all validators complying with v4 Terms of Use. We are also keeping in contact with all validators through Discord announcement channels.

Additionally, we are looking into ways to establish an alert system for top-stake ranked validators (by V.P.) and are also operating in accordance with v4 Terms of Use, to prepare for potential emergencies that require validator intervention.

‍
Indexer Service Provider

‍
tl;dr:
Chosen service provider: Imperator
Operating Quality is great
Considering creating guides to enable easier onboarding for other parties that are willing to operate indexers

The contract for one of the two essential community-owned infrastructure components mandated by DOT 2.0 has been led internally by Dimitar, our Technical Project Manager, along with Callen and Valentin. After thorough consideration of numerous high-quality candidates, we selected Imperator as our service provider for the remainder of the DOS 2.0 term until December 16, 2024.
We want to take this opportunity to thank all the applicants again for their time and applications.

Imperator’s performance has been great so far, with a smooth setup, adherence to expected timelines, and timely operation of the indexer, meeting the agreed-upon SLAs.

RPC Nodes & Archival Nodes

‍
A key core infrastructure aspect of dYdX Chain’s operations is ensuring there are publicly available RPC and Archival nodes. RPC nodes are crucial for frontend applications, while Archival nodes store unpruned block data for debugging protocol issues. To provide these services to the dYdX Community, the dYdX Operations subDAO ran an RFP and contracted KingNodes, Polkachu, and Bware Labs. The endpoints provided by these teams can be found on the resources page.

‍
IBC Relaying

‍
To seamlessly integrate the dYdX Chain within the broader Cosmos ecosystem, IBC packets must be relayed swiftly between zones. With the help of diligent dYdX community members, we identified the need to support IBC relaying between the dYdX Chain and Osmosis. We ran an RFP for IBC relaying services and contracted Cros-nest and Informal Systems, who are currently relaying IBC packets between dYdX Chain and Osmosis, with the option to extend the service to other Cosmos zones, if the community identifies such need.

‍
Frontend (dydx.trade)

‍
The frontend deployed at dydx.trade is a deployment of the open-source codebase by dYdX Trading Inc. To achieve smooth operations and updates, we maintain our own fork of the upstream repository.

User support

‍
Shortly after we launched the dYdX Chain community-owned frontend, we introduced a community-funded user support function that went live. The dYdX Foundation serves as the service provider to dYdX Operations Services Ltd. in this capacity. The dYdX Foundation is well positioned to provide user support, expedite issue resolution, and collaborate with relevant parties to address potential bugs. The dYdX Foundation has partnered with ACX, a leading user support service provider, who is currently managing user support for dYdX v3, bringing valuable product and ecosystem experience and synergies to support users of the dydx.trade user interface. The user support function has experienced significant usage so far and the experience has generally been very positive for all parties involved.

dydxopsdao.com

‍
The new version of our dydxopsdao.com website was introduced shortly before Genesis and was aimed at improving the brand recognition of the dYdX Operations subDAO, also enabling people outside the dYdX Community to understand that the subDAO is part of the dYdX family and the products made available by it can be trusted.
Additionally, the new design also provides a better overview of the information presented on the website, increasing transparency. We will continuously add to the information shared on dydxopsdao.com.

dydx.forum

‍
In the last quarter of 2023, the forum underwent significant enhancements, aligning with the dYdX brand through a full rebranding and revamp. We introduced a new colour scheme, custom CSS for better alignment, and updated categories and tags. Key initiatives included weekly backups, SEO improvements, updated ToS and Privacy Policy, and a new Code of Conduct. We also focused on moderating content, tackling bad actors, and engaging with the community to ensure a positive and constructive forum environment. Our efforts resulted in a well-organized, user-friendly platform that resonates with our mission and values.

Hiring

‍
The dYdX Operations subDAO contributor team was onboarded in the early months of the DOT 2.0 mandate, thanks primarily to the efforts of Joanna and Callen. We have already discussed this at length in a previous update.

Recently we have added Stan to the contributor team as a Governance Associate. He has exceeded expectations and contributed beyond the initial scope of his role, which is why we have asked him to increase his involvement with the team from the start of 2024, growing our contributor team to four members.

It is likely that Stan will not be the last hire in 2024, as we assume additional responsibilities and strengthen the technical aspect of our products. We are in the process of defining the 2024 strategy and will share more information as soon as it is available. Importantly, all hiring decisions, including Stan’s expanded role, align with the original budget approved as part of the DOT 2.0 mandate.

Accounting and Auditing

‍
Among several viable candidates for the accounting and auditing contract, Harris & Trotter stood out due to their experience in the crypto space. They are assisting us in establishing a first-class accounting system with state-of-the-art internal controls and a public dashboard. The public dashboard will try to synthesize all the necessary information to give a good overview of the subDAO’s financials, going beyond the on-chain MultiSigs and showing movements of the Bank Accounts and Credit Cards. This upgrade from our previous reliance on Google Sheets for accounting and transparency will be a significant improvement.

Their auditing unit, separate from the accounting team, will conduct the first audit for the calendar year 2023, with the report expected to be available to the dYdX community by the end of Q1 of 2024.

Finances

‍
Finally, we wanted to give an overview of the financial situation of the Operations subDAO. While we were only recently able to publish the finance reports for the past couple of months on dydxopsdao.com, as mentioned above, we were working in the background to increase the transparency of our finances.

In the first 6 months of the 18-month term, the subDAO spent roughly 1.1 m USDC (final numbers for December are not in yet). The spending rose from a little over 16k per month in July to about 400k in November, this is due to the ramp-up in operations, hiring the core team only starting August, Genesis only happening in late October as well as the trading incentives only launched at the end of November. The main ongoing cost driver is infrastructure cost, which is a function of the usage of the dYdX Chain.

This leaves us with 5.5 m USDC for 2024, currently, we are looking at monthly expenses of around 400k, very much like November 2023 numbers. This means we should very well stay within the budget of the original proposal, even though we have taken on some additional spending (not budgeted in the original proposal).

2024

‍
Lastly we wanted to share a quick outlook on what the dYdX Operations subDAO wants to achieve in 2024.
Undoubtedly, our top priority is to successfully fulfil our mandate and to achieve this, our foremost objective in the first half of 2024 is to execute all actions necessary for rolling out the iOS and Android applications for the dYdX Chain.  

In the background we are working on solidifying the DOT and condensing our learnings in the SubDAO Playbook - updating it to reflect our learnings and recommendations for possible new subDAOs that may be formed is also a high priority for us.

Once all of the infrastructure pieces are in place we would like to work on resiliency and redundancy, decreasing single points of failure and risk as much as possible.