# My Response to SGP‑0012, and why I can not support it

I want to share my perspective on SGP‑0012, a proposal calling for the dissolution of Tangle DAO and the reallocation of its treasury under a new committee and mandate.

## How the Proposal Was Handled

The proposal was published by one member of the current committee without prior discussion or approval from the rest of us. It lists our Program Lead as its primary signatory, but he was not involved in drafting or reviewing the proposal before it was made public.

The two members named as Co-Leads have been involved during the term, with somewhat more engagement over the past couple of months. However, they were not among the most active members of the committee and did not participate meaningfully in the work on the new operating agreement we have been drafting, nor did they raise concerns or contribute feedback as that work progressed.

This proposal appeared while the rest of the committee was finalising a separate plan to manage a structured transition for the DAO, based on six months of active governance, financial, and strategic work (delayed due to illness in the team).

## What the Proposal Actually Does

If passed, this proposal would:
- Replace the DAO’s governance structure with a private 2-of-3 multisig
- Eliminate elections and the open grant proposal process
- Remove public oversight and committee accountability
- Spend the remaining treasury over the next 6 to 8 months
- Dissolve the DAO entirely at the end of that period
- Send any remaining funds to an unnamed non-profit

It includes no new governance document, no transparency standards, no conflict resolution pathways, and no protections for community participation. It removes the core operating structure of the DAO without providing a legitimate replacement.

## We Were Already Engaged

The proposal presents infrastructure funding as an urgent new priority. In reality, we were already engaging with the IOTA Foundation and others on this very topic. Specifically:
* We had indicated our willingness to support one urgent infrastructure grant for 200,000 USD
* We clarified that under the current operating agreement, only 30 percent could be paid upfront, with the remainder contingent on the continuation of the DAO
* We expressed preliminary support for up to 250,000 USD in additional grants, to be properly reviewed after the new operating agreement was adopted and our term extended to manage the transition
* We made clear that we could not ethically approve multiple large grants in the final days of our term while operating under interim conditions

This was not inaction or resistance. It was a deliberate effort to ensure that infrastructure funding progressed within a transparent and accountable process, supported by community agreement.

## What We Were Proposing

While this new proposal was prepared behind the scenes, we were finalising a different path forward. Our proposal was nearly complete and included:
- Publishing a new, more flexible operating agreement we have been developing since 2024
- Migrating the DAO from Shimmer to IOTA, reflecting where the funds originated and where the community voted
- Extending the committee by three to six months to oversee the transition and support strategic planning
- Launching new governance tooling on IOTA Rebased, using a Move-based voting system already scoped with a third-party developer through a public RFP
- Running new elections under the improved structure once the tooling is in place

During the extension period, we planned to review the remaining infrastructure proposals according to the rules of the new operating agreement and exhibits. We were not refusing to fund infrastructure. We were working to ensure that funding decisions followed due process.

## On Activity and Spending

The proposal criticises the DAO for inactivity, citing the number of proposals submitted versus funded. But that framing ignores the full context of this past year.

The DAO term began in July 2024. At that point, some committee members were informed (under NDA) that the entire IOTA protocol would be rebased to a new technical foundation. This was not announced publicly until November 2024, and the new network only launched in May 2025.

During the intervening months, most teams in the ecosystem continued to build on Stardust-based IOTA and Shimmer, unaware that those technologies were being deprecated. Many incoming grant proposals targeted this soon-to-be-obsolete stack. We were often forced to reject or leave those proposals idle, not because they lacked merit, but because we could not responsibly fund work that would not be supported long-term. At the same time, we were legally restricted from explaining the full reasons to applicants or the public.

Even after the public announcement, clarity about the new stack only emerged gradually. Many ecosystem participants only understood what the new Move-based direction entailed in the final months leading up to the network’s launch.

This was not inefficiency. It was the result of a deep transition that reshaped the technical foundations of the ecosystem and placed the DAO in a holding pattern while the new landscape took form.

Despite that, the DAO continued operating responsibly. We improved internal tools, engaged new applicants, funded what we could, advanced governance planning, and ended the term with a net surplus (even after OpEx) and a new proposal nearly ready for publication.

## Treasury Management and OpEx

The proposal references overhead and operational spending, suggesting that too much was spent on salaries. In reality:
- Committee compensation remained below 20 percent of the original budget
- Our internal policy allowed for up to 30 percent, which we remained well within
- We offset all of our operating expenses through DeFi yield strategies
- DeFi earnings exceeded operational costs by more than 85,000 USD

These results show financial discipline and strategic planning. Our work paid for itself.

## Legal and Governance Context

Tangle DAO LLC is a single entity with two funding streams. The DAO originally included a committee elected by Shimmer holders and later expanded to include an IOTA-elected committee managing the IOTA portion of the funds.

The IOTA Treasury is now managed by this IOTA committee. However, SGP‑0012 proposes using a Shimmer-only vote to approve reallocation of all funds including those from IOTA.

This presents a governance problem. The IOTA funds were approved by an IOTA community vote, yet that community cannot currently vote due to IOTA Rebased removing governance functionality. Using only Shimmer votes to override decisions about IOTA-elected funds is not consistent with the original community mandate.

That is why we have been working to:
- Migrate governance from Shimmer to IOTA
- Extend the DAO under improved operating rules
- Build new tooling to allow IOTA community voting to resume
- Respect the structure that was set in place by past votes

Until that infrastructure is ready, attempting to push through irreversible changes with only a subset of the community involved risks damaging the ecosystems legitimacy.

## Transparency and Integrity

SGP‑0012 suggests removing the governance exhibit from the operating agreement and granting full spending power to a 2-of-3 vote among a new committee. It removes limits on grant sizes. It includes no published governance document, no election pathway, no conflict resolution framework, and no clarity on member accountability. It does not include proper onboarding or public review for the new leadership structure. It removes key protections with no equivalent replacement.

This is not a transition. It is a power transfer, with minimal oversight, executed at speed. The fact that it was published without informing the full committee or waiting for the finalised proposal undermines the values this DAO is meant to represent.

## The Role of a Community Treasury

The proposal argues that because the current grant program faced structural challenges, the DAO itself is no longer needed. I strongly disagree.

The past year has not shown that a community treasury is unnecessary. It has shown that a community treasury cannot succeed when major protocol shifts occur without public warning, when foundational infrastructure is moved behind closed doors, and when grant-makers are legally barred from explaining why entire categories of proposals must be declined.

This was not normal market disinterest. It was the result of external conditions that will not be repeated. Now that the Move-based direction is public and stabilising, community tooling and grassroots builders will matter more than ever.

Infrastructure should absolutely be funded. But that is already the core responsibility of the IOTA Foundation and affiliated organisations, who hold significantly larger war chests and direct ties to engineering, research, and commercial stakeholders. A DAO should not become a passthrough to pay pre-signed deals negotiated by others. It should remain an independent engine for open experimentation, diverse perspectives, and community-aligned priorities.

The DAO exists not to duplicate the Foundation, but to complement it, and sometimes, to challenge it. That is what makes ecosystems resilient.

We have heard before that we just need a few more months of spending to reach a turning point. But spending the full treasury now to do so, without public oversight, without elections, and without structural reform, is short-sighted. With our new governance framework nearly ready, the DAO could be shaped into something much more powerful and participatory over the next several years. That includes new capabilities beyond passive grants, such as accelerators, funding seasons, and global engagement initiatives. It would be a mistake to give up just before we unlock that potential.

## Final Thoughts

Any DAO member can publish a proposal. That is how this system works. But how one does so matters. It reveals their respect for the process, for the other contributors, and for the broader community.

I am not opposed to funding infrastructure. I am not opposed to collaborating with the IOTA Foundation or any other entity. I believe it is essential that we do.

But I believe it must happen transparently, using trusted processes, and in a way that honours the DAO’s original purpose.

We will proceed with our proposal to:
* Transition the DAO to IOTA
* Extend the current committee to support that transition
* Fund the development of governance tools so that IOTA token holders can once again vote on their DAO
* Review all grant proposals properly and publicly under the updated operating framework

If the community supports this, we can restore proper governance, launch new elections, and define the DAO’s next phase together.

This is not resistance to change. It is an insistence that change be handled with care, with legitimacy, and with community support.