Authored by Milamber and Defi Ted on 1 Jan-25 with review from the Paragons and Treasury Councils
Proposal: Restructuring DAO Operations Proposal - Google Docs
Summary
The Executive Team proposes to restructure DAO operations by reducing operational overhead by removing some contributors, scaling back work in non-core areas and aligning future strategy with where most of the DAO’s success has been - being a player-focused Parallel bond, builder, and partner.
Taken together with changes already made in Q4 2024, this should result in a c.54% reduction in opex and will bring the DAO close to immediate profitability in the face of already quickly growing revenues.
The DAO still possesses a treasury of c.$20m (in line with post-TGE) and this leaner structure guides us towards faster profitability with simpler expectations, with no significant downturn in operations or revenues as a result of these changes due to changes being made in largely non-revenue driving areas.
Motivation
Ever since the DAO started in 2022 it has been focused on growth within the Parallel ecosystem as part of its core strategy, earning from provision of its assets to players, within caching contracts and building products to serve the Parallel community, supporting its players and the community via tooling, earning opportunities, tournaments and being a champion and key partner to help the ecosystem grow. This will always be at the heart of the DAO’s operations, goals and strategy and will never change.
More recently the strategy evolved to seek out additional earning opportunities and market fit on top of Parallel through other games and the wider Web3 gaming market in order to diversify away some of the risk of focusing on one ecosystem, and capture new market participants as a part of that.
The size of the team grew thoughtfully to serve the grant opportunity with Echelon, expand our footprint and skillset in content, tournament hosting and education, and in R&D by creating new products for gamers - experience and assets which could either be tested within one ecosystem and taken to others, i.e. the DAO was now a Parallel-focused guild and also a small Web3 gaming-focused developer. 2024 then came and was a great year for the DAO, some of the highlights including:
- Priming launched Sleeves, Portfolio, gameplay support, and met Echelon grant milestones;
- A custom solution for managing VIP Parallel users was created to head off challenges from alpha testing the bonds product. This has provided a majority of gameplay revenues to date;
- Bonds launched and we have grown quickly to 330 players and counting, the largest bond;
- We hosted several large scale tournaments on behalf of Parallel and numerous of our own;
- We rebuilt the Paragons website, launched our Alliance bond and education program and deployed PDT and staking v2 to Base, adding Wayfinder Prompt points to Prime earning;
- We redesigned our tokenomics via governance, helping the treasury work for PDT holders while stakers can access most of the protocol rewards and rebranded our products;
- We redeveloped our LP and earning strategy, moving our LP to Aerodrome, earning significant yields, deepening liquidity for holders, and started our buyback and burn program.
While the team has grown and as a result costs, the growth has been considered and not rushed, and underperformance or areas that weren’t working have been adjusted along the way. As a result of this care and the management of the treasury by the Treasury Council, the treasury is in a similar position to post-TGE after the costs paid out over three years at c.$20m. In saying that, after various attempts to seek out other forms of product market fit and revenue, the Executive Team has accepted that heading into 2025 the strategy should align with where most of the DAO’s success and profit has been - Parallel.
The DAO started to scale back some operational costs in Q4 of 2024, some of which was natural as the Priming grant came to a close, and after a period of reflection the Executive Team is proposing that further reductions be made in order to simplify the model to focus primarily on what the DAO initially set out to be (and is already succeeding at) - a player-focused bond, that serves the community of PDT holders and Parallel players for access to assets, education, and analytics to support that journey.
What this means is that there will need to be further team changes (including within the Executive Team), a streamlining of product focus to our own and Parallel-focused products only, a change in strategy to focus only on proven revenue streams and a change in team structure to a model where more people have the trust, autonomy and freedom to execute quickly and efficiently in their areas.
Defi Ted, along with members of the Executive Team have put together a strategy which all believe to be the most sensible for the DAO to operate going forwards. Unfortunately this also means Defi Ted has volunteered to step down as part of this, albeit the DAO and remaining team will continue with his blessing. In short the core focus areas of the new 2025 strategy will be:
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Capitalizing on Echelon’s 35M PRIME (largely untapped) gameplay pool through:
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TCG and mobile expansion
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Colony
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Tau Ceti
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Furthering Paragons Alliance (including player management system) and Priming’s gameplay analytics to further tap into this pool, with potential monetisation of Priming in future;
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Selective expansion into promising ecosystems where incentives align (e.g. Koin Games);
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Treasury optimization to, minimally, offer PDT value aligned to the treasury backing, get to more consistent profitability, grow the backing and reduce the overall supply of PDT;
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PROMPT/Wayfinder opportunities via staking rewards and potential revenue streams;
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Offering an exit (“quit”) option to holders who want it to further reduce PDT supply.
We will continue to help players and guilds maximize gameplay rewards while building sustainable value for PDT holders. Our leaner structure guides us towards faster profitability with simpler expectations, with no significant downturn in core operations or revenues as a result of these changes.
Specification
Identify the core strategy for the DAO going forwards
The Executive Team had already discussed and agreed on the approach going forwards as part of work in 2024; this proposal is an acceleration of that timeline as various initiatives to be attempted became unviable in the intervening period. Over December, the Executive Team refined this strategy, reviewing revenues, costs, work done to date and what has and hasn’t worked and agreed the fastest route to profit with least risk is as noted above - being a player-focused Parallel bond, builder, and partner.
Identify leadership team required to take the strategy forwards
As part of the strategy work, a review of team members and salaries were undertaken and it was determined who was key to each area required to execute on this plan. It is proposed that Defi Ted (CEO) and Rhagga (COO) step down and the new structure to be led by a team of FlapJackson (CPO), Milamber (CFO) and JCrew (CGO) with the three absorbing all leadership responsibilities going forwards.
Given a scaling back of the engineering team (below) and product work, Tea (CTO) has been offered an individual contributor role All remaining team members will take a more active role in strategy discussions, removing the siloing of leadership vs. team as in the past.
Identify team members who are not required to execute the new strategy
Several team members left the DAO in Q4 2024 as part of the first stage of this work. Unfortunately several other team members are proposed to exit the DAO as they are no longer required in the new structure. One of our Content and Education team will be asked to exit immediately and two developers who are now at the end of an initial one year contract will be asked to exit in three months once they have completed all outstanding requirements. The remaining structure is shown in Workings.
Present proposal to Paragons and Treasury Councils for approval
This proposal will be presented to and discussed in detail with our councils to ensure that it has their approval. It will initially remain private due to its sensitive nature, and some form of private on-chain vote will be required to take place to signal official approval of these changes.
Inform team members of changes, announce changes internally and externally
Team members expected to exit will be informed and removed from systems as required. An official announcement will be prepared for team members and separately to the community informing them of these changes, the reasons and highlighting the positive outcomes for the DAO, making clear that it is a collective decision inclusive of Defi Ted, with his blessing, and that he will remain as a holder and advisor.
Continue to monitor and measure outcomes, adjust strategy and team as required
The remaining Executive Team will continue to monitor and report on the (hopefully) positive outcome of these changes, and may in future seek to expand again to better serve new opportunities.
Rationale
The Executive Team agrees the time is right to accelerate an existing timeline
As noted above the team had been working on new products and areas of focus for 2025 in addition to its core focus on Parallel but acknowledged that this may not work out and the scaling back proposed in this document may eventually need to happen later this year if so (including Defi Ted stepping down).
Some of these initiatives became unviable in the intervening period, and coupled with slower than expected growth in Parallel and a late rollout of bonds (which is now bearing fruit), it was agreed the best approach was to bring forward this timeline and ultimately deliver faster profitability at lower risk.
The vast majority of our success and market fit to date have been in one area
We have a team of extremely talented people at the DAO and have built some incredible things. We have always strived to not just contribute to the Parallel ecosystem but to Web3 gaming as a whole, creating a killer product or app that would not just deliver returns for holders but turn us into a powerhouse business within the space. Ultimately that has not quite panned out and we have to be realistic about where we are earning and where we aren’t getting returns and the R&D is not worth it.
Some inefficiencies, split focus and middle-sized organisation issues were creeping in
As the DAO has grown and more focus has been placed on product development in and outside of the Parallel ecosystem, operations haven’t felt as efficient or fast-moving as they need to be in this space. We feel a change in team structure to a model where more people have the trust, autonomy and freedom to execute quickly and efficiently in their areas more like a startup will ultimately be a benefit.
We will be quickly profitable, with only a minor operational impact on remaining areas
The aforementioned c.54% reduction in opex will bring the DAO close to immediate profitability in the face of already quickly growing revenues. We expect no significant change to core operations, earnings, bonds or day to day activities since most of the scaling down is in non-core areas, and/or following development delivery milestones. We will just be a smaller team delivering similar output around Parallel, the same earnings to our stakers holding the same treasury and giving more opportunities to freelance community members.
Timeline
Due to the sensitive nature actions are required to be taken immediately, subject to council approval. Operational processes such as removal of personnel from systems to take place once exited.
Costs
Exit packages for appropriate personnel will be disclosed in a separate proposal. No other costs are expected relating to this proposal.