Establishing a DAO Constitution

DAO Constitution

Hey friends, what a time to build a piece of the future of finance together.
Let’s get the ball rolling on defining a framework for the DAO’s operation.

This draft is the first step to codifying standard operating procedures for processes like governance and community management.

This draft describes our mission and attempts to make operating principles digestible. With it defined, we can make it easier for a decentralized community to coalesce and build together.

Once the community has provided feedback, a final version should be drafted and ratified via a vote on snapshot.

An important thing to note is that the final constitution is editable with follow-on proposals.
I’m sure there will be amendments, discussion, and growth.

A timeline for next steps follows:

  • Forum discussion of a week.
  • A poll in the forum will be opened for 3 days.
    If the poll has more than 10 participants, and more than 50% decide to move to a formal proposal, a formal proposal will be written.
  • The proposal will be voted on in Snapshot, if more than 4% of the vlCXD holders participate, and more than 50% of participants vote yes, the constitution will be ratified.


DAO Constitution

Mission Statement

Create and maintain index protocols useful for building portfolios, such as the Convex Index.


Tokenomics first
Tokenomics is what turns a product into a protocol. Without healthy tokenomics, a DeFi product will struggle to gain traction and struggle to decentralize. Design should start with tokenomics.

We evaluate decisions by considering the best interest of protocol participants (ie. users, downstream protocols, and DAO contributors).

Own the work
We expect decision making at every level. When tasks aren’t fully formed, we make decisions on how to execute and fill in the gaps.

Work with Urgency
Time is the most valuable resource we have. We must diligently prioritize our tasks to capitalize our use of time and act on a bias for action

Pursue Innovation
Look for answers that are outside of the box, and prepare us for today and the future

Seek Alignment
Take action when we see behaviors that aren’t aligned with our operating principles


The DAO uses a two entity structure similar to the framework defined by David Kerr (Principal, Cowrie LLC) and Miles Jennings (General Counsel, Crypto, Andreessen Horowitz).[^1]

The DAO will receive income from the protocol, with a portion of the yield earned going into the treasury. The treasury will fund the development and day to day operation of the protocol.
DAO members can signal a desire to make changes to the protocol via governance voting.


Treasury Entity


The following roles and responsibilities outline who participants in the DAO and what their actions are:

  • Member: A person who has been onboarded to the Cortex DAO community.
  • Contributor: A person/entity actively contributing to Cortex DAO.
  • Core Contributor: A person/entity with decision making authority.
  • Voter: A person/entity with the ability to vote on governance proposals using locked CXD tokens.
  • Administrator: A person/entity with access to the Administrator Multisig(s).


Actions within the DAO are completed via two processes, direct governance and representative governance.

Direct governance is the result of passing governance proposals by DAO contributors. Decisions resulting from direct governance are submitted via governance proposals to the community, once passed, are actioned by the Administrator using the protocol multisig:

Contributors → Governance Proposal → Administrator → Protocol Multisig

Representative governance includes the responsibilities and charter of action given to Working Groups or the Administrator.

Direct Governance Proposal Process

Governance proposals must follow the following process and timeline.

  1. Formal forum discussion

    Forum proposals are permitted by any member of the DAO
    Link to forum:
    Can be submitted at anytime
    Proposals must use the Cortex Improvement Proposal (CIP) format.

  2. Temp check post on forum w/polling

    Temp check must reach 50% to result in a governance proposal
    At least 10 community members must be in favor of the proposal
    Polling must be open for a minimum of 72 Hours

  3. Vote via Snapshot

     Quorum format: 4% of locked CXD

    Greater than 50% must be in favor of the proposal

    Voting must be open for a minimum of 72 Hours
    Link to Snapshot:

  4. Formal submission to working groups for implementation

    Submitted to the working group’s task management system, ie. github, trello
    Format to be determined by individual working groups

Working Groups

Working Group Charter
Core The core working groups is responsible for:

1) Product development

2) DAO development

3) Day to day product operations

Convex Index Construction This working group is responsible for:

1) Analysis of assets

2) Creation of governance proposals related to the addition of assets to the Cortex DAO

3) Basket selection

4) Weight setting

Tokenomics This working group is responsible for:

1) Setting fees for yield aggregation

2) Tokenomic feature development

3) Creation of governance proposals related to the expansion of Cortex DAO tokenomics

Growth This working group is responsible for:

1) Content marketing

2) Impression mining

3) Project ambassadors

4) Community controlled grant program

5) Community Moderation

6) Design

7) Documentation

Code of Conduct

The code of conduct for the DAO will be stored in github in the following file:


Excited to build with you all. :rocket:


As mentioned on Discord, I think it’s important to work towards good communication. And this ties into the marketing efforts, which is something that was seriously lacking under APY. The website needs a FAQ page and everything should be easily understandable to both technical and non-technical people, (perhaps basic and advanced pages?) so that the use case is clear, simple and attractive.

Anthony mentioned efforts being taken to work with a marketing agency which sounds very promising. Coming from an advertising background myself, I felt APY squandered a great opportunity to capitalize on the hype from the sudden spotlight it found itself in when some of the bigger Youtube channels were covering it. Having marketing figured out at that time would have meant really going hard on social media. Twitter, Discord AMA’s, Youtube explainer videos and interviews on a bunch of youtuber channels, promotional events and giveaways, (some of which did happen and which is what got me on board, and I stuck around) that sort of thing.

One fear I do have is that the current use case might be a bit too focussed on diversification through rewards, if I’m understanding it correctly. It might be even more appealing if there were more ways to diversify into a broader range of assets, including non-DeFi tokens, and perhaps even things like NFT’s or whatever else comes out down the line.

And I also think the website should contain a bit more info about the team behind it. Even if psuedoanonymous. Perhaps some linked interviews to give it a bit of a face, which builds trust. That sort of thing.

I’ve been with APY since the start and will be along for the ride here too! Interested to seeing things grow! Perhaps I’ll even be able to contribute more in the future. It already looks promising.


@dem0n it would be good to get gather your input on the Growth work group’s charter in particular - that’s where this topic will be hashed out and executed on.

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thanks for the first draft of the constitution…exciting!

I would suggest one additional separate working group for “New Cortex Indices”. Although I see that the Convex Index Construction group should also focus on the “Creation of governance proposals related to the addition of assets to the Cortex DAO” - which I read as the place to discuss new Index ideas - I believe one could send a strong signal that the Convex Index is just the beginning allowing for a separate space to discuss new index products.


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Voting power is denominated entirely in locked CXD (vlCXD). Under this constitution CXD holders have no vote. In effect, vlCXD is the sole governance token. The amount of vlCXD held is variable based on the amount of CXD locked and the duration of the lock. If person A and person B hold equal amounts of CXD, lock an identical amount, but Person A locks for 1 month, and Person B locks for 2 months, Person B’s vote will be greater than Person A.

I don’t think we should take this approach. I think we should allow CXD holders to vote, and have a a 1 token, 1 vote policy. Your vote should be the total number of CXD held in a wallet, plus the number of CXD locked in a smart contract (regardless of duration).

(I disagree with having vlCXD at all, but that will be a separate proposal.)


Also agree, but would like to hear more thoughts on why the sole focus on vlCXD. I understand the desire to award governance to seemingly committed members who lock CXD, however I worry this is also unrealistic to want prospective members to a new project to 1) even invest in anything Defi right now and 2) lock up funds where they didn’t have an escape if things fell apart. Once more trust is built in the project possibly we could consider giving governance exclusively to vlCXD, but for the short to mid-term I would propose allowing all CXD holders governance votes barring a detailed explanation from devs


Further exploring the challenges with vlCXD as the governance token. How many CXD, when locked in a 4 year contract would generate enough vlCXD to constitute 50% of the DAO voting power?

(Can someone help me with the math here?)

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As with being part of the curve ecosystem the team seem to be mimicking curve protocol mechanics where you lock CRV to get veCRV (voting escrow CRV) and that’s used for voting and the longer you lock CRV the more voting power you get. It’s not a bad idea given how much CRV has been locked in Curve and how CVX has used that gain voting power on curve.

We are currently seeing a fair amount of CXD being locked for at least 2 years. Whether that’s for voting, rewards or both it’s still a good number being locked.

I’m not against this format it does tend to favour early adopters however, Apy holders have been unfortunate with the way Apy and the general crypto market has played out recently we need some sort of reward for sticking with such crypto projects.


The number of CXD being locked now is getting better every week. I’d imagine as the fee distribution rewards and the index token being rolled out we could see a 40-50% of tokens being locked in a few months time. We are at nearly 18% of current supply locked so far.


The problem with using “18% of the current supply” as a metric of success is that it fails to measure who are choosing not to buy CXD as a result of the locking mechanism.

In particular, I think token locking hinders gaining institutional support. We just switched from the APY.Finance model to the CortexDAO model and time-locked tokens in the former became time-locked in the latter. I definitely think it’s a hard sell within institutions to invest and choose to not have tokens be liquid regardless of how the underlying business model changes. Certainly the converse is true - that a platform that has no lockup, where the tokens are constantly gaining in value, would be relatively more attractive to institutional investment. Shameless plug:


@awinter Interesting proposal. One thing to keep in mind, the Index token is a liquid token that will consistently gain value and can be bought or sold, without lockup commitment. This is the primary token we foresee being of interest to institutions. However, to your point, they would need to lock an amount of CXD to boost their earnings, to maximize their earning potential.

a platform that has no lockup, where the tokens are constantly gaining in value, would be relatively more attractive to institutional investment.


I think all of this looks great! Excited for the future!


I disagree with one token = one vote, because I think it goes against the alignment principle.

Locking up the token and granting more voting power for longer lock ups makes perfect sense. Those with more “skin in the game” should have more voting power. Those that lock up their tokens are incentivized to act as good stewards of the DAO because its success is in their best interests. It also gives power to the smaller holders with more conviction. Lock ups weed out the mercenaries, and bad actors.

Neither approach grants protection against Oligarchy, but Oligarchs with tokens locked up are less of a risk to the long-term success of the project.

Fates are bound = interests are aligned.

One final thought: People already locked up in good faith. Changing the rules after they locked up seems immensely unfair if not just plain wrong. They would be at the mercy of others with the ability to liquidate their tokens in a moment’s notice.


I understand your concern about fairness. I’ve some locked tokens as well. But we have all locked tokens prior to the adoption of the DAO constitution. It would be far more unfair to change things after it is in a ratified constitution.

Like tariffs and other protectionist measures, I believe that the locking of tokens keeps more people out than keeps people in. It ultimately hurts the people (CXD token holders) that it is trying to help.

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Exactly. The index token has great institutional appeal, but we’re hampering adoption by the CXD lockup. A money manager will want to maximize the yield on the allocation they put into our index token, but likely structurally can’t commit to a 4 year lockup.

In the buyback model that I proposed, if adopted, I would put forth a follow-on proposal for boosting that also does not require locking.

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Yes. It would be more unfair to change after a constitution has been ratified. But that was just an afterthought about fairness.

My main concern is aligning the interests of the holders and that of the DAO. It is in the interests of long- term holders that adoption increase, but the long-term viability of the project - it’s survival - is also a primary concern. The operative word is “long-term”. Money managers, institutions and speculators have one goal - make money. You can see from the latest market dump how fast they’re willing to bail. Why give them full voting rights that allow them to dominate for the short time they’re in? Governance of the DAO isn’t their concern, but it might become tempting if the threshold to voting is extremely low and they can manipulate it to their advantage. They will buy and sell anything that can net them a profit - they are in and out of positions, i.e. they’re tourists. Sure, we want tourists, they bring money into the ecosystem, but their ability to vote should be proportional to their commitment to sticking around. Listing on a bigger CEX’s and having deep liquidity will attract more tourists which is a separate conversation from how to incentivize good stewardship of the DAO.

Anybody is free to hold and trade the token, and they will as liquidity as the number of exchange listings increases but voting rights should be reserved for those willing to lock up token. There should be a distinction between stakeholders and token holders. I see no benefit in removing this threshold from a good governance perspective.


IMO, the discussion on ensuring the long term viability and short term accessibility of the protocol is the right direction for this DAO.

Some of the other reasons for launching with vote locking and a vlCXD implementation have already been discussed. For me, the 3 reasons for taking this approach are:

  1. Governance Stability - without vote locking, attackers can borrow from the lending market and can gain a large number of voting rights in a short period of time to launch governance attacks on DAO and the protocol. We should be wary of this attack vector with the launch of the index token.

  2. Alignment with the larger Curve/Convex ecosystem - I can see the lion’s share of potential CXD users coming from the Curve/Convex ecosystem. I think it simplifies onboarding of those users to offer a governance model they’re familiar with.

  3. The cost of utilizing a vote locked approach is low. We’re able to programmatically ensure governance stability.

Outside of these three positive reasons, the big negative that was mentioned is plausible, and I’ll change it a bit to call out the concern: that a vote locking implementation disincentivizes new non curve/convex - primarily institutions, who’s operating model is not suited for long term locking of governance tokens.

While I can see the merit in the argument, I’m not convinced it’s a reason to change the model because of the two points above - it may be more appropriate to evaluate vote locking CXD for their portfolios and instead explore an alternative approach to provide them with the a similar boost.


Regarding governance stability…with vote locking I think a governance attack becomes more plausible than without. An attacker can still acquire 51% of the vlCXD given that the amount of vlCXD held is a function of the cash purchase of CXD and the non-cash “locking”. But anything can be unlocked given a successful attack of the DAO. CXD holders would be unable to defend against any governance attack as they currently have no vote. The average CXD lock duration is currently 2.06 years (according to the dune dashboard) - meaning it will take 2x the underlying holdings of CXD to generate enough vlCXD to defend against an attacker willing to pseudo-commit to 4 years in hopes of gaining control.

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I agree with you that reaching 51% is possible with or without vote locking, but the counterpoint is that there’s a repercussion of holding a large locked position of CXD. The attacker now has a meaningful incentive to improve the quality of the protocol.
If they wanted to tank the protocol they would end up paying an immense sum for it.