KIP-81: Strategic PNK Sale to Kleros Cooperative

Proposal
27

KIP-81 Counter-Proposal: A Verifiable Trade for 100M PNK

Date: 2025-11-07

Author: A Kleros DAO Member

1. Context & Motivation

This proposal is a direct response to KIP-81. We (the DAO) acknowledge the Kleros Cooperative’s need for PNK to fund operations, liquidity, and incentives. We also support the goal of establishing a DAO-controlled ETH Treasury.

However, the original proposal constitutes a lump-sum minting and sale with no contractual link between the payment and the delivery of value. The DAO must not mint 100M PNK in exchange for ETH without guarantees that this PNK will be used for its intended purpose.

This proposal reframes the “sale” as a verifiable, binding trade, using the Kleros protocol itself to enforce accountability. We are not granting funds; we are executing a contract.

This proposal puts two distinct models for this trade to a vote.

2. Capitalizing and Protecting the DAO Treasury

Both options below achieve the primary goal of the original KIP-81: funding a new DAO Treasury with ETH (and/or wETH, wstETH). The use of this new treasury will be governed by the following three provisions, which are adopted from the original KIP-81 and apply to both options:

  1. Futarchy Safeguard: All proposals requesting funding from the new DAO Treasury must pass both a Snapshot vote and a positive Futarchy test, ensuring they are value-additive.

  2. KIP-66 Exclusion: All PNK held by the Cooperative (whether in escrow or in their multisigs) will be excluded from the Total Supply calculation for the Juror Incentive Program, as the Cooperative does not stake.

3. The Two Trade Options

The Cooperative can decide how to structure this trade. Both options use a Kleros Escrow contract to enforce the terms.

Option 1: The Upfront Trade (Full DAO Treasury, Escrowed PNK)

This model prioritizes capitalizing the DAO Treasury immediately while locking the full PNK supply until milestones are met.

  • Execution:

    1. ETH Transfer: Upon approval, the Kleros Cooperative transfers the full market value (in ETH/wETH/wstETH) for 100M PNK to the DAO Treasury Governor (0xe5b…cf4).

    2. PNK Mint & Escrow: The DAO mints the 100M PNK and immediately sends it to a Kleros Escrow contract.

    3. Milestones: The 100M PNK in escrow is segmented into tranches tied to specific, measurable milestones (e.g., “Kleros 2.0 Mainnet Deployment,” “Achieve $10M in new liquidity,” “Onboard 5 new integrations”). These milestones must be ratified in a subsequent KIP.

  • Accountability:

    • To withdraw a PNK tranche, the Cooperative must submit evidence to the escrow contract proving the milestone is complete.

    • Any DAO member can raise a dispute, sending the case to a Kleros Court to rule on the factual question of whether the milestone was achieved.

    • If the Court rules “Yes” (or the challenge period passes), the escrow releases that specific PNK tranche to the Cooperative. If “No,” the PNK remains locked.

  • Pros: The DAO Treasury is funded in full, upfront. The DAO has maximum security, holding all the funds while the Cooperative must prove its work to unlock the PNK it purchased.

  • Cons: The Cooperative must pay for 100M PNK that it cannot immediately access.

Option 2: The Structured Trade (Pay-As-You-Go)

This model prioritizes a granular, milestone-for-milestone trade. The DAO only mints PNK after value is proven and payment is received for that specific tranche.

  • Execution:

    1. Agreement: The DAO and Cooperative first agree on a set of milestones and the PNK/ETH value for each (e.g., Milestone 1 = 20M PNK, Milestone 2 = 30M PNK, etc.).

    2. Milestone Achievement: The Cooperative performs the work to meet Milestone 1.

    3. Verification: The Cooperative submits evidence to a Kleros Escrow contract that Milestone 1 is complete. A Kleros Court verifies this, ruling on the factual question.

    4. Transaction:

      • Only after the Court rules “Yes” does the trade execute for that tranche.

      • The Cooperative transfers the corresponding ETH (e.g., market value of 20M PNK at agreed upon price) to the DAO Treasury.

      • Simultaneously, the DAO mints and transfers the 20M PNK to the Cooperative.

    5. The process repeats for Milestone 2, 3, and so on.

  • Accountability:

    • This is “maximum accountability.” The DAO mints nothing and is paid nothing until work is verifiably complete by its own court system.

  • Pros: The DAO never mints PNK without proof of work. The Cooperative only pays for what it verifiably “earns” access to.

  • Cons: The DAO Treasury is funded very slowly, in unpredictable chunks. This delays the DAO’s ability to fund its own ecosystem initiatives.

4. Voting Options

  • Approve Option 1: Upfront Trade (Full Escrow)

  • Approve Option 2: Structured Trade (Pay-As-You-Go)

  • No, Rework the Proposal

28

This thread is getting very complicated, there’s a lot of AI slop around so I’ll be very selective with what I reply to.

First and foremost (I’m condensing the argument):

>This is not a grant, because we’re paying.

You don’t want to buy at market price. Computing the TWAP of past x months, and treating that as the price for the entire 100M bag, is not market price. It**’s acquiring ~10% of the PNK supply, a highly iliquid asset, at a fixed price.**

Anything that implies buying the PNK at a fixed price, with preferential treatment (e.g. an open auction would’ve been more acceptable), is what I have referring as a grant. To avoid arguing semantics, I’ll refer to it as “preferential treatment” from this point onwards.

With that out of the way; I agree with:

  • It is positive for the DAO to have assets
  • Only way for the DAO to have assets, is to mint PNK and sell it

I also believe that, as for the futarchy market for a proposal in which the DAO sells the PNK at a favourable price, could signal a positive price impact. However, if this just consists of the DAO dumping a 100M bag on the Coop for a fixed price, without allowing other people or actors to acquire the (highly illiquid) PNK asset, then this is just the Coop getting a preferential treatment.

A digression: I don’t know what would be a better deal for the DAO. It might very well be that, from the DAO’s perspective, dumping a 100M PNK on the Coop is a very good deal, because no one else other than the DAO would be interested in acquiring PNK, and dumping the minted 100M with the Coop deliberately not buying at a high price, would crash the price. If the Coop proposed to buy the bag at a slight ETH premium over the retro 3 month price average, then it would be hard to justify this as a good deal. End of digression.

On @0xAlex comment to my alternative approach:

>Thank you for suggesting this alternative approach. However, we don’t believe it’s viable. Purchasing such a small amount of PNK wouldn’t secure the Cooperative’s long-term operational needs, nor would it build a Treasury large enough to fund meaningful growth initiatives for the DAO.

So, the only issue is the amount I proposed (20M-30M PNK). It could also be 100M PNK, with a longer TWAP (1 year, instead of 3 months). What would be the issue then?

=====

I don’t think there’s any point in replying to all the other discussion in this thread, I don’t care the specific way the PNK would be minted as long as it involves anyone (not just the Coop) to buy the minted PNK. Or, the deal is “too good to ignore”.

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TLDR:

The Cooperative can have the 100M PNK if they also utilize Kleros to ensure accountability for their spending.

They can either give us 1000 ETH and we divest the 100M using Kleros to ensure agreed upon goals (essentially we double up the DAO incentive, by ensuring we get value for the PNK minted, and by gaining ETH for DAO initiatives) or they can pay us piecemeal with the same divestment schedule.

The point is, not to allow a blanket minting and transfer of 100M PNK all at once without goals and targets that control sell pressure.

And should be mutually beneficial for all involved as it fully utilizes the Kleros ecosystem, and demonstrates it’s value.

1 Like
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That’s better. I’d reduce the bureaucracy involved to:

  • The 100M PNK ← → 1000 ETH path would have no conditions whatsoever. That’s a huge premium, almost 2x current market price in ETH, so despite PNK illiquidity, that should always be a net positive for the Kleros DAO no matter what. And futarchy markets on price impact would agree with that.

  • The 100M bag priced at retro 3mo average from agreement date path, should have conditions. But your proposal seems very cumbersome for the Cooperative to interact with, isn’t there a better way? e.g:

    1. Coop covers the ETH amount of the whole bag.
    2. DAO mints 25% (or 50%?) of the agreed-upon PNK bag immediately so the Coop gets the benefit of being liquid immediately.
    3. The rest of PNK will be minted according to quests, like you’re suggesting. So, if the Coop wants their worth, they need to fulfill certain goals. But those goals wouldn’t have any deadlines or time limit.

I think that would reflect as a net positive in the futarchy market as well: either the DAO has minted a small amount for a comparatively amount of ETH, essentially pumping the worth of PNK. Or, the DAO has got a lump sum of ETH for their own expenses AND had the Cooperative actively fulfill certain vital goals, which has made the ecosystem stronger and thus also pumping the worth of PNK. So it should be positive price impact no matter what.

1 Like
Brainstorming Conditioned PNK Sale to Kleros Cooperative
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I think an open auction would lead to more or less the same result unless the auction were to be widely communicated on.
I have no problem at making it an open auction, but it’s then quite possible that no one else bid and the coop ends up buying at the defacto discount and that it nukes the PNK price.
If there were a futarchy on that I’d be for PNK price to be lower in the open auction than the fixed price. (unfortunately futarchy.fi currently only supports YES/NO but not competing proposals)

3 Likes
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Keep in mind that this should also be ratified by the coop. And here the coop paying market price but then having obligations to the DAO would probably be seen as unfair and rejected.

Either it’s a market price purchase, or it’s a grant with the associated obligations. The DAO can’t have its cake and eat it too (as both the DAO and Coop need to vote it).

2 Likes
33

Conditional sales aren’t “having your cake and eating it too.”

When you buy a house or a car, the sale is final, yet it comes with binding stipulations, like a mortgage or a lease agreement. This is normal.

Therefore, there’s nothing wrong with requiring Kleros Escrow to enforce the terms of this trade. There is also nothing wrong with making this current KIP-81 proposal utilize Kleros for enforcement, bnoth as a demonstration to the broader market, and to ensure incentives are even stronger for both the Coop and the DAO.

If YOU object, then just say YOU don’t want to use it. Learn to be honest with yourself and others. But I won’t be engaging in bad-faith arguments in this KIP; that kind of logic is reserved for courts, where it’s rightly penalized.

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If you sell a house, at market price, but in addition ask the buyer to perform extra services to you and condition the payment to those (but you do get paid entirely), no one will buy your house.

And now I am not against conditional grants, but this should be grants, you can’t ask someone to pay market price + add extra conditions, as it would be an unfair deal, not at arm length.

I’m trying to find a proposal which will be accepted by both the DAO and the coop.
Also keep in mind that I also have PNK. And thus economically aligned with the DAO. But I am also a member of the Coop, and for that I have the legal/moral duty to behave in the interest of the coop mission too. I think a sale instead of a grant is really the most friendly deal the Coop can provide without risks of being accused of mismanagement.

3 Likes
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Your argument is again either bad faith, or a misunderstanding.

The truth is the success of the sale of the house would depend on the specific contract and the relationship between the parties. Perhaps the contract states, that if the buyer maintains the home well for a year, they will get back a portion of their purchase.

Again, I’d prefer to not spend my time, engaging with bad faith arguments.

Also, you do not speak for everyone. The assumption that you do is the core rhetorical weight of your argument, though it is fallacious; in other words, you do not know that no one would buy the house.

Furthermore, the relationship between the Coop and the DAO is a special one, not a simple transaction between two parties.

Kleros should be used to enforce accountability on the Cooperative. That would be a triple win for everyone involved, and even for the broader market:

  1. Cooperative gets Kleros
  2. The DAO gets ETH
  3. The market sees a real proof of concept of Kleros enforcing accountability in the space, which is and continues to be one of the core innovations of Kleros.

It is much better than just doing a simple trade.

Note, that I do not think the Cooperative is unaccountable, I don’t have any concerns about you not putting the PNK to good use, and if you feel that I am implying that, I am sorry. I simply want us to utilize Kleros so that we can have a “something for nothing” sort of win for the project.

If we need the contract we agree upon to be fair, I of course agree to that too. The cooperative can even draft it up.

And to close, obviously, by nature of being reasonable, I am about fairness. Though the way you argue and discourse with me does make me wonder if you truly are about it as well?

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As you just claim bad faith instead of engaging in a productive discussion, I will not engage anymore as it would be a loss of time.

Kind regards,

1 Like
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Clemente, I proposed a good solution for both the Coop and the DAO. Please consider it.

And please consider what is best for everyone and for the project.

I guess you answered my final question, “Though the way you argue and discourse with me does make me wonder if you truly are about it as well?”

Ironic.

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Was a Snapshot proposal created and deleted? What’s going on?

1 Like
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Yeah, liquidity for futarchy was not put in time due to a Swapr frontend bug. We’ll fix ASAP.

1 Like
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You can now vote on this proposal on Snapshot, where you’ll notice the Futarchy.fi plugin directly integrated into the UI.

We collaborated closely with the Snapshot and Futarchy.fi teams to make this possible—and this is the very first proposal to feature the integration.

For direct access to the Futarchy.fi market, use this link.

2 Likes
43

It seems there is some controversy for this proposal. This is actually a great use for the futarchy test, as it allows people to “put their money where their mouth is”.

I’d strongly recommend those critical of the proposal, including @KlerosJuror and @greenlucid, to participate in the market and try to defeat the proposal. This is not hypothetical – if the average YES price is not higher than the NO price over the voting period, the proposal will fail, regardless of how many votes it has on snapshot.

The impact is currently at -1.6%, meaning the YES market is currently trading below the NO. So while trading and voting has just started, the proposal is currently on track to fail, and those against it simply have to keep it this way.

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One important protection from futarchy to minority tokenholders is precisely that if you see a bad proposal, you can threaten to sell your tokens if the proposal passes. You can do so by selling the YES market on the futarchy. There is $100k of liquidity on these markets, so you should be able to do so, especially if the YES price is trading at a premium, which is what is needed for the futarchy test to pass. By selling, you will make the YES price lower, so unless others buy from you (essentially buying you out), you can basically defeat the proposal all by yourself.

However, many of the disagreements with this proposal focus on the price/amount at which the Collective will be buying the new minted PNK, and hint at a desire for the purchase to happen slowly over time, or at a higher time later. Therefore, maybe you’d be interested in buying the “NO” market using Futarchy instead!

This means that, if the proposal passes, you’ll just get your money back. On the other hand, if the proposal fails and you expect the Collective (or others) end up having to buy PNK at a higher than current price, you can make a profit.

While we just started having futarchy on Gnosis/Ethereum, and indeed this is the very first proposal with futarchy integrated directly into Snapshot (yay!), futarchy as a decision mechanism has been running for ~2 years in the MetaDAO project in Solana, and we can study a lot from their experience.

Just one month ago, a VC fund Variant proposed to buy $6M worth of META (MetaDAO tokens) at a price of $4.0795 each (~$85MM market cap). This was a quite controversial proposal that generated >800k in volume in the futarchy markets.

The founder was in favor of the proposal, and yet the proposal ended up failing on futarchy, with the YES trading on average at -about 2% the NO price.

And indeed the markets were proven right, as less than a month later MetaDAO raised $10M, rather than $6M, at higher prices (the Variant fund itself ended up purchasing $2.5M at a higher price of $8.6, more than double the price, and others such as Paradigm / 6MV purchased as well).

So if you believe KlerosDAO can sell PNK for a higher price, and that it would be better for PNK holders to not sell at this proposal, you can buy the NO market, and help prevent this proposal from passing.

Furthermore, some mentioned an auction as a potential sale mechanism. But by buying the NO market, you’re essentially participating in an auction and bidding against the Kleros collective, as the purchase can only happen if the YES price is even higher.

Of course, I’d also invite all those in favor of the proposal to buy YES tokens, or sell NO tokens. This is needed or else the proposal is not going to be approved. Currently you can buy the YES tokens at a small discount. So hurry up!

5 Likes
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Yesterday, the Kleros Cooperative voted and approved the proposal made by the DAO.

Voting results:
-Founders: 2 FOR
-Producers: 8 FOR / 7 AGAINST / 4 ABSTAIN

Reference price at the time of the vote: 100 million PNK = 599 ETH

As mentioned in the rule of the DAO, the Cooperative will proceed with the transfer of funds if the following two conditions are successfully met:

  1. The Snapshot vote passes
    2.The Futarchy test resolve in favor of the proposal
1 Like
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Do you think manipulating a prediction market is going to lead to a price increase?