KIP-82: Transfer PNK Liquidity Provision (LP) Custody to the DAO

Proposal
1

Date: 2025-11-05
Author: Community (PNK holders)
Status: Draft
Category: Treasury / Governance

Summary

Move ownership and control of all PNK liquidity-provision (LP) positions currently held by the Kleros Cooperative (“the Coop”) to the Kleros DAO. Establish a DAO-owned Liquidity Safe and a clear operating policy so liquidity is managed by—and for—PNK holders.

Motivation

  • Alignment: PNK holders are directly incentivized to maintain deep, healthy PNK liquidity. The Coop is a protocol steward, not the representative of PNK holders.

  • Decentralization signal: Handing LP to the DAO demonstrates real power transfer.

  • Clarity of roles: The Coop focuses on protocol development; the DAO manages ecosystem assets (including liquidity).

  • Community feedback: Responds to concerns raised alongside KIP-81 by placing strategic assets under DAO custody.

Scope

In-scope assets (non-exhaustive):

  • On-chain PNK LP positions: Uniswap (v2 LP tokens, v3 NFTs), Swapr, and any other AMMs where the Coop currently provides PNK liquidity.

  • Any LM rewards/fee claims attached to the above positions.

Out of scope:

  • CEX inventories or market-making agreements that are not “LP positions.”

  • Non-PNK assets unrelated to AMM liquidity.

Specification

1) Custody Change

  • From: Kleros Cooperative Safe (currently: 0xE979…40e8).

  • To: DAO Liquidity Safe (new Gnosis Safe) controlled by the Governor:

    • Owner: Governor (0xe5bCea6F87AaEE4A81F64dfDb4D30D400E0E5cF4).

    • Modules: Delay/Timelock (≥7 days) + Pause/Guard module.

    • Purpose-bound: may only hold LP positions, accrued fees, and temporary working balances needed for LP operations.

All LP NFTs/tokens and unclaimed fees/rewards are transferred to the DAO Liquidity Safe. If a pool requires closing/re-minting (e.g., Uniswap v3), the Coop executes the minimal steps to recreate positions under the DAO Liquidity Safe with identical or DAO-approved parameters.

2) Operating Policy (Guardrails)

  • Mandate: Maintain competitive PNK liquidity depth with prudent, non-speculative management.

  • Permitted actions (Governor-authorized only):

    • Add/remove liquidity, adjust ticks/ranges, claim and compound fees.

    • Rebalance between AMMs if it improves depth/efficiency.

  • Prohibited actions:

    • Using Liquidity Safe funds for buybacks, grants, or non-LP spend.

    • Staking LP or PNK from the Liquidity Safe in Kleros Court.

  • Reporting: Monthly on-chain report (positions, fees, changes) plus a forum summary.

  • Emergency: DAO-elected Emergency Guardian can pause moves (not spend) for up to 14 days; unpause requires Snapshot approval.

3) Accounting & Program Interactions

  • KIP-66 (Juror Incentives): Exclude DAO-held PNK in LP (and the LP tokens/NFTs themselves) from any “staked supply” metrics to avoid distortions.

  • KIP-76 (Futarchy rules): Futarchy can rule on the predicted price increase or decrease.

4) Roles

  • Kleros DAO: Ultimate owner via Governor; sets/updates policy by KIP.

  • Operations multisig (optional helper): If appointed by KIP, can propose transactions to the Governor module within pre-set limits; all moves still pass through timelock/guard.

  • Kleros Cooperative: After transfer, no authority over DAO LP.

Rationale & Alternatives

  • Why DAO custody? Maximizes alignment and transparency; matches who bears token risk with who controls liquidity.

  • Alternative A — Keep at Coop: Centralizes control and blurs responsibilities.

  • Alternative B — Third-party MM: Adds counterparty/fee risk and weaker alignment.

  • Alternative C — Programmatic vault only: Nice long-term goal; this proposal enables it later without blocking on engineering.

Risks & Mitigations

  • Operational errors: Use timelock + guard; require public runbooks and peer review.

  • Governance capture: Pause module and supermajority thresholds for policy changes.

  • Market volatility: Conservative ranges, periodic rebalancing, multi-venue diversification.

Implementation Plan

  1. Create DAO Liquidity Safe with Governor ownership, timelock, and guard modules.

  2. Inventory LP: enumerate all positions (AMM, pool, range, position IDs), pending fee claims.

  3. Transfer/Remint positions to the DAO Liquidity Safe; claim and move fee tokens.

  4. Publish Runbook: operations checklist, signers, and reporting template.

  5. First Report (T+30 days): depth, fees earned, any parameter changes.

Timeline

  • Week 0–1: Safe setup, inventory publication.

  • Week 2–3: Transfers/remints executed.

  • Week 4: First monthly report.

Costs

Gas for transfers/remints and Safe setup; no new token issuance.

Backwards Compatibility

No change to user-facing protocol components. KIP-66 interpretation updated to exclude DAO-held LP/PNK from “staked” metrics.

Governance

  • Snapshot Quorum/Threshold: Same as standard Treasury/Keeper changes (or: quorum X%, simple majority).

  • Execution: Governor enacts Safe ownership and calls for each transfer/remint.

Voting Options

  • Yes — Approve KIP-82: Transfer all PNK LP positions and custody to the DAO under the policy above.

  • No — Reject: LP remains with the Coop; no changes enacted.

  • Abstain.

1 Like
2

you are quick!

I think it makes the most sense for the DAO to be the keeper of the PNK LP that the Coop currently holds. The Coop can’t and shouldn’t touch the LP anyway, and the DAO is a more reliable entity for safeguarding the PNK LP, as PNK holders are far more intrinsically incentivized to maintain PNK liquidity. In contrast, the Coop is not the official representative of PNK holders, but rather a steward for developing the Kleros protocol. Transferring LP ownership to the DAO would also be a strong signal from the Coop, demonstrating its willingness to transition power to the DAO.

who can make those changes so the lp can transition and controlled by the dao? how much would that cost and how would we pay for that?

1 Like
3

The liquidity belongs to the Cooperative, not the DAO. So this proposal makes no sense. If the DAO wanted to get the liquidity, it would have ask the cooperative (the same way the Coop has to ask PNK from the DAO).

3 Likes
4

yes this is the proposal about to transfer the liquidity from the coop to the dao

5

But it cannot have any effect. Not more than a proposal saying “transfer Zebras $PNK from his wallet to the DAO“. Because the liquidity belongs to the coop, not the DAO. You can read more about a similar issue here.

2 Likes