MIP-5 Proposal: Partner with Gro Protocol for Treasury Management


  • joyce-gro (Gro core team member)
  • me (member of G-Force which is Gro’s decentalised marketing team)


Merit Circle governance approved MIP-2 Broad investment mandate proposal on Nov 16, 2021. This proposal allows the committee to allocate some fiat in yield farms with no more than 5% can be put in a single position and no more than 20% in total can be put into yielding stablecoin positions. We propose to help you manage 5% of the aforementioned fiat through our risk tranched stablecoin PWRD, which offers deposit protection while generating yield.


After approval of the MIP-2 Broad investment mandate it was decided to put a maximum 20% of the treasury value (TV) in crypto assets and a maximum of 20% of TV in stablecoin yield farms. It was also decided that a maximum of 5% of the TV can be put in a single position. While selecting a yield farm for stablecoin, the security of funds is one of the biggest criteria. The fact that a significant portion of USDC reserve is based on commercial papers by unknown entities should raise some counterparty risk. Also, irrespective of the type of stablecoin selected, there remains a systemic risk to it.


We would like to propose helping you manage part of the Merit Circle treasury through our risk-tranched stablecoin PWRD, which offers deposit protection while generating yield. Our goal is to make it work like a FDIC protected account but in DeFi with healthy yields.


• Protect your stablecoin treasury from high-impact tail risks like the failure of a major stablecoin or protocol through:

  1. our Risk Balancer mechanism that ensures exposure to multiple stablecoins & protocols and

  2. risk-tranching where Vault, our leveraged yield farming product, would absorb the loss for Treasury users if such failure occurs.

• Generate healthy yields on your treasury balance instead of having the funds staying idle until they’re deployed. With a base yield and having options to earn token incentives on top, we believe MC treasury stablecoin balance would be better placed to support growth of the ecosystem. Details on token incentive options are available at Gro.

Suggested implementation:

We suggest Merit Circle DAO to allocate a pilot deposit to PWRD that amounts to 5% of your treasury. You could decide to increase the allocation later on after having confirmed that our treasury product meets your expectations.


With the aforementioned mandate Merit Circle DAO’s treasury will become much more secured. A large part of treasury management is to reduce liquidity, market and credit risk. By using risk tranched stablecoin PWRD the treasury can reduce the risk of a single stablecoin failure. We believe this mandate will safeguard MC DAO treasury from any unforeseen regulatory attack on stablecoins. PWRD is protected by a novel risk distribution model that shields holders from loss, while still accessing DeFi yields. Any loss of capital from stablecoins or protocols is first absorbed by Vault, letting PWRD generate yield more safely.


Only 5% of treasury value will be used to be deposited in PWRD.


Made up of a basket of stablecoins, PWRD risk is diversified and lower than other products in the market. To reduce risk further, PWRD is always at least 100% protected by the capital deployed in Vault. There is no cap on the amount protected, and the protocol makes sure there is enough Vault TVL to cover PWRD (and won’t let you buy more PWRD if not).

Even in the unlikely case scenario of a major stablecoin failure, your funds will be safe. It would take multiple simultaneous and major failures of protocols and stablecoins to touch the PWRD funds. Technically, PWRD is designed as a stablecoin. But it is more stable than other stablecoins because Vault absorbs any price volatility of the underlying basket of stablecoins to make PWRD more stable than its components. Yield is delivered into a users wallet as a stream of new PWRD stablecoins.

PWRD may not give the highest yield available in the market on stablecoins but it gives necessary deposit security which can help in mitigating risks. With a base yield and having options to earn token incentives on top, it provides a better solution for stablecoin treasury management.


  1. The proposal will be open for discussion.

  2. After the discussion is concluded and any possible adjustments have been made, the proposal will be up for voting on Snapshot. This link will be provided in due course.

  3. The snapshot voting will last for 24 hours after it goes live.

  4. After the voting concludes and if the proposal is accepted by the token holders, the proposal will be ratified by the multi-signature signers.

Copyright and related rights waived via Creative Commons CC0

Thanks for the proposal!

Would you mind adding who the author is, and thus who people may direct their thoughts too.

On top of that - the discussion period should not be rushed and therefore I would like to immediately propose to remove the ending date for the discussion period. Given the fact that there’s currently another outstanding discussion, please allow the community enough time to respond to the proposal before we move to voting.


Greetings, @khaaduscalper. This is Admiral Erik von Pumpson of the MC Enterprise. I see you’ve entered our territories.

We thank you for your proposal, but as of this moment we’re unable to calculate the exact valuation of your project. Might you be so kind as to entertain us with some future prospects, and if possible, allow us to understand the value of the tokens?


Erik von Pumpson
Admiral of the MC Enterprise
Ascending Galactic Federation


Greetings, @AdmiralErik ! This is Community Manager Alona von Shevchenko of the Gro DAO. I can confirm that I have entered your territories today but have been looking at them for a while now.

If you’re referring to the value of PWRD tokens, PWRD is tokenised as a stablecoin the value of which is backed by three of the most traded stablecoins on the market—DAI, USDC, and USDT—but also protected against problems with any of them. Price volatility of the 3 major stablecoins (DAI, USDC, USDT) is handled by Vault (which is the second core part of Gro protocol) so PWRD can remain stable. Losses are taken first from Vault. You can learn more about PWRD here: PWRD Savings & Stablecoin - gro Docs
You are also very welcome to visit our Discord where we’ll happily answer any questions you have!

Alona von Shevchenko
Community Manager of Gro Protocol
Planet Earth
The Solar System
Milky Way Galaxy

Hey @AdmiralErik

There’re lots to share about Gro Protocol (more below), but to make sure we’re on the same page - PWRD is a stablecoin collateralised with DAI, USDC, and USDT deposits. On top of it there’s risk tranching mechanism to make sure exotic risks like protocol or stablecoin failure would be first absorbed by its sister product Vault. In other words, regardless of Gro protocol’s valuation, PWRD would stay very close to $1 with any yields generated accrued to your treasury through rebasing.

On Gro protocol - we’ve just announced launching a new product, Labs, on Avalanche to offer higher returns with low gas costs. The first strategy in Labs will be leveraged yield farming on Alpha Homora v2 - with a twist that Gro will manage the positions so users don’t need to monitor & manage those positions to avoid liquidation on their own! More details will be shared tomorrow on our twitter :slight_smile:

Aside from Labs, we’re also looking to lower gas costs for users through other means and make our dApp more accessible on mobile. Happy to share more details in a call - or if it’s easier we can also join your community call for an AMA too!

In the meanwhile, please feel free to check out our docs - it’s the best place to understand how our products work :wink:

Looking forward!


Hello Joyce,

Thanks for your proposal.

You are asking MC DAO to inject almost 10% of your total TVL with high risks on leveraging completely new stable coin that yet to be tested in the harsh market enviroment with the yield that doesn’t worth the risk. + Increased risks with additional layer of smart contract above those stable coins and additional risks on leverage farming.

What is the advantage of it with such yield and such high risks over other protocols that can offer same yield but lower risks?

I certainly don’t see how in such market enviroment or incoming harsh volatility we should risk our treasury to new project with new stable coins mechanism.


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Hi @SpeedyG,

Thanks for your prompt reply to the proposal!

To clarify - PWRD stablecoin does not engage in leveraged yield farming; the Labs product described above is a separate offering that runs on a different network (Avalanche).

In terms of smart contract risk, I understand why you’re concerned given we’re a relatively new protocol. We take security very seriously – that’s why we’ve gone through 2 audits (Peckshield and Kurt Barry) and Code Arena. We also have a $1million bug bounty program for Gro protocol and have scheduled another audit with Trail of Bits. Please see this page for more details on past audits.

In terms of track record, the risk-tranching mechanism that is designed to protect PWRD stablecoin was proven to be fully functional when the CREAM exploit took place. Even when the protocol had to write down our exposure to CREAM, PWRD users were not impacted at all since Vault (the higher yield product) is designed to absorb all the losses.

We have also published our yield strategy selection framework for full transparency on which strategies we’re using to balance yield and risks. As you’d see from these strategies, Gro has exposure across multiple stablecoins and protocols so to avoid concentration risk.

As PWRD is built upon risk diversification and risk-tranching mechanism that has proven to protect PWRD users, I’d argue that it carries lower risk by design.

Regarding the amount, we’re also open to doing a pilot deposit at an amount you and other community members feel comfortable with if you’d like to explore PWRD as an option but don’t want to commit a high amount upfront. OlympusDAO is starting with us at $100K deposit that can scale upward after building more confidence through working together and experiencing the product first-hand.

In terms of yield, PWRD stablecoin earns 5-10% base yield (in stablecoin strategies) with potential ways to increase your yield through liquidity pools with 45% APY paid in GRO, our governance tokens with vesting conditions. The caveat of this arrangement is that it would weaken the protection, so while it would still be protected against protocol exploits it wouldn’t protect against the failure of USDC, DAI, or USDT.

Hope these help alleviate some of your concerns. Happy to address any other concerns you have here or in a community call :slight_smile:


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Greetings @joyce-gro,

Welcome to the great territories of MC.

As I understand it, your reasoning for the usage of Gro Protocol is that there is systemic risk in holding a single stablecoin and that deposits are backed by the Gro Vault.

What separates Gro Protocol from something like Curve Finance? Curve has been around for longer (Lindy Effect) and provides comparable risk/interest rates to PWRD with it’s 3Pool (DAI/USDC/USDT).

Can you provide more details on backing provided the Vault/GVT Token? What is the collateralization ratio? If the system faced a situation where all funds were lost through an exploit or otherwise, how much would each user be compensated? What if only a portion of funds were lost?

Thanks for stopping by on your journey; don’t steal any sweetrolls.


Quantum Soldier
Imperial Guard of MC


Hey Joyce,

Thanks for reply.

First of all you are saying that PWRD stablecoin yield is 5-10% base yield and it doesn’t involved in leveraged farming. While Im seeing absolutely different numbers and data from your own app. Please see attached

Here is my another concern. Checking by the etherscan of GRO token holders I stopped by searching the liquidity of your PWRD token and I found the only one pool supporting it with little to no liquidity for such big ambitious stable coin.

While you have much bigger size of pools for GRO-FEI?? (A competitor) and GRO-USDC. This blown my mind tbh and I see another obvious risks here.

For me this already enough to vote no on your proposal.


Welcome Fellow DAO! Thanks for the proposal Gro Team. Interesting.

For our USD part of the cash balance, aside of the risks and the rewards, the degree of optionality and liquidity is also important.

Could you speak towards these topics. What is the average slippage we would incur upon entry and upon exit? Do we have to lock funds if we want to enter the Curve meta pool?

I believe only the rewards are locked over a period of 365 days (with penalty for earlier claims), correct?

How does PWRD stack up vs the PWRD-3CRV pool stack up to each other in terms of main differences in risk.

Lastly, the vault. This is not proposed and probably too risky, but I see an attractive staking yield so I think it’s worth exploring the Risk/Reward proposition for this product.
Does the vault have a $PWRD component?
Does the vault have a locking element?
How easy is it to exit and enter? (slippage and/or locks)

Presumably, the vault runs a double risk of vault exploits and of PWRD’s exploit (since it acts as insurance for PWRD)?

I think a 2,5M cap might be a more prudent start, given the total TVL of Gro and the age of the project.

I do think the product looks very interesting.


Hey thanks for the detailed feedback and questions!

I see some common concerns across your comments so allow me to address them together! :slight_smile: Hope these help and happy to chat more in details!

  • Risk diversification on stablecoin: as @quant pointed out that there’s systemic risk in holding a single stablecoin. PWRD is much safer than holding 3CRV since 3CRV does not give you safety from diversification. Rather, if any of the three stablecoins fails, market participants will start swapping in the failing stablecoin in exchange of the other two, leaving the 3CRV pool with more of the failing stablecoins.

  • Risk diversification on protocol: PWRD generates stablecoin yield through multiple protocols. We limit the direct and indirect exposure to any protocol given the possibility of exploits (please see below screen shot for our capital allocation & exposure).

  • Protection through risk tranching: in case of any fund loss, Vault would always absorb 100% of the loss first; only if Vault is entirely depleted would PWRD users start to experience any losses. We cap the utilisation ratio (PWRD TVL divided by Vault TVL) at 70%. That means PWRD would have zero loss before the protocol loses 58.8% of funds, which would require simultaneous failure of multiple protocols and/or stablecoins for that to happen given our diversified strategy portfolio.

  • Yield:

  1. Stablecoin yield: it comes from stablecoin yield strategies that diversify risk to different stables and protocols, typically yielding 5-10% but as SpeedyG pointed out there is also volatility. That volatility comes from how the yield strategies perform, how much our capital has been kept in reserves, and how many people withdraw funds which contribute to the HODL bonus.
  2. GRO rewards: this is optional and only applies if you deposit into the Curve meta pool, which would boost total APY up to 45%. As you pointed out @tommyq the rewards have a 12-month vesting period with 10% vested upfront; leaving early would mean you give up part of the rewards to other users who stay (in the other way round, you can also claim from others who leave early too!)
  • Liquidity & optionality:
  1. PWRD/3CRV meta pool has $21.6mn pool TVL; slippage for entering with $1million PWRD is 0.1% (maximum 1.1%) while exiting gives a 0.09% bonus.
  2. You don’t have to lock funds to enter/withdraw from the pool or stake/unstake on our dApp for GRO rewards. You are also free to withdraw your treasury balance in PWRD any time; currently there is a 0.5% withdrawal fee that gets re-distributed to all other users which we’re exploring to remove.
  • Vault/GVT: To answer your questions @tommyq -
  1. Vault shares the same yield strategy with PWRD; the risk tranching comes in play in how we split the yield and risk across the two products based on the total yield generated by the system.
  2. There’s no lock to the Vault and yes it offers >100% APY in GRO for single-sided staking (which also doesn’t have any lockup). You can withdraw from Vault anytime from the dApp with no slippage but incur the 0.5% withdrawal fee; you can also swap Vault through AMM pools but the price impact would be much higher (35% for $1million exit) as Vault has much lower pool2 liquidity.
  3. It’s worth noting that the leverage mentioned about Vault is a conceptual leverage (earning extra yield from PWRD deposit through offering protection), not a financial leverage like Labs would have.
  • Holding PWRD vs depositing into PWRD-3CRV metapool: while the PWRD-3CRV pool offers higher yield, you lose the protection against the failure of the 3 stablecoins because of how 3CRV works as described above. You’ll still be protected from protocol failure unless it’s Curve that fails.

  • Holding PWRD vs Vault/GVT: the key risk you assume as a Vault holder is that you’d take on the risk of an underlying protocol being exploited or any of the stablecoins failing. We’re continuously working to improve our allocation so that it wouldn’t happen (see the Strategy Selection Framework link in the previous post) but Vault/GVT definitely carries higher risk than PWRD.

I’ve talked a lot about diversification above - here are more details about which yield strategies we allocate to at the moment. You can see the latest at the bottom of our dApp dashboard :slight_smile:

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Hey I’ve addressed some of your concerns on PWRD liquidity and yield in the above response - I couldn’t tag more than 2 users yet so want to make you aware of the response above.

I’m curious to understand what you refer to as the obvious risks in GRO-FEI or GRO-USDC pools since a user can use PWRD and not interact with GRO at all.

For context, GRO-FEI pool was set up to deepen GRO liquidity through the Fei/Ondo Liquidity-as-a-Service program to lower slippage for GRO users. It’s structured so that Gro DAO deposited $5M GRO and Fei Protocol matched our deposit with $5M FEI to create the pool (i.e. we didn’t fund the $5M FEI from Gro DAO treasury).

Hope that helps clarify why we’ve got the GRO-FEI pool in the first place!

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Hi Joyce,

Forgive my english its not my native language. I was referring to the low liquidity of PWRD itself and it being much lower than your competitor’s stable coin such as FEI. Checking PWRD contract itself there are not much liquidity overall for the stable coin. And one of the biggest liquidity is PWRD-3CRV which you referred yourself higher risk than PWRD itself.

The liquidity of your own stable coin is critical. And it is low right now.

I’ve read your responses and want to point an obvious risks regarding vault. You mentioned there are no lock ups, users can withdraw at any given time, APR is high for single sided staking with no lock ups as well. What does this mean? I see it as major risk as if anything could go wrong and vault starting to drain its obvious people will start to panic and withdraw the majority of vault and just dump on open market. Your protocol needs time to be battle tested and so the vault depositors are well aware/educated of the risks involved here.

Idea is very interesting but its also very new protocol for 5mln injection from MC DAO in my opinion.


Hey folks, I’m a community member of Gro and just helping out to answer some questions here. I believe Joyce has answered most of them but I’d like to help shed some more light

Gro conceptually has no concept of collateralization ratio. PWRD isn’t minted against Vault deposits nor is Vault minted against PWRD deposits. Instead, Gro has something called the Utilisation Ratio which is defined as PWRD TVL/Vault TVL as Joyce explained above

The utilisation ratio affects the yield that PWRD and Vault gets, more explanation can be found in the profit-sharing mechanism documentation. It also has an impact on the amount of loss that will be incurred by Vault users in the event of an unfortunate loss

If you were to compare the dynamics of Vault/PWRD yields and protection to another financial product, it is akin to margin trading (without the funds borrowing) with Vault users as the margin traders, and PWRD as the supplying brokerage.

Consider the following example: total TVL deposited across Vault and PWRD is 100m and utilisation ratio is 100% which means 50m TVL in Vault and 50m TVL in PWRD. Since the deposited funds for Vault and PWRD are allocated to the same set of strategies and asset exposure, both products have the same base yield. Say that base yield is 10% APY. In 1 year 5m interest is generated for both Vault and PWRD. Due to the 100% utilisation ratio however, 100% of PWRD’s interest will go to Vault users (you can apply the formula in the documentation to verify). So Vault gains a total interest of 10m, 2x the original 5m, and PWRD gets 0m interest as its interest is fully given with Vault users in this instance

But consider when 50m of the TVL is lost due to an unfortunate event such as a hack, protocol failure, or even a stablecoin implosion. In this case Vault users would take the full brunt (because of the 100% utilisation ratio) of the loss instead of the loss being split 50:50 with PWRD which would amount to 25m loss for each. Hence in this case Vault users would suffer 2x or 200% of the loss (compared against the case when utilisation ratio is 0%). So essentially PWRD users are always protected first. This is very similar to what happens in margin accounts for margin trading where the brokers are always compensated first, and the margin traders is left with the remaining funds

The analogy with margin trading is just to give an easy comparison. Like I said before, Vault users do not borrow anything against PWRD users and vice versa. But due to the profit-sharing and protection mechanism it may seem like that is the case. Ultimately the end result is that PWRD users pays Vault users for protection with a share of their yield and the higher the utilisation ratio the higher the premium of the protection since there is less TVL room which helps incentivize deposits into Vault.

Finally as @joyce-gro mentioned there is a limit (of which I’m not entirely sure what it is exactly) to the utilisation ratio since the aim is to always protect PWRD. This means that there will be moments where either:

  1. new PWRD cannot be minted (by depositing to the dApp)
  2. or Vault users cannot redeem (withdraw) their deposits

as either of these actions would cause the utilisation ratio to increase

Hope this helps

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I don’t think of FEI or any other stablecoin are necessarily a direct competitor to PWRD. Of course, there is the stable aspect of stablecoins. But fundamentally what PWRD brings is a deposit-protected-interest-bearing token. And additionally unlike many stablecoins like FEI, it isn’t minted against a collateral whether, especially not a volatile collateral

Regarding liquidity, users always have the choice to redeem PWRD in Gro’s dApp for one/all three of the major stablecoins i.e DAI/USDC/USDT. The dApp can become the liquidity provider of last resorts. Of course redeeming PWRD against the dApp means taking out some PWRD out of the circulating supply, but it is still liquid.

Regarding the GRO/PWRD liquidity pool, as @joyce-gro mentioned it is part of our collaboration with OlympusDAO through their Olympus Pro program. The main objective is to gradually grow Gro’s protocol owned liquidity especially over GRO and less so on PWRD (but of course it gets the benefit too).

On the PWRD/3CRV pool’s risk, Joyce was mentioning the risk in the context of investing deposited funds not the risk of having liquidity in some particular AMM. Ultimately Curve is still one of the best, if not the best, stablecoin AMM out there and many stablecoins keep their peg mainly through Curve. Not that things can’t be improved, but considering PWRD’s TVL at 19.1m with 21m liquidity in Curve, continuous work on inter-DAO partnerships and finding new ways to bolster liquidity-owned protocol, I think we’re on that path of improvement :slight_smile:

Joyce meant that users who deposited USDC/USDT/DAI to mint Vault are free to withdraw/redeem their deposited funds to get back their USDC/USDT/DAI + earned yield at any time. There are some conditions as I mentioned in my post above when users may not be able to redeem their Vault for their deposited funds and yield but these are for cases that aim to protect PWRD users anyway.

Vault users can indeed sell their Vault tokens if they want through the open market, but this does not affect the protection for PWRD. What protects PWRD isn’t the price of Vault but the deposits used to mint Vault. So the price of Vault is irrelevant to the protection of PWRD. This makes sense because PWRD isn’t minted against Vault as a collateral and vice versa. And when possible, arbitrageurs would also scoop up the cheap Vault in the open market and redeem against Gro’s dApp, which essentially does the following:

  1. increase the price open market price of Vault
  2. increase the utilisation ratio causing an increase in the yield for Vault
  3. incentivize new deposits to Vault because of the higher yield which brings protection for deposit PWRD

The single-sided staking is simply a standard staking rewards program where users are rewarded in GRO (our governance and utility token) by depositing their Vault into a smart contract. This doesn’t affect the core principles of Vault and its usage. There is also no price impact on Vault. And other than the usual smart contract risks in any DeFi protocol it is safe.

Hope this helps

1 Like

Thanks for all the great answers GRO team.

I think one of two amended proposals might be interesting to start with:

Few more Q’s to decide which one is the best fit:

The way I understand it, by entering the curve pool we effectively forego on a part the “FDIC insured” aspect of PWRD. Where it insures against stablecoins depegging. Despite the 60% PWRD exposure in the metapool, correct? Since any failure would effectively distort the pool balance, if DAI were to go to 0, the curve pool would become almost all DAI? (note to others: this is a risk for all Curve pools - not a GRO or PWRD risk) .

  • Or is there a mechanism here that would at least cover part of the risk for the PWRD portion in the pool?

  • So withdrawing PWRD currently has a 0.5% withdrawal fee, would we be able to circumvent this fee in the Curve pool? Or would this still be charged indirectly on our PWRD part, if we were to withdraw to USDC, USDT and/or DAI from the curve pool?

Not directly related:

  • Gro appears to have been losing TVL over the past period. How does GRO plan on differentiating from other stable coin yield alternatives and how does it plan to GROw the protocol TVL?

Thanks again for taking the time!


Hey @tommyq , Charlie here from the Gro core team :wave:

You’re right in that the Curve pool removes protection from stablecoin failure, but you’d keep the protection against protocol failure. If it’s just in the PWRD product (not pooled) then it gets the double protection, but obvious significantly lower yield as there’s no liquidity mining option.

Hard to price those two risks so it depends if there is a specific concern you have e.g. protocol hack (in which case would go PWRD-3CRV), or generally are aiming for a safe long term store for treasury which also generates yield (in which case would go pure PWRD).

Couple of other points to address your questions:

  • 0.5% withdrawal fee is redistributed to other holders as part of system APY, therefore after ~ 3.5 months you are ‘in the money’ because of this fee (so it’s great for long term allocation). You can exit in the Curve pool to avoid this but would have slippage to contend with instead.
  • TVL has been falling recently in part because there was a lot of hype post-LBP which is now stabilising to more normal levels. The protocol is launching a new product (Labs on Avax) this week and integrating with zkSync next week so we expect TVL to start to increase again together with more marketing and referral efforts :slight_smile:

Let us know if there’s anything else that isn’t clear!


Thanks, Charlie.

If Gro agrees, I think we can issue the following proposal and put it up for vote @khaaduscalper :

1.25M in PWRD
1.25M in PWRD-3CRV (staked on Gro)

We believe both have interesting R/R profiles, I lean towards the latter being more interesting. I think this split and a lower total amount will have a higher chance of passing than the initial proposal.

When the Merit Circle DAO community gets more comfortable with Gro and as Gro total TVL grows, we can issue another proposal to increase the amount in both "pools.

Look forward to further cooperating with the Gro DAO!


Hey @tommyq

Happy to hear you’re interested in the product. We’re excited to hopefully welcome the Merit Circle DAO community on board!

Sounds like a great start, and of course you can always flex it as you choose to :slightly_smiling_face:

Looking forward to following the vote action :eyes:

1 Like

Likewise Charlie!

@khaaduscalper can you please amend your existing proposal as a reply to this thread. So both the new and old proposals are visible here.

Then we will put the revised proposal up for vote : )

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