While the results from the initial rounds of Merit appear promising, the (effectively) permanent allocation of such substantial resources warrants a deeper evaluation to ensure alignment with Aave’s long-term objectives. To this end, I suggest the following steps to ensure that we are making the most informed decisions possible on this program:
- Establishment of a Merit Review Committee: This committee would be tasked with overseeing the implementation and effectiveness of the Merit system. It would provide quarterly reports to the DAO on program performance against predefined metrics, offering transparency and ongoing accountability.
- Development of Specific KPIs: Before committing to a long-term expenditure, we should define clear, quantifiable KPIs that the Merit system must meet to justify continued funding. These KPIs should focus on key areas such as market share growth, protocol revenue enhancement. The Merit Review Committee could assist in defining these KPIs and in the regular assessment of their achievement. In the current state of merit
- Phased Funding Approach: Rather than allocating the full budget upfront, I propose a phased funding approach where budget releases are contingent on the successful achievement of the aforementioned KPIs each quarter. This approach would mitigate financial risk while ensuring the program’s goals are being met effectively. I see no reason to commit to the full year of funding right now.
- Extended Discussion Period: Given the complexity and potential impact of this proposal, an extended discussion period is necessary. This would allow all DAO members adequate time to review the proposal details, contribute to the KPI development, and voice any concerns or suggestions they might have.
- Ad-Hoc Reviews and Adjustments: While the proposal mentions the possibility of ad-hoc ARFC votes to modify aspects of the Merit system, I recommend formalizing this process. Regularly scheduled review points could be instituted, allowing for adjustments based on performance data and external market conditions.
Ultimately, Merit is probably to stay. That is well and fine, despite very well articulated reasons against it that have never been addressed:
Let’s actually put the structure around it so that it is run properly. I am not all that opinionated on the form in which this takes, but I am sure the majority of Aave holders would agree that something that will end up being the largest item on Aave’s balance sheet should undergo commensurate diligence.