[DRAFT PROPOSAL] Proposal to Wind-Down the Neutron Grants Program
Summary
We propose phasing out the Neutron Grants Program (NGP) and winding down the related Neutron Grants Foundation. The reason for this decision has been driven by our findings over the last year of running the NGP. While grant-giving served as an effective means of supporting the ecosystem in its early stage, we will now transition to a more bespoke and targeted approach to supporting and incubating high-value-add applications and businesses on Neutron
This would be accomplished via a resolution (i.e. DAO vote in favour) from the Neutron DAO to: 1) re-allocate and transfer any remaining NGP funds to the Neutron DAO; and 2) to dissolve the NGF with any required final written resolutions.
The wind-down and dissolution process will have a fixed budget as outlined below. Upon an affirmative DAO vote, the process will take 2-3 months on the administrative side; however, there will only be nominal additional operating costs incurred during that period.
Background
On October 9th, 2023, a proposal was made to launch the Neutron Grants Program (“NGP”), a Neutron DAO-adjacent program to support relevant technical research, application development, and other initiatives within the Neutron economy. A Cayman Foundation structure was established to support the NGP (the “Neutron Grants Foundation” or “NGF”). The NGP, through smart contracts and the NGF structure, is designed to enable smart-contract-based transparency and accountability mechanisms that are hardwired into its legal and technical governing rules. The purpose of the Grants Foundation, as stated in Section 2.1 of the Written Resolutions 2 Nov. 2023 (see NGF governing documents here), is provided below:
The Foundation Company has been incorporated to be adjacent to the Neutron DAO and to establish and administer the Grant Program for Neutron. The Grant Program seeks to achieve Neutron’s strategic goals within the Cosmos ecosystem, fostering innovation, development, and growth.
With its recent Mercury upgrade and migration of Neutron from ICS to a fully sovereign network, the value and efficacy of the NGP, including ongoing maintenance costs of the NGF, have been under evaluation by relevant stakeholders.
NGP Funding
The NGP was initially funded with 20,000,000 NTRN tokens, with 16,000,000 earmarked for future grant spending and 4,000,000 allocated for operational expenses. Further details about the initial structure of the grants program can be found in the initial governance forum post. (N-10 “Launch the Official Neutron Grants Program” https://governance.neutron.org/proposals/10 and N-14 “Launch the Neutron Grants Program (Resubmission of Prop N-10)” https://governance.neutron.org/proposals/14).
The allocated 20,000,000 NTRN tokens were allocated by the DAO and delivered to designated NGP smart contracts and multisignature wallets:
neutron1zjdv3u6svlazlydmje2qcp44yqkt0059chz8gmyl5yrklmgv6fzq9chelu | Neutron DAO Grants SubDAO (Core)
Neutron18e8vga4gqaerheumv05xausjctf8qj8suw9l2swm3c5f7z864yysx73nw2 | Neutron Grants Program — Operations Fund
Subject to the Bylaws, the NGF may determine the appropriate use for all and any of its general funds, i.e. the NGP funds, which include any “Blockchain Tokens, assets and monies, and may establish a reasonable budget for its own operation and maintenance.”
As of Q4 2024, the NGP had completed its first year of operations and provided the mandated accounting of NGP grants and NGF operational expenses publicly:
https://www.neutrongrants.com/dashboard. In addition, the work of the NGP within its first year of operations was summarised and published here: https://forum.neutron.org/t/neutron-grants-program-2024-report/374.
As of now, the NGP has halted evaluation and issuance of future grants, and there are no further outstanding grant liabilities to previous grantees. As a result, the remaining grant funds to be returned to the DAO (minus $25,000 allocated for legal and administrative wind-down costs) are as follows:
From the Neutron DAO Grants SubDAO (Core):
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13,663,981 NTRN
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75,380 USDC
From the Neutron Grants Program — Operations Fund:
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431,015 $USDC.axl
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1,085,454 NTRN
Authority and Steps to wind-down
Based on the design of the NGP and integration with NGF governing documents, only the NGF’s Director, Emergency Supervisor, or the DAO have the authority to dictate or initiate a wind-down of the NGF or transfer of remaining NGP funds.
The NGF’s Articles of Association provide that the company shall be wound up if the Supervisor delivers notice to the Foundation Company at its registered office, declaring that it is to be wound up, and attaching a copy of a Neutron DAO Resolution approving the winding up of the Foundation Company. The person designated in the Supervisor’s notice shall be the liquidator; or, if no liquidator is so appointed, then the Directors or such person as they appoint shall be the liquidator.
The Articles of Association further provide that Directors, Members and Supervisors as such have no power or authority to wind up the Foundation Company or petition the Court to wind up the Foundation Company, except in the case of insolvency or for a bona fide reorganisation intended to enable the Foundation Company to carry out its objects more efficiently.
Presently, Lanre Ige is the sole Director and Grant Lead. David Rodriguez, Emir Izaddeen, and David Park are the current Grant Reviewers.
The NGF’s Supervisor is International Protectors & Advisors Ltd. of Harbour Place, 2nd Floor, 103 South Church Street, PO Box 472, George Town, Grand Cayman KY1-1106, Cayman Islands.
For expediency and to reduce costs, Jonathan Ige has agreed to act as the liquidator with guidance from the Foundation’s counsel, Travers Thorp Alberga (“TTA”).
Allocation of NGP/NGF Assets Upon wind-down
The NGF’s Memorandum of Association and Articles of Association require that surplus assets, if any, be “paid or transferred to such charitable objects as shall be decided by ordinary resolution of the Foundation Company.” In other words, a DAO-approved NGF resolution is required to direct and transfer NGF Grants/Incentive/Ops funds.
Overview of wind-down and Dissolution Process and Proposed Steps
NGP
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The NGP via Director, Emergency Supervisor, or other ecosystem contributors will publish a proposal explaining the wind-down/dissolution of the NGP and associated NGF.
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The proposal will propose that the remaining NGP funds, minus costs, be returned to the Neutron DAO
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The proposal will direct the NGF to wind up and dissolve its operations
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The NGF and NGP will halt the issuance of new grants and wind up the majority of operations.
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Notice will be issued to all current and former grant recipients regarding the NGP’s sunsetting.
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The NGF will disband its limited team. Lanre will remain as liquidator to guide the wind-down and dissolution.
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The current multisig signers and setup will remain until an appropriate transition plan is in place. The current signers have agreed to continue their duties reviewing and signing transactions, and helping to transition when appropriate.
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The NGF is required to perform due diligence, which is enumerated in the resolutions confirming return of the remaining NGP funds does not violate anti-money laundering or other laws
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Appropriate NGF resolutions will be issued documenting the NGF’s due diligence and initiating the (including to transfer of the remaining NGP funds to the DAO and securing a majority of the treasury)
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In addition to notice to current and former recipients, the NGP will issue a final overview of all grants distributed and their current status. This information will also be made available in a way that is accessible and remains available to the community over the long term.
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A final breakdown of remaining NGP funding and its transfer to the DAO will be provided.
NGF:
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To wind-down and dissolve a Cayman entity, it must be in Good Standing status, which requires any outstanding obligations to be settled as per the Registry’s requirements. All pending dues in the name of the entity must be settled before dissolution.
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Once all is in order to proceed, the Registry will require a one-time payment to start the process and prepare the required documentation. It generally takes between 15 - 45 days for the dissolution process to complete. Once completed, a Certificate of Dissolution will be provided as proof.
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The administrative process for a voluntary liquidation generally takes 2 - 3 months, and the fees involved are outlined below. Administrative fees, including for providing notice in the Cayman Islands Government and Cayman Islands Gazette (the “Gazette”), are also required and outlined below. The proposed wind-down budget is as follows:
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Up to $10,000 for fees for the appointed law firm for the liquidation process
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Up to $4,000 for administrative fees, including providing notice in the Cayman Islands and the Cayman Islands Gazette.
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A buffer of $11,000 for additional unseen legal or operational costs
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Any leftover funds from the budget will also be returned to the DAO.
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Below is a brief overview of the process:
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Director(s) of the Company will sign a declaration of solvency confirming the solvent financial position of the Company and will recommend to the shareholders (in this case, the DAO as there are no shareholders) that the Company be placed in voluntary liquidation and pass any necessary resolutions;
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The DAO will pass special resolutions putting the Company into voluntary liquidation, transferring treasury funds, and appointing the “voluntary liquidator”;
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The voluntary liquidator will notify the Registrar of Companies (the “Registrar”) of the voluntary liquidation and the appointment of the voluntary liquidator(s);
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The voluntary liquidator will publish a notice of the voluntary liquidation and appointment of the voluntary liquidator(s) in the Gazette;
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The voluntary liquidator will file notice of the final general meeting in the Gazette;
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The voluntary liquidator will collate the final financial statements of the Company, indicating how the assets have been distributed and prepare a report of the voluntary liquidation for the shareholders;
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The voluntary liquidator(s) hold the final general meeting, and the shareholders sanction the actions of the voluntary liquidator(s);
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The voluntary liquidator(s) notifies the final general meeting to the Registrar and request for the Certificate of Dissolution; and
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The Certificate of Dissolution is issued (usually within 7 days, although the deemed legal dissolution of the Company will take a further 3 months).
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Next Steps
This signalling proposal will provide the Director of the Neutron Grants Foundation with the mandate to begin the winding-down process. As noted above, this will take approximately 2-3 months following the passing of the vote. It is anticipated that due diligence and appropriate resolutions will be completed and issued within this 2-3 month period, at which point the funds will be returned to the DAO. Funds will be returned to the originating addresses, unless the NGF is directed otherwise by passing a DAO proposal (NOTE: that modification of the return address may increase the time required to return the funds based on due diligence requirements). A further proposal will be required to terminate the Neutron DAO Grants SubDAO (Core) smart contract and return the funds, and this will occur once the winding-down process has been completed. Please also note that neither the Grants Lead nor any members of the Grants committee will receive compensation during this winding-down process, and they have not been evaluating grants or receiving compensation since the completion of the first year of grant giving.
Voting Options:
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A YES vote approves the process to begin the dissolution of the Neutron Grants Program and the Neutron Grants Foundation
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A NO vote rejects the process to begin the dissolution of the Neutron Grants Program and the Neutron Grants Foundation
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An ABSTAIN vote expresses no preference for the proposal’s outcome.