PIP-XX: Governance Cost Rationalization and Operational Continuity

[Laita]

Summary

This proposal realigns Velora’s fixed costs with current market realities. It pauses DAO-funded meta-governance, discontinues the PIP-69 treasury management role, and consolidates operations under the Laita Labs mandate. The objective is straightforward: eliminate administrative overhead to preserve runway for product development and protocol maintenance.

Motivation

Velora’s governance and incentive structures were established during a period of higher protocol revenue and stronger token valuation. Since then, both revenue and token price have declined materially, reducing the DAO’s effective operating budget.

At the same time, fixed governance and administrative costs have remained largely unchanged. Today, the DAO is funding core protocol operations alongside paid meta-governance structures and treasury management roles, including SeedGov, delegate compensation (approximately 10k USD per month in ETH and 5k USD per month in tokens), and a DAO-funded treasury management mandate.

Under current conditions, the DAO cannot sustainably fund all governance incentives, discretionary administrative roles, and core protocol operations simultaneously. Continuing to do so would directly impact the DAO’s ability to maintain, secure, and improve the protocol.

SeedGov and funded treasury management fulfilled important roles during a higher-growth phase. Current market conditions, however, require prioritizing protocol survival and core operations. These tradeoffs are not ideal, but they are necessary given present economic realities.

This proposal is a cost-alignment measure, not a change in governance philosophy.

Recent Product Progress

Despite tighter budget constraints, product development has continued.

Velora has recently announced upcoming improvements to Limit Orders, including:

• Crosschain Limit Orders, intended to allow limit orders to execute across supported chains without manual bridging or multiple transactions.

• Yield-Bearing Limit Orders, designed to allow funds committed to limit orders to earn yield while awaiting execution instead of remaining idle.

These products are announced and expected to go live following testing and audits. Continued funding for product development and maintenance is required for these improvements to ship and for the protocol to remain competitive.

Specification

1. Pause DAO-Funded Meta-Governance and Delegate Compensation

Upon approval:

• DAO-funded compensation for SeedGov and other paid meta-governance or delegate programs is paused as a temporary cost-alignment measure.

• This pause applies only to compensation. Governance participation rights remain unchanged.

• Community members may continue to participate in discussions, submit proposals, and engage in governance processes.

• This pause is reversible through future governance action if protocol revenue and budget conditions improve.

2. Discontinuation of DAO-Funded Treasury Management (PIP-69)

Upon approval:

• The DAO-funded treasury management role established under PIP-69 is discontinued.

• No ongoing compensation, retainers, or discretionary authority associated with PIP-69 will continue.

• Treasury assets remain fully under DAO control and subject only to governance-approved actions.

• No new treasury management strategy or discretionary mandate is introduced as part of this proposal.

This change reflects current conditions in which discretionary treasury management is not essential to protocol continuity and allows the DAO to reduce non-core operational overhead.

Any future treasury management initiatives would require a separate governance proposal.

3. Continuation of Core Operations Under Existing Laita Labs Mandate

Velora will continue operating under the existing Laita Labs service provider framework approved in PIP-64.

• No new governance bodies or entities are created.

• The existing mandate is adjusted to also cover basic governance coordination previously supported by paid meta-governance structures.

• Core responsibilities include protocol maintenance, development, infrastructure, security coordination, integrations, audits coordination, and communications.

This proposal does not transfer governance authority to Laita Labs. All protocol decisions, funding approvals, and mandate changes remain subject to DAO governance.

4. Allocation of Remaining PIP-45 Funds

Any remaining, unspent funds approved under PIP-45 will be allocated exclusively to:

• Product development

• Protocol maintenance

• Infrastructure and security work

• Technical debt reduction

PIP-45 funds will not be used for delegate compensation, treasury management, meta-governance programs, or non-operational initiatives.

5. Budget and Operational Cost Floor

To ensure protocol continuity, the DAO acknowledges a minimum operational funding level of 60,000 USD per month, invoiced by Laita Labs under the existing service provider framework.

This cost floor reflects historical protocol expenses across engineering, infrastructure, audits, integrations, and security response, adjusted downward for current market conditions.

All spending remains operational in nature and subject to regular reporting and DAO oversight.

Rationale

Reducing fixed governance and administrative overhead allows the DAO to prioritize the work required to keep the protocol operational, secure, and improving during a period of constrained revenue.

Pausing paid meta-governance programs and discontinuing DAO-funded treasury management removes discretionary overhead that is no longer justified under current budget conditions while preserving full DAO control and governance rights.

This proposal does not remove governance rights, introduce new authorities, or create forward-looking economic commitments. It aligns spending with current realities while preserving flexibility to re-evaluate governance and administrative structures if conditions improve.

Non-Goals

This proposal does not:

• Remove or diminish governance rights from token holders or community members

• Prevent future delegate, meta-governance, or treasury management programs

• Introduce new authorities or governance structures

• Commit the DAO to long-term spending beyond existing mandates

Implementation

If approved:

1. DAO-funded meta-governance and delegate compensation will be paused.

2. The DAO-funded treasury management role under PIP-69 will be discontinued.

3. Core operations will continue under the existing Laita Labs mandate with adjusted scope.

4. Remaining PIP-45 funds will be allocated to product development and maintenance as specified.

5. Operational spending will follow the defined monthly cost floor and reporting practices.

Governance funding structures may be revisited through future proposals if protocol revenue meaningfully improves.

Disclaimer

Nothing in this proposal constitutes investment advice, fiduciary obligations, or performance guarantees.

All work performed under the Laita Labs mandate is operational and best-effort in nature. Announced product features are subject to testing, audits, and implementation readiness. The DAO retains full authority to modify or revoke service provider arrangements through governance at any time.

[Avantgarde]

Given the current treasury and revenue realities, we agree it’s reasonable to reduce fixed governance overhead and prioritize protocol continuity, keeping the focus on shipping product and maintaining core operations. Therefore, it makes sense to pause DAO-funded meta-governance and delegate compensation, and to discontinue the PIP-69 treasury management role.

[boardroom]

Reducing admin overhead and governance complexity generally (and thus reducing treasury burn) is a trend we’ve seen in other DAOs recently. Scroll is currently undergoing a similar restructure. It’s likely the right thing for Velora to do at this time as well. It’s important to adapt to market realities, and extending financial runway now makes sense.

Ceding all core operations to Laita Labs is an understandable measure, although it does push pretty far into the “centralized” end of the spectrum. In Scroll’s new framework, for example, the DAO opted to keep one core governance operations committee and an accountability committee (to be elected by the DAO in future cycles). But given Laita’s emphasis on not creating any new governance bodies to really preserve the treasury, it’s understandable that we should remain more on the conservative side.

[Asou]

Hello, this corrective measure helps reduce costs due to a financial issue, allowing the project to remain afloat. However, when I read terms like “survives,” I wonder: What happens next?

This corrective measure alone cannot be effective.

We need actions to bring money into the project.

My questions are as follows: What are the objectives for 2026 to generate cash flow for Vélora?
Could you present us with a 5-year roadmap?

[Curia]

We’re fully aligned with @Laita on the need for cost discipline and prioritizing protocol survival under current market conditions. The rationale behind reducing fixed overhead is clear, and we agree that core operations and product development must come first.

That said, we believe it’s important to pair the pause of these initiatives with a clear and concrete plan for reactivation.

Specifically, it would be helpful to define:

• What objective criteria would justify restarting all programs that are paused under this proposal (e.g. revenue thresholds, runway targets, product milestones, or other clearly measurable indicators).

• How the DAO should evaluate when conditions have “meaningfully improved” enough to revisit these programs.

Our concern is that without predefined benchmarks, the pause risks becoming indefinite by default. This would effectively unwind a year of accumulated effort across governance coordination, delegate engagement, and supporting programs referenced in this proposal. If there is no clear reactivation framework, much of that work, and the resources spent building it risks losing long-term value, and restarting governance infrastructure later would be significantly harder and more costly.

We view this proposal as a temporary pause, not an abandonment of these efforts. Having an explicit renewal framework would:

• Preserve the value of past governance investments

• Reduce coordination and setup costs in the future

• Give contributors and community members clear expectations

• Enable the DAO to act quickly and confidently when conditions improve

In short, we support the direction and intent of this proposal, but strongly believe that defining a concrete reactivation plan is necessary to ensure this cost-alignment measure remains strategic, temporary, and reversible rather than open-ended.

[Tane]

Thanks @Laita for presenting a clear and timely proposal that addresses Velora’s pressing financial constraints. We recognize the necessity of aligning fixed costs with current market realities and agree that prioritizing protocol survival and product development is critical in this environment.

However, we see several issues that merit deeper discussion. The consolidation of all core operations under Laita Labs, while efficient, raises substantial concerns about centralization and the potential erosion of decentralized governance. As @boardroom noted, other DAOs undergoing similar restructures have retained at least minimal governance and accountability committees to preserve checks and balances. What specific mechanisms, if any, will remain in place to ensure transparency and community oversight during this period of operational consolidation?

Building on @Curia’s point, the proposal lacks clear, objective criteria for when paused governance and incentive programs might be reinstated. Without measurable benchmarks—such as revenue thresholds, runway targets, or product milestones—there is a risk that these cost-saving measures could become indefinite. How does the team plan to define and communicate the conditions under which governance functions and compensation will be reactivated, and what process will be used to evaluate when “meaningful improvement” has occurred?

Finally, while the focus on product development is well justified, we are concerned about the long-term implications for Velora’s governance culture and community engagement. What steps will be taken to ensure that, once financial conditions improve, the DAO can rapidly and effectively reestablish decentralized governance structures and avoid entrenching a centralized operational model?

We believe addressing these questions is essential to balancing immediate financial needs with the long-term health and legitimacy of Velora’s governance.

[Laita]

Thanks everyone for the feedback—appreciate the time.

We want to re-highlight two points from the proposal that might be getting lost here:

@Laita

• This pause applies only to compensation. Governance participation rights remain unchanged.

@Laita

• Community members may continue to participate in discussions, submit proposals, and engage in governance processes.

Just to be clear: We are only pausing the paid compensation. The governance process itself stays exactly the same.

This move cuts ~$15k per month in immediate burn. But the bigger issue is the long-term impact: at the current rate, delegate compensation eats up >2.5% of the total token supply per year.

That is real, recurring dilution. It’s far more effective to preserve that value and focus resources on core protocol dev, maintenance, and security.

This doesn’t change decentralization. Anyone can still be a delegate—the DAO just won’t subsidize the role directly anymore. Private arrangements between delegates and holders are still totally fine.

On Laita’s role: We aren’t extending our mandate. We’re keeping our technical provider role and just picking up the admin slack to remove overhead. We aren’t expanding authority; we’re expanding support to make operations efficient.

It’s really just about matching our structure to the current market conditions. We need to be pragmatic. We can explore new models later, but right now we need a setup that actually sustains the protocol.

[jameskbh]

It makes sense to adjust the budget when conditions are more challenging. While this probably will lead to a lower engagement from delegates and on governance activity in general, it is a reasonable request

@Laita

To ensure protocol continuity, the DAO acknowledges a minimum operational funding level of 60,000 USD per month, invoiced by Laita Labs under the existing service provider framework.

This cost floor reflects historical protocol expenses across engineering, infrastructure, audits, integrations, and security response, adjusted downward for current market conditions.

All spending remains operational in nature and subject to regular reporting and DAO oversight.

This is the continuity of PIP-64, so no big issue here.

[Mehdi]

I agree with cutting operational costs given current conditions, as I’ve previously highlighted in my comments on why Velora’s revenue has decreased recently. With 2026 expected to be a volatile year, reducing some operational workload and expenses can help the DAO manage overhead and extend runway. As noted by other delegates, several DAOs and projects are moving in this direction—for example, Optimism recently significantly reduced its Discord operations, leaving only a few channels in read-only mode.

At the same time, governance actions take time to reflect in market outcomes, and historically we’ve seen very few cases where governance changes alone translate quickly into price performance. For that reason, these decisions should primarily focus on sustainability and navigating uncertainty.

My only question is: if this proposal gets approved, will the pause be effective starting next month, or by the end of Cycle 2?

[PGov]

There has been pretty good points presented across both sides. Overall, we think for the time being, cutting off these incentives and saving the DAO $150k+ a year makes sense. We are in favor of this proposal as is.

[Asou]

Hello, how many delegates does the DAO represent?

[Vigo]

At present, the project and the token price are completely disconnected, and I have never seen anyone seriously address this issue.

A project itself must have healthy and sustainable revenue. Once this fundamental goal is achieved, many so-called “problems” naturally stop being problems. For example, trying to “save” USD 15,000 per month is already a last-resort solution under an unsustainable situation.

The current state of this project is simply a disaster.

As an investor who purchased VLR, this situation leaves only two possible outcomes in my view:

Either the project is able to attract a sufficient number of users through genuine technological innovation and real product value;

Or, if the technology has no clear advantage and lacks enough appeal, then at the very least the token price should be properly maintained — because as long as there is price, the project retains visibility and momentum.

For me personally, the investment loss has already occurred. I don’t really care anymore, and it does not significantly affect me.

But for those parasites within this project — who can initiate proposals that contribute nothing to the actual progress of the project and still get paid — how much longer do you think you can continue generating income this way?

[Laita]

Thanks for the input, Mehdi.

We are targeting a Jan 26 close date (Live Jan 21 + 5 days). This gives everyone a clear resolution before February begins.

We believe this is fair notice, especially as we flagged the tightening budget situation to Seed privately back in December. We simply can’t afford to delay this another month—we need to prioritize those funds for protocol operations immediately.

[Eren_DAOplomats]

Addressing fiscal health involves two levers cutting costs or increasing revenue—and while this proposal pulls the former aggressively, we must prioritize the protocol’s survival. We are concerned that eliminating delegate compensation and meta-governance risks centralizing the protocol and distancing us from the true ethos of a DAO. However, we recognize that 2026 will be a volatile year, and without a sustainable budget to ship key products like Crosschain Limit Orders, governance becomes irrelevant. In a nutshell we are trading decentralized checks and balances for operational runway, but we must aim to restore the decentralized structure as soon as revenue recovers.

[Benibauer3]

Given the current context and the sharp decline in protocol revenue, it makes sense to revisit governance, operational costs as a way to preserve sustainability and ensure continuity. Introducing a more disciplined cost structure is a responsible and timely move.

That said, it’s important that this proposal goes beyond cost reduction alone. Alongside the cuts, I’d like to see clearer next steps and a forward-looking roadmap for the protocol. Cost rationalization should be paired with initiatives focused on rebuilding revenue, strengthening usage, and supporting long-term value accrual for VLR. Otherwise, there’s a risk of this becoming a purely reactive measure rather than a strategic reset.

Regarding delegate compensation, the proposed approach is reasonable. Counting delegate activity through the end of the current month, followed by the application of the reduced structure as described, provides clarity and fairness. Proceeding with payments for December and January under this framework ensures a clean and transparent transition.

Overall, this proposal addresses an important short-term need, it also opens the door for a broader discussion on how governance, incentives, strategy can work together to support the protocol’s recovery and growth.

[Laita]

The 7-day debate period for this proposal has now concluded. In accordance with the PIP Lifecycle approved under PIP-57, we are closing the debate stage and initiating the 2-day frozen period. After this period, the proposal will be submitted to Snapshot for voting.

Thank you to everyone who contributed to the discussion!

[citizen42]

I want to start by sincerely thanking everyone involved for the work, care and openness that went into past governance discussions, proposals and this broader transition we lean towards.

In particular, thank you to @Laita for continuing to carry the protocol forward with consistency and technical stewardship, to @Avantgarde for the responsibility taken on through treasury management and to @SEEDGov for facilitating governance, alignment and difficult conversations when they mattered most, these roles and the people behind them, have played a meaningful part in guiding Velora through a period of real change.

I’ve been with Velora from day one, staking from the start and contributing long before any formal delegate programs existed and being able to serve the DAO through these phases, including as a delegate, has been genuinely meaningful to me and must admit that this decision is a responsible one, and I understand why the DAO is moving in this direction. However what matters most to me in this moment is how we preserve what makes Velora strong while doing so.

At its core, Velora’s governance has never been about programs or titles, it’s been about engaged people showing up, thinking critically, and acting in good faith. Even as formal frameworks wind down, that human layer remains essential. Delegates, multisig signers, and consistently active contributors are not just operational roles, they are the living expression of decentralization.

Even when not strictly required, we should continue to favor governance that is open, collective, and decision-based rather than role-based, preserving decentralization by design, not by obligation.

I’m fully committed to continuing to support Velora’s governance and decision-making in the same spirit I always have, regardless of structure or incentives. My involvement has never been transactional; it’s rooted in conviction about the protocol, its values, and what it can become.

Equally would be nice to perhaps keep in mind or as a possibility, If, at some point in the future, the DAO finds it appropriate to acknowledge sustained past contributions, for example through periodic, retrospective recognition for consistently active governance participants (i.e active parrticipants and/or multisig signers) that could help maintain engagement without creating standing roles, duties, or centralized dependencies.
This wouldn’t be about paying for responsibilities, but more about recognising commitment after the fact.
This being said, I also fully appreciate that given current priorities, this may not be feasible right now.

Either way, I remain happy to contribute, support and help steer where I can. Velora has strong foundations, thoughtful contributors, and real protocol capabilities. If we stay aligned with our principles and continue to value open, decentralized participation, I’m confident we’ll stand out in this space.

Bring it to snapshot !

[GozmanGonzalez]

I read this proposal slowly, not because it is complex, but because decisions like this change the shape of a DAO in very real ways. From a legal and governance standpoint, this is not an easy proposal, but it is an honest one. It acknowledges financial reality without pretending that the tradeoffs do not hurt.

What stands out to me is the clarity of intent. This is framed as cost alignment, not a quiet shift of power, and that distinction matters. Pausing compensation while preserving participation rights is a meaningful safeguard. It tells the community that governance is not being taken away, only that the DAO can no longer afford to pay for every layer of structure it built during better times. From a legal perspective, that separation between rights and compensation is important for legitimacy and for trust.

The decision to discontinue the PIP-69 treasury management role also feels grounded in current conditions. Discretionary treasury mandates make sense when there is room to maneuver and take calculated risks. When revenue is tight, preserving capital and reducing moving parts becomes the safer choice. What I appreciate here is that the proposal clearly states that treasury control stays with the DAO and that any future management structure must return to governance. That clarity avoids ambiguity, which is often where disputes begin.

I also want to acknowledge the human side of this. SeedGov, delegates, and treasury managers did real work when the DAO needed them. Saying that those roles are no longer affordable is not a judgment on their value, but on timing and capacity. As a lawyer, I often see organizations fail because they wait too long to make hard calls. This proposal does not do that. It chooses protocol survival over comfort, which is never popular but often necessary.

My main point of caution is around operational concentration. Expanding the Laita Labs mandate to absorb basic governance coordination increases responsibility in one place, even if authority remains with the DAO. I think this can work, but only if reporting stays frequent, plain, and transparent, especially during this transition period. Trust will depend less on structure and more on communication.

Overall, I see this as a defensive move done with restraint. It preserves flexibility, keeps governance rights intact, and buys the DAO time to ship product improvements that could actually change the revenue picture. I do not think anyone celebrates proposals like this, but I do think they are sometimes the difference between a protocol that survives a downturn and one that slowly bleeds out.

I appreciate the straightforwardness of this proposal and the willingness to name reality as it is. That honesty is, in itself, a form of good governance

[Laita]

Thanks everyone for these fruitful feedbacks and insightful discussions!

The proposal is now live on Snapshot

[PurpleIndividual]

I agree with the general observation: costs have to be lowered in tough times.
I wouldn’t worry as much about community and delegates engagement, I think it comes and goes as the ecosystem evolves, when the ecosystem sees a regain of interest the DAO and delegates will manifest themselves again.
As stated above, the focus should be on making velora profitable, when a protocol is profitable there is no emergency, the product can be developed and maybe investors can be paid a regular income flux. I am no expert and will probably ask for clarification on this but I believe velora is still earning money. We should focus on allowing the protocol to go through this hard time, the future is bright.