**TIP 51: Coverage Pool Allocation** **Vote type:** Token Holder Governor Bravo **Overview:** This is a proposal to provide more insurance to tBTC users in the form of allocating more Threshold DAO resources to the coverage of tBTC. Responsible risk management on behalf of the DAO is critical for tBTC users as the network continues to scale. Currently, tBTC is backstopped by a single asset T-only coverage pool. Strong steps toward improving protocol risk management are achieved by the DAO committing more assets to this pool. This proposal is an extension of TIP 43- Coverage Pool Migration. The intention is to strike a better initial balance between early tBTC coverage and the opportunity for the DAO to maximize yield by leveraging internal assets elsewhere across the DeFi ecosystem. *The proposal is not the end state for Threshold DAO tBTC risk management.* The Threshold DAO can elect to expand tBTC coverage into multiple assets by deploying a new, fully incentivized multi asset coverage pool. This would allow for coverage outside of just T as a single asset which is benificial for risk management. However, any expansion is out of scope of this proposal. **Milestones and Deadlines:** *Proposal Drafting:* Strategy discussion and alignment in the Threshold Treasury Guild. *Temp Check Snapshot:* The proposal will move to a Threshold DAO temp check snapshot the week of 05/08/23. *Governor Bravo (GB) Flow Start:* If the temp check is passed this proposal will move into the Threshold DAO GB instance shortly after the snapshot ends. **Who is Involved?** Token Holder DAO, Treasury Guild **Detailed Summary:** The exact resources allocated to the T-only coverage pool are outlined in this section of the proposal. Current stats for protocol generated BTC wallet size are available on this dune dashboard. The Threshold Treasury guild is recommending the DAO uses a percentage of tBTC TVL as an anchor metric to base coverage available in the pool. Currently, BTC wallets are generated by the protocol every two weeks. However, this number will increase to one week. Wallets will timeout after 6 months at which point they are swept resulting in BTC transferring to newer, more lively wallets. This means that 26 is the foreseeable maximum wallet amount. The DAO should aim to provide initial coverage on one BTC wallet. Thus, in theory - the DAO should initially pledge to cover 1/26 or 3.8% of the entire tBTC supply. Currently, the total tBTC supply is 529.62. This means that the DAO will deposit enough T to cover roughly 20 BTC or ~17M T. However, metrics discussed are at the time of this proposal writing and will absolutely change. Thus, a mechanism for flexibility for the DAO to adapt to tBTC growth and market volatility is a necessary part of this proposal. This proposal calls to allocate up to 50M T from the DAO to the Threshold Treasury guild to add to the T only coverage pool at discretion. This 50M T represents a cap that the DAO will deposit into the T only coverage pool. This flexibility will ensure that this proposal does not become irrelevant in a short time and gives the DAO a mechanism to continuously adjust risk to market conditions. Worth noting, if all goes well and no BTC is lost from the protocol the Treasury Guild will be able to withdraw these funds out of the T only coverage pool and return them to the Token Holder DAO when any multi asset coverage pool launches. **Tx Details (If required):** N/A at time of posting. Exact T amounts subject to change with market over lifecycle of proposal.

**Vote type:** Token holder DAO Snapshot with a 5-day vote period **DAO-elected representative sponsors:** John Packel, @LakeLaogai **Timeline:** * 5 days for comment / discussion on this proposal * token holder DAO Snapshot with a 5-day vote period **Highlights:** * The DAO supported [TIP-42](https://forum.threshold.network/t/tip-042-proposal-protecting-contributors/445) to commission guidance on the best legal entity for Threshold * This proposal would authorize funding to engage law firms and service providers to create a Cayman Islands Foundation for Threshold **Detailed Summary** As outlined in [TIP-042 Proposal: Protecting Contributors](https://forum.threshold.network/t/tip-042-proposal-protecting-contributors/445), which passed Snapshot unanimously [here](https://snapshot.org/#/threshold.eth/proposal/0xe8a04016cb65cac932dc9e422735a0ad580aa469ffc662ec7604c74f1670b64e), Threshold DAO token holders approved $15,000 to engage a law firm to investigate establishing a legal entity. Expected benefits of an entity include: * Protecting Threshold contributors and token holders from personal liability * Reassuring existing and future contributors who are limiting their involvement or are concerned about risks * Providing Threshold DAO a proxy to represent the DAO and sign legal agreements ***Please note that this proposal is not legal advice, and the sponsors are not attorneys but rather are active community members who believe Threshold needs a legal entity and support from legal counsel in setting up the most appropriate structure.*** * A [Cayman Islands Foundation Company](https://www.ciregistry.ky/companies-register/types-of-companies/foundation-company/) is a non-profit entity that will take direction from Threshold token holders via the existing DAO governance structure * Specifically, the Threshold treasury would continue to be housed in the Governor Bravo contract controlled by token holders, and the Council retaining its ability to veto harmful proposals * To expedite the process of creating a Cayman Foundation and reduce the cost, a company called Otonomos has offered incorporation services since 2015; their Cayman Foundation package is shown [here](https://otonomos.com/order/4/new) * The legal counsel retained via TIP-042 will provide additional services as needed to the extent they are not covered by Otonomos If passed, this proposal appropriates the necessary DAO funds and authorizes Threshold Treasury Guild Committee to engage with legal counsel and Otonomos to create a Threshold Foundation as outlined above. * $21,615 for Otonomos’ Cayman Foundation package * Up to $40,000 for legal counsel’s services, including local Cayman counsel * Discretion to alternatively select the DAO-controlled Foundation, Corporate Nominee Director, Nominee Supervisory Councillor recommended by legal counsel, rather than that provided by the Otonomos package **Here are some resources the community may want to read for context:** https://www.ciregistry.ky/companies-register/types-of-companies/foundation-company/ https://otonomos.com/order/4/new https://daocollective.xyz/legal-entity/ https://a16zcryptocms.wpengine.com/wp-content/uploads/2022/06/dao-legal-framework-part-2.pdf

TIP-045, this proposal, supersedes and replaces [TIP-035](https://forum.threshold.network/t/tip-035-t-grants-for-tbtc-v2-bootstrap-node-providers/405). ### TL; DR: Bootstrap Node Requirements tBTCv2 will launch with three bootstrap node providers: Boar, P2P, and Staked. Each provider will receive a grant of $10,000/month in T. The updated Bootstrap Node Proposal shortens the term commitment to one (1) year and adds the requirement of running an Electrum Server. ### Background: After carefully considering the concerns, suggestions and comments from the community in response to the [first version of this proposal](https://forum.threshold.network/t/tip-035-t-grants-for-tbtc-v2-bootstrap-node-providers/405), this update has been drafted to reduce the expense to the DAO while still ensuring a **robust and timely launch** of tBTCv2. Bootstrap nodes are critical building blocks of infrastructure for the Threshold Network’s tBTC application and are very different from regular nodes. Their operator addresses are hard-coded in off-chain client code. Bootstrap nodes do not participate in activities that expose them to slashing risk, thus they do not earn inflation rewards. Their stake sizes are of no importance and can be the minimum stake. ### Main Revision Points: - The runtime of this proposal has been reduced from three years to one year - The number of operators contracted under this proposal has been reduced from 4 to 3 - Running an Electrum server as a requirement has been added - The monthly grant in liquid T has been reduced to $10,000 - Guaranteed availability has been changed from 99.9% to 96 to 98% ### Detailed Requirements Per Operator Two (2) instances of the tBTCv2 client in independent regions for redundancy, to be deployed on high-availability equipment, whether this is a VPS or bare metal is left up to the provider. Bootstrap node operators agree and guarantee availability of at least 96% to 98%. The rationale in reducing the uptime guarantee from 99.99% is that it is extremely unlikely that all bootstrap node providers will experience downtime at the same time. This reduction in guaranteed availability achieved a significant cost minimization for the DAO. ### Electrum Server Requirement: This requirement was added to further support the tBTCv2 launch. Operators agree to run one instance of an Electrum server, software version and other requirements shall be furnished prior to launch, however, as a reference, tBTCv2 has been tested against three of the most popular types of servers: - ElectrumX (>= 1.16.0) (https://github.com/spesmilo/electrumx) - Esplora/Electrs (>= v0.4.1) (https://github.com/Blockstream/electrs) - Fulcrum (>= 1.8.2) (https://github.com/cculianu/Fulcrum) A Bitcoin node is required for electrum to function properly. Thus, bootstrap providers will need to maintain a Bitcoin node as well. ### Providers: **P2P** - [https://p2p.org/](https://p2p.org/) - P2P Validator provides high uptime, secure staking with advanced monitoring & support. P2P was established in early 2018 and proved the best quality of staking services as one of the top operators in Threshold, Solana, Polkadot/Kusama, Tezos, Graph, Moonbeam, Regen, Chainlink, and Connext Networks. Currently, P2P secures more than 1.5 billion USD value across 30+ networks, provides highly-available RPC services, and contributes to web3 as a core developer for Lido on Solana and Neutron - Cosmos Hub secured smart-contract chain. **Staked** - [https://staked.us/](https://staked.us/) - Staked operates the most secure, performant, and cost-effective block production nodes for decentralized PoS protocols on behalf of institutional investors. Their multi-tier signing and listening node architecture delivers stakeholders the ideal combination of security, scalability and decentralization. **Boar** - [https://boar.network/](https://boar.network/) for transparency, please review the following post: [TIP-035 T grants for tBTC v2 bootstrap node providers](https://forum.threshold.network/t/tip-035-t-grants-for-tbtc-v2-bootstrap-node-providers/405/19) ### Proposal: If approved, each provider will receive a grant of $10,000/month in liquid T for running a tBTC v2 bootstrap node in accordance with the requirements discussed herein.