**Vote type:** Token holder DAO snapshot, single-choice voting (yes/no/abstain) **DAO-elected representative sponsors:** [@JohnPackel](https://forum.threshold.network/u/johnpackel) [@Eastban](https://forum.threshold.network/u/eastban) **Timeline:** 7-day discussion period followed by 7-day Snapshot vote **tl/dr** * Following tokenholder approval to create Threshold Labs per [TIP-98](https://forum.threshold.network/t/tip-098-the-future-of-threshold/1012?u=johnpackel) and [TIP-100](https://forum.threshold.network/t/tip-100-the-future-of-threshold-continued/1033?u=johnpackel), tLabs submits a year-1 budget request for $2,850,000 * This number reflects at-cost projections with zero profit margin added * Proposed milestones by which to measure tLabs success include doubling revenue to 50 tBTC and increasing TVL by 60%, to 7,500 BTC * tLabs has commenced operations based on $250k fronted by the former Treasury committee, which will be deducted from the total * The former Treasury committee created an expense payment plan based on estimated tLabs budget; Threshold Committee will update it to reflect the actual **Purpose** The stated purpose of creating tLabs was outlined in TIP-100 as addressing core challenges facing Threshold and tBTC: 1) growth coordination challenges and unclear market position, 2) stalled tBTC product and technical development and 3) limited tokenomic model. Threshold became “default alive” (the protocol and network can operate sustainably and profitably) thanks to significant cost reductions from eliminating emissions ([modified TIP-92](https://snapshot.box/#/s:threshold.eth/proposal/0xd334afe182b0aa6aee48c4df3668ad5fe68c2983ed3f914bf2477ab3d937ca82)), discontinuing investment in thUSD and putting it in maintenance mode ([TIP-102](https://snapshot.box/#/s:threshold.eth/proposal/0xabe62139271fd42a537dfcbce602b3adbdd4cf02b7cbd3342f56f801863e0cd3)) and reducing by $1.1million/year the cost of Threshold DAO committees and roles via restructuring in anticipation of tLabs executing on tBTC development and growth ([TIP-103](https://snapshot.box/#/s:threshold.eth/proposal/0x0c83560eb8275ae7b5dd645ef73f4824561b7c9699ead00ea11fe78e33f1f885)). The 3 challenges are being addressed by the newly formed tLabs team, and in a section below milestones are proposed for outlining the efforts planned and underway, as well as measuring success. **Budget request** In order to achieve these goals, tLabs submits a 12-month budget request of $2.85 million. While competitive and other considerations prevent the detailing of planned expenditures, we can share that staff employees make up 66% of the total and include Technology, Product, Business development, Ecosystem growth, Marketing and Operations. The planned budget category totals are: * Paid employees: $1.88M (66%) * PR, marketing & growth: $570k (20%) * Outsourcing, audits, miscellaneous: $300k (11%) * Legal: $100k (3%) Note that MacLane waived all compensation as CEO, and as also stated in the discussion on TIP-98, “There will not be a tLabs treasury and annual budget requests will be at-cost without a profit margin baked in.” **Milestones** TIP-98 approved that “tLabs lead protocol, product, business development and marketing functions for tBTC”, stating that high-level goals would include increased tBTC TVL and bridge velocity, upgraded tBTC core technology, and developed tBTC product and usability. tLabs proposes the following milestones to measure success in year one: * **Double revenue to 50 tBTC** * **60% increase in TVL, to 7,500 BTC** Threshold revenue (which is currently from redemption fees only) was ~17 tBTC in 2024 and is currently on track for ~25 tBTC in 2025. Doubling it to 50 tBTC will cover ~80% of Threshold expenses at a tBTC price of $100k (it’s $104,255 at time of writing) – a very large step toward profitability (inclusive of tLabs’ budget request). tBTC’s[ TVL hit a peak of 5,274 last November](https://dune.com/threshold/tbtc), dropped to 4,190 in March and has averaged ~4,700 over the last 7 months (in part owing to velocity of redemptions; we hit 20,000 minted a few weeks ago and are now approaching 21,000, while redemptions total more than 16,000). Increasing TVL 60% from current to 7,500 BTC should accelerate our momentum, draw increased attention and support the growth narratives tLabs is driving in the market (note the[ recent media coverage](https://decrypt.co/315301/threshold-network-restructures-for-profitability-launches-strategic-reinvestment-via-t-token-buyback) and market sentiment following a first press release a few weeks ago). Rather than offer more tactical milestones based on the growth, tech and product workstreams underway, tLabs believes that these two milestones put the emphasis on the growth Threshold needs to unlock even larger opportunities – and which tokenholders emphasized repeatedly during the discussions leading to the formation of Threshold Labs and the DAO restructuring. **Logistics** Based on passage of TIPs 98 and 100 (which included an expected budget range of $2M to $3M), tLabs commenced operations and the former Treasury committee fronted a payment of $250k. This amount will be deducted from the total (budget begins April 1, 2025 and runs through March 2026). Any unused budget will be returned at the end of a year, or rolled over to a future budget. Upon Snapshot approval of this TIP, the Threshold Committee will update the expense payment plan created by East and the former Treasury committee (see overview in the Expense Planning section of [TIP-103](https://forum.threshold.network/t/tip-103-restructuring-of-threshold-dao-committees-and-roles/1066?u=johnpackel)) to reflect the actual amount, then provide 3 months of average expenses in an initial transfer, followed by a monthly transfer to tLabs. Members of the tLabs team are available for a community call to share high-level strategy and initiatives designed to achieve the milestones above. While tLabs will remain in close contact with the Threshold Committee and DAO contractors on at least a weekly basis, the team also proposes a quarterly community call to share updates and progress toward milestones. Also upon approval, tLabs and Threshold Foundation will formalize the relationship in an agreement reflecting this budget total, milestones and cadence for updates. https://dune.com/threshold/tbtc https://decrypt.co/315301/threshold-network-restructures-for-profitability-launches-strategic-reinvestment-via-t-token-buyback https://snapshot.box/#/s:threshold.eth/proposal/0xd334afe182b0aa6aee48c4df3668ad5fe68c2983ed3f914bf2477ab3d937ca82 https://forum.threshold.network/t/tip-098-the-future-of-threshold/1012?u=johnpackel https://forum.threshold.network/t/tip-100-the-future-of-threshold-continued/1033?u=johnpackel https://snapshot.box/#/s:threshold.eth/proposal/0xabe62139271fd42a537dfcbce602b3adbdd4cf02b7cbd3342f56f801863e0cd3 https://snapshot.box/#/s:threshold.eth/proposal/0x0c83560eb8275ae7b5dd645ef73f4824561b7c9699ead00ea11fe78e33f1f885

## Summary As Threshold DAO continues its strategic focus on tBTC growth ([TIP-100](https://forum.threshold.network/t/tip-100-the-future-of-threshold-continued/1033/35)), with recommendations outlined following forum discussions the DAO will also take necessary steps to transition thUSD into Autonomous Maintenance Mode. This means removing direct DAO funding, ending active development and ceasing thUSD’s role in DAO financial planning, while ensuring the protocol remains fully operational for users. Under this new model, thUSD will remain functional, allowing users to open and close troves, while maintaining limited liquidity support in the 3CRV pool. The system will also transition to a single-collateral model, supporting only tBTC, which strengthens protocol security and aligns thUSD with Threshold’s core mission. This transition ensures that thUSD remains a decentralized, censorship-resistant stablecoin, while the DAO removes financial and operational overhead. Any future governance decisions related to thUSD will continue to follow the standard forum discussion, Snapshot vote and on-chain governance process but due to the lack of direct DAO resources or active focus, changes may take longer to execute. ## Why This Transition Benefits the DAO and the Community thUSD has been a unique, decentralized stablecoin, offering: * 0% Interest Borrowing – Unlike USDT, USDC, or DAI, thUSD provides fee-free borrowing, making it a capital-efficient option for users. * Censorship Resistance – Centralized stablecoins face increasing regulatory scrutiny, while thUSD remains non-custodial and resistant to blacklisting or freezing. * tBTC-Backed Stability – With tBTC as the sole collateral, thUSD will be fully aligned with Threshold’s mission of integrating decentralized Bitcoin into DeFi. * Minimal DAO Financial Burden – This transition removes ongoing costs, ensuring sustainability while keeping thUSD accessible. * Sustainable Market Presence – The DAO will leave some liquidity in the 3CRV pool, allowing for organic growth and potential future use cases. ## Key Aspects of Autonomous Maintenance Mode ### 1. thUSD Remains Operational Without Direct DAO Involvement * Users can continue borrowing, redeeming, and closing troves. * Liquidity incentives will cease and no new DAO funding will be allocated to thUSD. * No structured DeFi integrations will be pursued. ### 2. Transition to a Single-Collateral Model (tBTC Only) * ETH will no longer be accepted as collateral, reducing risk and simplifying protocol mechanics. * The system will focus solely on tBTC, ensuring better security and stronger alignment with Threshold’s vision. * A formal governance on-chain execution will be required to enact this transition. ### 3. DAO-Owned Liquidity in the 3CRV Pool * The DAO will leave ~$200K of POL in the 3CRV pool to support market depth. * The tBTC/thUSD pool will no longer be maintained, eliminating low-utilization liquidity. ### 4. Future Governance Flexibility * Any further modifications to thUSD will follow the current governance process, requiring: * A forum proposal to outline any suggested changes. * A Snapshot vote to gauge DAO consensus. * An on-chain governance vote for final implementation. * However, due to this proposal's implementation and the lack of dedicated DAO resources, governance actions related to thUSD may take longer to execute. 5. thUSD Bug bounty - Cantina Bounty Coverage Continue Cantina’s Bug Bounty coverage for the thUSD protocol to proactively identify and address any new or evolving threats with minimal overhead. * Proactive Protection: Swiftly detect and resolve vulnerabilities to safeguard TVL and maintain trust. * Cost-Efficient: Pay only for validated findings, reducing unnecessary expenses and time commitments. ## Restructured Plan – DAO Holdings & Liquidity Allocations Under the Autonomous Maintenance Mode, the DAO currently plans to retain the following allocations, subject to change based on Treasury Committee’s expense management planning: The Protocol-Owned Liquidity (POL) in the 3CRV pool will be maintained to some extent to support liquidity. Within the DAO Vault, a certain quantity of tBTC will be retained as collateral, while a designated amount of ETH currently held in the vault is planned to be retrieved. This ensures that some liquidity remains, while the DAO retains assets in the treasury to be redeployed as needed in the future. ## Final Considerations & Next Steps This decision represents a sustainable and cost-effective approach to ensuring thUSD remains operational while eliminating unnecessary financial burdens on the DAO. * thUSD will remain available for borrowing and redemption. * tBTC will become the sole collateral, strengthening alignment with Threshold’s mission. * Use Cantina bounty coverage to maintain robust security coverage. * DAO financial support will be removed, but some liquidity will remain to sustain market depth. * Future changes to thUSD will require formal governance proposals through the existing on-chain process, which may take longer due to the lack of active DAO resources focused on thUSD. This transition balances sustainability, decentralization and financial efficiency, ensuring that thUSD continues to exist while no longer being a direct financial responsibility for the DAO.

**Vote type**: Token holder DAO snapshot, 7-day vote window **DAO Elected Representative Sponsors:** @JohnPackel @Eastban @Luna5 @Vict0r @MrsNuBooty ### Key provisions - [TIP-100](https://forum.threshold.network/t/tip-100-the-future-of-threshold-continued/1033) called for sunsetting existing committees and restructuring DAO roles to reflect Threshold Labs taking over tBTC development & growth per [TIP-098](https://forum.threshold.network/t/tip-098-the-future-of-threshold/1012) - This TIP is the recommendation of the DAO restructuring workgroup based on evaluation of responsibilities remaining with the DAO - The treasury, security and oversight committee called for in TIP-100, combining the responsibilities of the Treasury Committee and Council, will be the “Threshold Committee” - The Threshold Committee will consist of 6 part-time paid seats and 3 volunteer seats, retaining the 5-of-9 threshold for multisig security - 5 part-time contributor roles remain (hours reduced from current): treasury operations, tech support, communications/engagement/education, project management, incentives/reporting - Total cost for Committee and part-time roles will be $602k annually, a reduction of ~$1.1 million from current payroll - Streamlining operations and reducing cost substantially will minimize the treasury selling T tokens, allowing the DAO to be a net purchaser of T by implementing “buyback and make” - Treasury assets plus 30% of projected revenue can cover ~23 months of our obligations paid in stablecoins, with $10.6M in T remaining to cover ~$1.6M annual protocol & incentives cost - A detailed plan with timing is outlined, reflecting the need to transition multisig signers and committee work streams; election for Threshold Committee seats will start March 29th ### Process for creating this recommendation The DAO restructure workgroup (East, John, Luna, Ashley, Victor, Ethan, Sap & MacLane) used these principles to inform our work: 1. tBTC development and growth will move to Threshold Labs, a new DAO structure will streamline remaining core work, and we will discontinue what’s no longer essential 2. Avoid compromising protocol, treasury and operational security by assessing risks each retained function needs to mitigate 3. Every function needs accountability: no autonomous or "orphaned" roles 4. Ground the recommendation in financials: actual cost and revenue Given the mandate (from token holders approving TIP-100) to sunset guild committees, combine Treasury and Council functions into a single committee and dramatically reduce cost, we put all work streams managed by each committee and contractor role on a board, separated them into 3 groups (move to tLabs, retain in DAO, discontinue) and determined the minimum number of committee seats, contractor roles and hours per week we believe are [required to mitigate risks](https://www.notion.so/Risks-Each-DAO-role-is-designed-to-mitigate-1ab725fcbcb080c5b390e31ab032fc93?pvs=21) to the protocol, tBTC and the DAO (token holders). ### **Threshold 2.0 structure & financials** In addition to the >$8.5 million annual savings from TIP-92 eliminating tBTC rewards and continuing TACo's for 6 months, TIP-100 prescribing a further $360,000 reduction by discontinuing thUSD incentives, as well as $252,000 in protocol savings – this proposal will reduce the annual cost of committee and contractor roles by ~$1.1 million, to $602,400. **Threshold Committee:** 6 paid committee roles (7 hours/week) plus 3 volunteer signers (trusted members of the community), all elected (see schedule detail below). **Dev & growth to tLabs:** the 2 full-time developer roles (Evandro and Leonardo) and growth lead (Ethan) will transition to tLabs. Expected timing is April 1, but these roles will remain on DAO payroll until tLabs is able to hire them. **Redefined DAO roles:** These roles, with reduced hours/week, will cover the key needs not moving to tLabs: POL & treasury operations (East, 15 hours/week), Tech support & Discord management (Victor, 20 hours/week), DAO communications/engagement/education (Ashley, 20 hours/week), Project management (Luna, 20 hours/week), Incentives and reporting (Wuji, 8.5 hours/week). While the DAO has used $85/hour as its standard for most roles since the Marketing Guild adopted it 3 years ago, this recommendation and financial plan includes a rate of $100/hour to reflect both the contributors' reduced hours and the fact that they receive no benefits and pay full self-employment taxes. As tLabs finalizes its planned team structure, there may be additional opportunities for former DAO contributors and committee members to apply. **Simplifying treasury operations**: In order to streamline operations, reduce cost and increase security through fewer treasury transactions, we will make the following updates: - Treasury multisig will hold only assets for 6 months of operations; any surplus, plus T returned from betastakers' stakes, will be transferred to the Governor Bravo contract - All reserve assets – stables, tBTC and ETH – will be managed by vaults from partners like Aera, Arrakis or Flowdesk, facilitating yield and diversification (detailed proposal to follow) - Active T pairs on DEXs will be analyzed to be determined if liquidity needs to be adjusted - Other assets (all governance tokens like CRV, CVX, AURA, AERO, VELO) will be swapped into tBTC, ETH or T (timing depending on market conditions)  ### **Bridge fees can turn the DAO into a net buyer of T** If we annualize the current level of bridge fees we can project revenue of ~32 tBTC in 2025, not counting future growth based on accelerated development and growth via tLabs, as well as previous TIPs (particularly [TIP-96](https://forum.threshold.network/t/tip-96-mint-5-of-t-supply-for-tvl-growth-milestones/1009)). We can **use** **tBTC revenue to implement “buyback & make” as originally proposed in [TIP-54](https://forum.threshold.network/t/tip-54-tbtc-t-better-together/635?u=johnpackel).** If we use 70% of redemption revenue to buy T and add it to the T/tBTC pool, it would mean that: Each quarter, tBTC from bridge fees can be claimed and the buyback executed.  ### **Expense planning** Based on the new DAO structure above, plus an estimated ~$2.5 million in tLabs costs for development and growth in year 1 (they will share actual cost in the coming weeks), if we convert all reserve assets (tBTC and ETH balances above) plus governance tokens to stables as they are needed – this will cover ~23 months of our obligations that are paid with stables (i.e., DAO Committee and roles plus tLabs). Note that total runway for Threshold is longer, as the treasury has $10.6M in T and T pairs, and annual obligations paid in T (protocol and incentives) are $1.58 million/year. We do have other costs (oracles, market making services, legal, etc.) but these account for only ~2-3% of total. Of course, we could decide on a different ratio for tBTC redemption fee revenue going to buyback and make; e.g., if we put 100% of revenue into buybacks (eliminating the 30% to treasury) we could still cover ~19 months of our expenses paid in stablecoins. The DAO should also decide at some point to turn off the mint fee holiday we've had since December 2023, increasing our projected revenue.  ### Operational transition and timeline While TIP-100 approved sunsetting all committees as they have been configured, and combining the Treasury Committee and Council, it will take a few weeks to complete this, including transitioning the multisigs and committees making any final payments already committed. [This document](https://forum.threshold.network/t/full-timeline-for-threshold-2-0-transition-per-tip-103/1067?u=johnpackel) outlines a full plan and schedule, with key milestones being: - One week for comment on this TIP, plus one week Snapshot (March 7 - 21) - End of current committee and role responsibilities and payroll: March 21 - Transition – current Treasury Committee members** take on Treasury + Council responsibilities and execute all multisig updates: March 22 - April 6 - Nominations (one week), vote (one week) for new Threshold Committee: March 22 - April 4 - New one-year term for Threshold Committee begins: April 5 ** The rationale for recommending the current Treasury Committee members take on the Council responsibilities during the transition period rather than vice versa is that the Council has not been involved with treasury management and the multiple daily transactions required, whereas Treasury has provided guidance to Council on decisions such as POL and asset transfers, Threshold Foundation transactions, etc. **Links to documents with further detail:** * [Threshold Committee expectations & requirements](https://forum.threshold.network/t/threshold-committee-expectations-requirements-see-tip-103/1063) * [Risks each DAO role is designed to mitigate](https://forum.threshold.network/t/risks-each-dao-role-is-designed-to-mitigate-see-tip-103/1065?u=johnpackel) * [Full timeline for Threshold 2.0 transition](https://forum.threshold.network/t/full-timeline-for-threshold-2-0-transition-per-tip-103/1067) * [Transition of DAO Multisigs and Asset Ownership](https://forum.threshold.network/t/transition-of-dao-multisigs-and-asset-ownership-per-tip-103/1064)