December 8th, 2025 Budget Comm Minutes

Budget Committee Weekly Meeting — December 8th, 2025

Date: December 8, 2025 Attendance:

• Voting Members:

  • Dimitri

  • Jose Velázquez

  • Kriss Baird

  • Kris Kowalski

  • Eric Helms

  • Megan Hess – Chair (joined during meeting; quorum confirmed upon arrival)

• Project Manager:

  • Simo Simovic

• Observers / Guests:

  • Christina

  • Georgia (Delivery Assurance)

  • Gintama (Intersect member / community participant)

Quorum: Achieved once Megan and Chris Baird joined.

---

1. Opening and Agenda Overview

Lloyd opened the meeting and welcomed attendees, noting this is the second-to-last committee meeting before the holiday break.

Primary Agenda Items

1. Finalize review of the Budget Process Info Action

2. Optional final review of the 2026–27 Net Change Limit (NCL) proposal (pending Board approval expected Friday)

The Budget Process Info Action remains the most critical document to complete before year-end.

---

2. 2026–27 Net Change Limit (NCL) – Brief Status Update

• Board approval of the 350M ADA 2026–27 NCL is expected at the Friday Board meeting.

• This NCL:

  • Shifts the fiscal cycle to June 1 → May 31,

  • Establishes precedent for using annual net income (Jan–Dec inflows),

  • Supports future governance where DReps choose what percentage (below 100%, at 100%, or above 100%) to spend of that income.

Committee proceeded to the main agenda: Budget Process Info Action.

---

3. Budget Process Info Action – Document Review

Simo shared the working draft (not yet approved or public). Lloyd emphasized:

• Do not repost or share externally until Board approval.

• Feedback from guests is welcome but must remain confidential.

Participants were asked to provide fresh eyes on the document to ensure clarity, rationale, and sound process design.

---

4. Discussion: Proposal Fee (500–1000 ADA or USD-pegged Equivalent)

4.1 Core Context

• DReps have consistently requested a proposal fee, citing “skin in the game” and a mechanism to:

  • Reduce spam,

  • Discourage low-effort submissions, and

  • Ensure proposers are serious entities with capacity for Treasury-level delivery.

• DRep suggestions ranged widely:

  • 500 ADA, 1000 ADA,

  • Some even recommended 50,000–100,000 ADA deposits, though these are impractical today given tooling limitations.

4.2 Committee Discussion

• Dimitri: prefers 500 ADA to avoid undue burden.

• Math Context:

  • Last round: ~200 proposals → ~39 funded (~20% success).

  • Expected “probability-weighted cost” to proposers ~400 ADA.

• Jose Velázquez: suggested tying the fee to USD value to avoid large swings if ADA price climbs.

• Committee acknowledged:

  • A USD-max cap would prevent fees from becoming punitive,

  • But would add administrative overhead, since every proposal submission would require price verification at time of deposit.

4.3 Rationale for Charging a Fee

• As summarized by Chris Kowalski:

  • Treasury Withdrawals are intended for ecosystem-scale initiatives, not small grants.

  • The fee discourages:

    • Sybil behaviors (multiple puppet-agent submissions),

    • Speculation,

    • Low-quality or unserious proposals.

  • Entities withdrawing hundreds of thousands or millions of ADA should reasonably be able to meet a $200–$500 equivalent deposit.

4.4 Pending Decision

The committee must still decide:

• Exact ADA amount (500 or 1000),

• Whether to add a USD ceiling (e.g., “500 ADA, capped at $500 equivalent”).

Decision deferred to finalization of the document.

---

5. Voting Tooling: Ecclesia, CF Tool, and Hydra-Based Peer Review

5.1 Ecclesia Voting Tool

• Used last year; contract exists; customized grouping logic is available.

• This year Ecclesia will:

  • Capture yes/no votes,

  • Capture priority rankings, enabling budget reprioritization when proposals exceed NCL capacity.

5.2 Concerns about low participation

• Christina reported surprisingly low participation in the recent Constitutional Committee election.

• Many DReps were unaware voting was happening.

• Committee acknowledges:

  • Major communications push is required for the Budget Process, including:

    • Walkthrough videos,

    • Guides for using Ecclesia,

    • Blogs, social media, and Discord reach-outs.

5.3 Why not use CF’s tool instead of Ecclesia?

• Ecclesia was selected due to:

  • Prior use and familiarity,

  • Ability to support ranking,

  • Existing configuration with custom groupings,

  • Developer relationship already in place.

5.4 Hydra PRDMS (Peer Review Document Management System)

• Lloyd’s upcoming Hydra-based tool will support off-chain peer review, including:

  • Approve / Conditionally Approve / Reject statuses,

  • Witnesses through Hydra heads,

  • Archiving via IPFS.

• Optional beta this round.

• Ecclesia remains the final voting mechanism.

---

6. Thresholds for Grouped Treasury Withdrawals (Step 4 Discussion)

6.1 Dimitri’s Question

Why does Step 4 separate proposals into:

• Under 80% support

• Over 80% support?

6.2 Explanation

• Utah requested two Treasury Withdrawal actions rather than one, to reflect stronger vs. weaker proposal support tiers.

• Originally, he recommended 67% of active stake for a single TW. Given low current off-chain participation, that threshold would allow only 1–2 proposals to pass the primary TW.

• Compromise:

  • Create two TW bundles, allowing the highest-support proposals to be grouped into TW #1,

  • Proposals below the threshold still receive DRep attention but must be raised via individual TWs if they fail to meet grouping criteria.

6.3 Committee Discussion

• 80% may be too high since only two proposals surpassed it last year.

• Several members prefer lowering to 75% or >75%, simplifying ranges.

• Strong consensus to add clear rationale for these thresholds directly into the document.

---

7. Need for In-Document Rationale

The committee agreed the Budget Process Info Action draft must include:

• A Rationale section for every major step, outlining:

  • Purpose,

  • Expected outcomes,

  • Alignment with constitutional requirements,

  • Why thresholds or fees were chosen.

This will:

• Improve DRep understanding,

• Minimize misunderstandings,

• Provide an audit trail for future committees reviewing historical processes.

---

8. Parallel Sequencing Concerns: KPIs, Vision/Mission, and Budget Process Timing

8.1 Current Blockers

Some governance leaders believe:

• Vision & Mission must be approved first,

• Then KPIs,

• Only then can the Budget Process Info Action be placed on chain.

8.2 Product Committee Update

• Product may release high-level KPIs soon — enough to allow Budget Process Info Action to proceed.

• More detailed KPIs may follow as a separate Info Action in Jan/Feb.

8.3 Lloyd’s Position

• Budget Process Info Action already references Vision/Mission/KPIs conceptually and does not rely on their textual specifics.

• With high-level KPIs approved, Budget Process Info Action should be able to go forward.

---

9. Future Membership Concerns

Jose’s Question: What about absentee members?

• There are still committee members who have not attended any meetings.

• Example: Rajitha, elected in April, was active early but has been entirely unreachable since.

• Committee has authority to:

  • Remove inactive members,

  • Invoke next-runner-up replacements if desired.

Committee agreed to discuss member replacement formally at next Monday’s meeting (Dec 15).

---

10. Meeting Access & Public Transparency

Megan’s Question: Should meetings be publicly listed or streamed?

• Committee had prior discussions about:

  • Opening first 30 minutes to the public,

  • Running longer meetings (1.5 hours),

  • Streaming portions via YouTube or other channels.

• Reality:

  • All recent meetings have been full working sessions with no room for segmented public portions.

  • Guests are allowed provided they respect confidentiality of draft documents.

---

11. Next Steps & Deadlines

• Wednesday (Dec 10):

  • Continue refining the Budget Process Info Action.

  • Add full rationale sections.

  • Finalize threshold and fee decisions.

• Monday (Dec 15):

  • Last meeting before holiday break.

  • Vote on Budget Process Info Action (if ready).

  • Discuss absentee member replacement.

• Friday (Dec 12):

  • Expected Board review of 2026–27 NCL.

---

12. Adjournment

Lloyd thanked participants for their contributions. Meeting adjourned at the top of the hour.

Dimitri was informed the next working session will be Wednesday, with focus on NCL rationale and Budget Process Info Action refinement.