MetaDAO wants non-crypto app builders but the existing team performance package structure is a friction point for onboarding them. Currently, a team that launches an ownership coin on MetaDAO has to wait nearly 2 years before receiving anything from the performance package. Earlier unlocks could make the framework more attractive to founders, but investors need to understand what protections they give up and how this can benefit token price in the long term.
The Proposal
The Rip Cars "Reconfigure Founder Liquidity" proposal passed with plenty of opinions on both sides. The proposal assessed if the market would first give Rip Cars founders earlier unlocks, but more broadly its approval could also inform how MetaDAO structures founder performance packages for future launches.
Under the existing terms, the team's 12.9M token performance package is split into five equal tranches. They unlock when a three month TWAP clears 2x, 4x, 8x, 16x and 32x the ICO price. MetaDAO's framework requires an 18 month wait before the TWAP can begin, which puts the earliest receipt of tokens in month 21.
The approved proposal removes the 18 month cliff, but keeps the price thresholds and three month TWAP. It also adds an AMM linked sales constraint for 18 months which programmatically enforces that no more than $100K or 5% of the package can be sold in any rolling 30 days.
The Tradeoffs
Earlier unlocks could relieve financial pressure on founders who have invested personal capital or taken below market pay. Allowing founders to recover some of their investment could help them keep building without drawing higher salaries from the treasury.
Holders can also benefit, particularly if more flexible terms help MetaDAO attract strong founders. But since the performance package rewards token price appreciation, this can happen ahead of business progress. So founders could earn from sales of tokens before the business is viable.
Future investors can weigh that risk against the valuation and terms offered at launch. For existing Rip Cars holders, the decision involves changing a restriction they invested under. The case for earlier unlocks should explain how the company and its holders are expected to benefit from that change. Rip Cars founder, David provided further context on social channels, but that explanation could be in the proposal itself.
Comparison Points
In private venture funded businesses, both founders and investors have limited opportunities to sell their equity. Founder liquidity may come through a negotiated secondary market sale during a later fundraising round.
Other token projects often use time based vesting, with team allocations unlocking after a cliff and over several years (a six to 12 month cliff and four year vest is typical; but there are other options for faster liquidity, like “fair launches”). These schedules govern when team tokens become transferable, but do not limit subsequent sales. Subsequent sales may be governed by founder agreements, or nothing at all and outsiders don’t have a view on either.
The Price Milestones
Rip Cars attracted significant primary market demand that then filtered into secondary markets after the token was live. During the ICO there was $31.9M in commitments against a $250K raise. ICO price was $0.025, it's been ranging between $0.045 and $0.060 since.
While a three month TWAP helps filter out a launch spike it does not separate sustained speculative demand from business progress, so it's possible that an oversubscribed launch can clear the first milestone before the company has established anything.
Unlock milestones are multiples of the ICO price, so the starting valuation affects how difficult they are to reach. A low launch valuation could allow early milestones to be reached with limited operating progress. As such, investors need to assess the valuation and expected treasury runway alongside the performance package. Since proceeds from any sales of tokens go to the founder and not the company, a team could be personally liquid but short on runway at the same time.
Markets will price these risks. For example, existing holders can get repriced when terms change and future issuers may pay a higher cost of capital if investors stop trusting the standard.
What Could Change or be Improved
MetaDAO’s performance requirements and restrictions on founder token unlocks provide some of the industry’s strongest investor protections. The Rip Cars update tests whether founders can receive earlier unlocks while retaining certain safeguards. We think this is a reasonable experiment, with several areas where the terms could be improved or clarified:
- A six month cliff without sales restrictions - Require six months before the existing three month TWAP window can begin. Keep the price milestones unchanged and allow unlocked tokens to be freely transferable. This gives investors more operating history before founders can sell and keeps the package straightforward to analyze.
- Make ongoing compensation explicit - Teams that need higher salaries should propose them through the monthly allowance process, with enough detail for holders to assess the cost and effect on runway. Teams should also disclose their wallets and trading activity in decision markets concerning their own compensation.
- Clarify liquidation rights - Specify whether unlocked team performance tokens participate in liquidation distributions.
- Use financial reporting to support accelerated unlocks - Publish monthly revenue and high level operating expenses so investors can assess business progress alongside token performance. Teams performing well could use that record to propose accelerated unlocks.
Final Thoughts
We’ll continue to watch upcoming launches to see which performance package terms remain market standard and which become negotiable. Based on the Rip Cars proposal, it seems holders are more likely to be lenient on time based unlocks as long as the price based conditions stay intact.
Flexibility can help attract founders, but at the same time, investors will need to model and compare unlock timing, sales limits, transferability, among other things.
If new founder packages are offered we will assess launch valuations, how quickly price milestones are reached, operating progress, treasury runway, and founder proceeds relative to that progress.
