Summary
Reimburse the Foundation for $268,000 USDC of already-incurred operating/marketing/legal expenses not covered by GIP-77, and approve a $200,000 USDC legal reserve to handle ongoing default-related legal actions.
Motivation
Since GIP-77 passed, the Foundation has faced higher-than-expected legal costs from protocol defaults (e.g., Lend East litigation, advisor work, etc). These were necessary to protect the protocol but exceeded the original one-time allocation. The Foundation should be made whole, and a modest reserve should be established so the Foundation can act promptly on default matters without repeated ad-hoc asks.
Specification and Requirements
So far this year, legal, marketing, and operational costs incurred have included:
- $534K in legal, advisor, and liquidator fees to manage the default situations with current borrowers
- $159K for legal and operational set up of Goldfinch Prime
- $24K for general foundation operations
- $51K for marketing so far this year
These total to $768K, which is above the $500K previously covered in GIP-77. This proposal approves two things:
- Reimbursement: Reimburse $268,000 to the Foundation to cover the unfunded portion of already-incurred expenses.
- Legal Reserve: Approve $200,000 as a “default legal reserve” to cover future potential expenses for litigation, liquidators, recoveries, and related advisors.
In addition, this proposal is paired with GIP-83 which proposes an additional ongoing steady-state budget for the Foundation.
Benefits
- Restores the Foundation’s operating position.
- Ensures the protocol can prosecute/resolve defaults efficiently. Without this proposal, the Foundation risks inability to continue to support prior protocol participants.
Downside
- Higher near-term treasury outlay; legal outcomes/timing are uncertain.
Voting
- “Yes” - Approve $468K USDC for reimbursement + legal reserve.
- “No” - Do not reimburse nor create the legal reserve.