Liqwid DAO Core Development Team Operating Budget | 2025–2026 Salary Plan
Summary
This proposal seeks DAO approval for an updated 12-month Core Team developer salary budget totaling $1,610,000, reduced from $2,700,000 in the previous cycle — a 40.4% decrease in cost. This reduction aligns with the DAO’s strategic move towards sustainable financing of DAO operating expenses.
The budget supports developers responsible for maintaining the existing Liqwid v2 protocol and building new revenue-generating products such as:
- Bitcoin DeFi Aggregator
- Real World Asset (RWA) Markets
- Liqwid V3
The most accurate detailing of all new products can be found in the Liqwid Cardano Treasury proposal here: https://gov.tools/budget_discussion/621
Although Liqwid DAO Core Team’s Cardano treasury budget proposal was unsuccessful, the plan to build and launch the products outlined above remains. The Liqwid roadmap and proposed product development plan outlined in our budget proposal is also fully aligned with the 2025 Cardano Product Roadmap with Liqwid products aimed more directly at new user acquisition growth, increased stablecoin liquidity and improvements to decentralized infrastructure used to power the Liqwid protocol.
Description
Scope
This proposal focuses solely on Core Team salary expenses, which are the largest part of the DAO’s annual operating costs. Other costs, such as infrastructure and security audits (e.g., $300,000 in last year’s budget), will be addressed in separate proposals.
Rationale
With the growth in DAO revenues and the completion of most roadmap items from the 2024–2025 cycle, the Liqwid DAO is positioned to move closer to financial sustainability, where operating expenses are covered by DAO income alone.
The DAO’s largest annual expenses include:
- Core Team salaries (Liqwid Labs), covered by this proposal.
- Protocol infrastructure (e.g., oracles, offchain servers), not covered by this proposal and will be addressed separately.
- Smart contract audit costs, not covered by this proposal and will be addressed separately.
While current DAO revenues are not yet sufficient to achieve full self-financing, we anticipate a continued trend of meaningful acceleration to revenue growth in the coming months as the 1st half of 2025 data has shown. Increased protocol utility driven by new product launches and growing user adoption is expected to increase the total revenue generated within Liqwid DAO. This revenue growth may also position Liqwid DAO for a more favorable external financing environment. In addition this revenue growth results in a positive feedback loop for LQ as higher revenues from new product launches results in larger monthly LQ buyback volumes & a higher LQ valuation.
As the most utilized lend-borrow protocol on Cardano since launch and the only one that generates both yield and staking rewards for ADA deposits locked as collateral in loans, Liqwid is clearly positioned as a leveraged investment on the growth of the entire Cardano DeFi ecosystem. With the launch of various Cardano-Bitcoin bridges and incoming stablecoin liquidity the Cardano DeFi ecosystem is strongly positioned for asymmetric upside growth and Liqwid is well-positioned to capture growth alongside it. As we build towards this end-state future the strategic financing from the Liqwid DAO will serve as a bridge for the DAO Core Team’s salary expense until external funding can be secured.
Budget Financing Plan
The $1,610,000 developer budget will be funded through limited monthly borrowing, capped at $134,167 per month. Our strategic priority is to minimize new DAO POL loan origination by covering Core Team salary expenses with funds sourced from:
- Liqwid DAO revenues (10% interest income accruing to the Liqwid DAO treasury)
- Catalyst grant funding (when possible)
Important notes regarding this proposal:
- No changes are proposed to the 80% of interest income allocated to lenders nor to the 10% of interest income allocated to LQ Stakers.
- The only proposed change is to the Liqwid DAO’s 10% interest income. Currently the 10% income split for Liqwid DAO treasury used for LQ buybacks, if the proposal passes, will be redirected to support Core Team salary expenses and gradually repay POL loan interest.
- No new LQ collateral will be added to the POL loan position. The existing LQ allocation remains unchanged.
Additional Proposed Measures Toward Liqwid DAO’s Fiscal Sustainability
A) Redirect Liqwid DAO Treasury Interest Income to Core Team Salary Costs
This proposal recommends reallocating 100% of the Liqwid DAO treasury interest income funded through its 10% share of the protocol’s interest margin—to cover Core Team salaries. This 10% income margin split is presently used for the LQ Buyback Program which are purchased on Cardano DEXs and held in the treasury reserve wallet.
The objective of this reallocation is to minimize new borrowing and move the DAO closer to fully covering all operating expenses through its own revenue. For example, if the DAO generates $50,000 in revenue during a given month, the new borrowing requirement would be reduced from $134,167 to $84,167, significantly lowering the reliance on additional debt.
While it is difficult to produce accurate revenue forecasts due to ongoing market volatility and global economic uncertainty, the Core Team anticipates a significant increase in total value locked (TVL) over the next year. This growth is expected to stem from new Liqwid DAO product launches aimed at broader user acquisition, a more favorable macro environment for crypto assets, and a shifting U.S. regulatory landscape that is increasingly supportive of decentralized Layer 1s and DeFi protocols.
Liqwid’s TVL growth will likely reflect all of these factors, but especially the launch of RWA Markets, the Bitcoin DeFi Portal, and Liqwid V3. Taken together, these initiatives should significantly expand the user base, increase borrowing volumes, and grow protocol revenue.
B) Rebalance DAO Debt tokens
We propose to shift the debt from higher-interest to lower-interest stablecoin markets. The outcome will be a reduced POL loan interest expense, contributing to the DAO’s fiscal sustainability goals.
C) Increase POL Market Max LTV
- Raise maxLTV from 70% to 80.89% (equal to ADA market).
- Purpose: Maintain a health factor of 3 or higher throughout the 12-month period, enhancing safety. See the Health Factor simulation here.
Proposal Actions
- Approve the 2025-26 Core Development Team Budget and the maximal amount to withdraw per month for covering Core Team salary costs.
- Redirect the Liqwid DAO’s 10% treasury allocation from the LQ Buyback Program to Core Team salary costs.
- Rebalance existing debt positions to reduce interest payments.
- Increase the maxLTV for the POL market to 80.89% to improve position health and buffer.
Technical Considerations
There are no technical considerations or smart contract changes required for the execution of these proposed actions.
Conclusion
The Liqwid DAO Core Team recommends adopting this proposal to finance the next 12 months, while operating the POL position with an adequate health factor.
By supporting this proposal, the DAO continues funding essential product development work while protecting its long-term economic health.
Do you support the proposed changes in this proposal?
- Yes, I support this proposal.
- No, I do not support this proposa.
