Bankless DAO Profit Distribution

Poll Question for Bankless DAO Members
Profit Distribution
Author: @Bauhaus
Date:10/02/21

Summary

The purpose of this poll is to gather a general consensus and feedback on future profits generated by the DAO. If/When the DAO begins to generate sizable profits, should some of the profits be distributed back to the $BANKholders?

Purpose

I believe this question serves two purposes.

  1. Being a $Bankholder provides a certain level of membership/ownership in the Bankless DAO. As a member/owner, is there an expectation or entitlement to profits? I think it should be clear to all current and future $BANKholders as to how profits are handled within the Bankless DAO.
  2. I believe this is a critical question to answer regarding any future legal entity setup. For example, if the DAO decided to allow future profit sharing, we have to create an entity structure that would allow for profit sharing.

Considerations

I believe these are some of the considerations each $BANKholder needs to make.

  1. Does allowing or disallowing profit sharing change the integrity of the DAO? Does allowing or disallowing align with the goals of the DAO?
  2. Does allowing profit sharing create any potential problems with the SEC? Honest questions, I know very little about SEC laws.
  3. Profit sharing entities are all but guaranteed to pay income tax regardless of where (country) the entity is registered. That said, disallowing profit sharing doesn’t guarantee less or no income taxes on profits either.
  4. Would profit sharing incentivize more people to contribute?
  5. If profit sharing was disallowed, would any current $BANKholders leave or cease to contribute?
  6. Would profit sharing only incentivize more buying/selling of $BANK tokens instead of contributing and earning $BANK tokens?

Conclusion

I think there is a lot to think about regarding this topic. I personally feel this decision could change the dynamic of the DAO long term. I don’t feel there is a right or wrong answer either. Please share your thoughts. This information isn’t only for my benefit but for the DAO as a whole.

Polling Options

Disallow Completely - The DAO should create an entity structure that will forever keep the profits within the DAO. The DAO should only pay out $BANK or other currencies strictly on each member’s contribution. Let’s keep the whales from buying up the $BANK to fill their wallets.

Disallow With Future Consideration - The DAO should disallow profit sharing but should create an entity structure that would allow for future profit sharing consideration.

Allow Limited Profit Distribution - Hard work pays off. We are creating an entire new way of business. Those that helped pave the future should be rewarded long-term for what they’ve helped create. Profit sharing should be allowed for only $BANKholders that gain a certain level of discord membership for their vast contributions. This can all be defined more accurately if decided is the best option

Allow Profit Distribution For All - All $Bankholders should be granted a share of profits based on the amount of $BANK they possess.

Should Bankless DAO allow profit distribution
  • Disallow Completely
  • Disallow With Future Consideration
  • Allow Limited Profit Distribution
  • Allow Profit Distribution For All

0 voters

3 Likes

Thank you for the thoughtful poll and discussion starter. You raised a number of points that clearly need to be thought about carefully. I voted for limited profit distribution because:

  • I think DAO members that contribute over the long-term should definitely be able to see the profit from their endeavours
  • I believe our set-up should be developed to allow for profit-sharing even if it is not something we do immediately
  • I would like to see longer-term contribution to the DAO become incentivised, we should aim for low churn rate on talent as people and culture are our greatest assets
  • I don’t fully understand the implications of completely free for all profit-sharing but assume it could lead to shorter-term thinking and would like to see a wider discussion before I would feel comfortable voting for that
2 Likes

All good thoughts and good ideas but I think too soon and early to grant profits. Want to see the projects, value to other DAI’s, and treasury diversification occur first. Great experiment so far. Great community so far but I want a new creation built on new ideas with new motivations , methods and compensation strategies. Profit seems old school. Been there done that let’s redefine value while we are maturing.

1 Like

Noobie questions here:

What qualifies as profit sharing? Are the following profit sharing?

  • Revenue splits for income generating projects (NFT showcase)
  • Coordinape rounds
  • Possibly vested BANK payouts

Hey check out this BANK token - Legal Assessment - #12 by Brustkern

This is excellent work done by our professors in the legal guild.

I personally don’t like “distribution profits” or “share buy backs”. It proofs that the organisation has ran out of bright ideas to properly allocate funds to create more growth.

I think we are years away from this phase. Right now if we can, we should be channeling 100% of our funds into building infrastructure for the future.

7 Likes

Revenue Splits - Who gets the revenue splits? Is it agreed upon by everyone in the DAO or just the project participants?

Coordinape - I don’t know what this is or how this works. Can you give me a little more information on what this is? I tried looking it up in defipedia but it wasn’t able to give me anything.

This question is more to the overall success of the DAO and less project specific. I assume the DAO has its own wallet for funds generated by sales of NFTs/merchandise, grants, other revenue generated streams. At the end of each season or year, I assume there are financials showing what the revenues and expenses are of the DAO. Based on the financials, if the DAO shows a net gain, should a portion of those gains be distributed to $BANKholders?

I do have a follow up question for anyone/everyone. If a project generates revenue, should some of those profits go to non revenue generating groups such as the legal guild, translations guild, etc. They are doing work in the background that allows the revenue generating groups to do what they do. Their work helps the overall success of the DAO. Are they entitled to revenue splits from income generating projects as well?

I tend to agree. Many companies lose focus when they start think about profits.

1 Like

coordinape is a way for active contributors to be recognised for their work.

1000 GIVE tokens is assigned to each person to assign to team members who have done work in the season.

Its a pretty interesting and fair way to have a “hive mind” do payments. No need for KPIs and disputes about the value of “work”. Quite incredible.

1 Like

Revenue Splits - Who gets the revenue splits? Is it agreed upon by everyone in the DAO or just the project participants?

Would be decided by the project participants. For example, look at our Weekly NFT Showcase, 23.75% goes to the NFT team. Perhaps we could put more constraints here, but my view is if you’re bringing in revenue at no cost to the DAO, you should set your own take rate. If someone else wants to compete with you on that, they can.

Coordinape - I don’t know what this is or how this works…

One of the main ways we have contributor rewards. Basically, for each round, we have a pool of X BANK. Each person in the round can allocate a number of Y tokens to their peers that they think have provided value to the DAO. At the end of the round, each of the Y tokens represents a share of the X BANK pool and you are paid proportionally to the number of Y tokens you have. Read more here.

On a whole, I don’t think the DAO should distribute profits. If we do anything with profits, it should be to deepen liquidity or buy back BANK for its own treasury.

RE:

Their work helps the overall success of the DAO. Are they entitled to revenue splits from income generating projects as well?

This is why guilds have their own budgets. In the future, I believe each guild will be part of a larger economic unit where getting input from legal or having translators help with a project will be a paid gig.

2 Likes

Thanks @Bauhaus for launching such an interesting topic. Profit distribution to token holders means clearly having an expectation of profits. Not everyone would agree, I think. Social DAOs are a new concept and many people are here just to lurke or get in contact with other people.

At any rate, in my opinion, it’s too early to discuss such an issue and that it is not a central question for the success of a project (see Amazon or, in the blockchain ecosystem, Yearn). Incentives for token holders are already existent and IMO they will grow more and more in the future.

Finally, I think that every Guild (and also the Legal Guild) may produce forms of revenue in delivering good writings or in helping out other DAOs for governance issues! My feeling is that at Bankless DAO one could really learn a lot of things that can be then brought/sold to other organizations.

6 Likes

+1 to @angyts @frogmonkee @Eagle on this - way too early to be thinking about distributing profits, whilst we are in the growth stage and will remain there, for the next few years.

That said, I think that framing projects in terms of potential revenues (that go towards the treasury), should probably be something we do more of going forward, when defining and budgeting projects.

7 Likes

I would agree with @Eagle .

However! There is a possibility of spin-offs from BanklessDAO members that might incorporate and form entities that are profit-making such as the Academy. When such a thing happens, it might be possible for such an entity to pledge donations to the DAO like how Bybit pledges some revenue to their DAO. How these donations are utilised will be up to the DAO governance process.

Would that make sense?

3 Likes

I agree, and why I voted to disallow with future consideration. Channel resources back into effort and the value of BANK will grow with the DAO.

1 Like

Thanks for the additional information. Based on what you explained in your second post, here are my thoughts to your earlier questions.

I hope that helps answer some of your questions.

I voted for “Disallow with future consideration”. I’d rather see BanklessDAO use profits for growth in the near term.

3 Likes

Yes, this does. With it being said, I voted Disallow for all

1 Like

Appreciate the views of @angyts @Eagle @frogmonkee
BANK is a governance token to make decisions relative to the treasury (not a means of profit or return – that’s what securities are)
Funds are in the treasury and are for executing the mission (1B Bankless)
The mission successfully executed puts more funds in the treasury to expand the mission

We’re a long way from 1B people Bankless & I don’t want BANK to be a security I like it just fine as a governance only token w/ no expectation of return making the mission happen :wink:

voted : Disallow for all

5 Likes