Brain Dump #3 - Is $BANK Money?

I agree that $BANK should be money and used as the internal currency within the DAO. If you want to purchase services from the DAO, it should be in $BANK.

Maybe we can even go so far as accepting $BANK in our stores (e.g., the merch shop).

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Great post and I like your opinions.
In my opinion, once $BANK is used as a reward, it becomes a utility and when the utility could be used to obtain other services then the token can be viewed as money.
The only major immediate problem of considering $BANK as money is the possible lack of use (in addition to governance), because in this case there would be a constant sale of the token on the market and a loss of value. to counter it, initially the creation of a small economy could be enough, in which each member of the community has the possibility to earn and spend the $BANK on services or products that may interest them.
Therefore, in addition to using them as incentives and rewards, giving the possibility to spend the $BANK internally (in the dao shop, in the nft factory, etc.) would allow to circulate the tokens within the community in order to direct them as little as possible towards the markets.
Furthermore, selling some goods and services of value exclusively in $BANK, could incentivize others to join the DAO to obtain these exclusive benefits.

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Consider that the utility of BANK in these early seasons is actually pretty dependent on the tokenomics. Rather than worry about making BANK an appreciating a store of value, my opinion is that the DAO should prioritize keeping the nominal USD price of participation somewhat stable in order to achieve critical mass and adoption of the DAO. This could be done by new issuance (or burning) of tokens or by changing the amount of BANK required to join (or both).

Let’s say a meme goes viral and the demand for BANK from new members spikes, exceeding the available UNI supply. In this case, the price will appreciate too fast and it will become very expensive to obtain the necessary BANK to participate. This would hamper growth and potentially cause a negative perception that Bankless is a scam or is gouging newer entrants to the DAO. I think this is a real risk in the early seasons.

On the flip side, if anything were to cause a significant number of members to exit the DAO and mass dumping of BANK occurs (for example, the end of this bull cycle or a significant game-changing regulation is put into effect), an opposite scenario occurs and the market is oversupplied with BANK tokens - everyone holding loses nominal value.

The amount of issuance and the participation requirement may need to be regularly adjusted or even algorithmically determined, since we don’t have good information on how fast the DAO will grow. It might also be nice to be insulated somewhat if there are shocks to the system.

To me the tokenomics should be loose and easy when the DAO is growing fast and get progressively tighter as the membership curve slows or drops. A constant minting schedule (perhaps through staking) could be one way to issue new tokens (airdrops to holders or minting new BANK to incentivize projects are others). If we are going to grow this thing to a billion unbanked, I believe we need to expect that the DAO will grow a lot and a large demand for BANK is coming.

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Really interesting topic, it may sound very early but it might be one of the core fundamentals for the success of the DAO.
In my opinion the idea that it can be money if we want it to be is only a first step. If DAO members don’t see it as money, no one will. So yes we must keep imagining ways to make it money (perks, exchanges of services) between ourselves. But we should not see it as a store of value too much for the moment, cause we need that energy, that dynamism of moneys in general, when a store of value is something you want to never spend.

A second step I would see is for Bank to become money in our interactions with the outside world, meaning we must make it so that if we want to work with a DAO (and they need to be compensated), they’ll be super happy to be paid in Bank. But also if an organization (whatever it is) wants to work with the DAO, for example sponsor a podcast series, have their brand on an NFT from the Bankless factory, or just some BtoB consulting, like they want to have a user research study on a bankless topic, they want to implement a defi strategy for their capital, they want to launch an nft project that makes sense etc… They should consider it normal to buy Bank to work with us, and maybe accumulate Bank in prevision of all the future collaboration, cause they’ll know they’ll need some to have us work on this article, this research, or that report. Just like some companies buy BAT in advance cause they know they’ll run ads on a long period on the Brave browser.

The third step will be to see Bank become a money for everyone, like the average investor who would see it as a way to get exposure to the crypto media industry, or to show support but with a more detached way (doesn’t necessarily want to know what’s the DAO, or even follow the DAO’s work on a regular basis and get any perks).
Bank could find its place in crypto indexes as an uncorrelated asset (eth & defi on one hand, bank on the other). Legacy portfolio managers who don’t get most tokenomics might see in Bank a more traditional kind of investment as a media vs a protocol. This buy pressure would let us use the treasury to fund work and projects that would make more people see Bank as a good money (those getting paid with it) and as a good investment (those who DCA into it).

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BANK is money when you are paying for services or goods with BANK as long as both parties agree with it, then BANK is money.

BANK is money because you can exchange it for other tokens in exchanges. We are just starting, give it some time.

I also agree that we should have a price list for common tasks/services so everyone knows what to pay in BANK and review it periodically to account for changing conditions.

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I love the post, and agree with the overall initiative as we need to drive the value and use of $BANK internally and in relationship to other tokens, DAO’s and platforms.

For that it has to be useful to us AND others.

So we need an internal economy(tip bot, bounties… interpersonal trade?) and on ramps for others to obtain and use $BANK, not just as a speculative investment.

My thoughts:
I think $BANK is money and also a store of value, as it has a valuation, both represented in terms of the amount people are willing to pay others for work done, and in relationship to other denominations (ETH, USD).

I think that this economic function is not inherent to ANY money, but something assigned to it socially. $BANK has had it assigned to by nature of being an ERC-20 token which is accepted and valued socially.

My perspective is that the economic function of storing value, is a relational function that is largely socially defined and in relationship to supply and demand. This is still quantifiable(best example is how much $BANK you can buy for $ETH), although not exact as disparities happen between those that value $BANK more or less.

I think we need to think about the DAO as a sovereign digital nation, with our own denomination that we need to use, as well as a startup company seeking to increase revenue(both on chain and off).

Economic post incoming.

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I like the ideas you propose here, if only for different options for us to work with $BANK.
That similar to the Federal Reserve, we have the capacity to burn and issue, which can influence the valuation of $BANK.

I don’t think we would want to manage the valuation of $BANK to $1 usd, although it’s a great point that we want to make sure that the ability to join the DAO is always available.

Maybe we issue a $sBANK, which would be a stable coin BanklessDao token, pegged to $1usd…

This may be a requirement(?), especially as we get involved in the defi ecosystem and if we create defi products or different financial instruments.

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./sits in the dissent chair

If I’m honest, I’m not a huge fan of the idea of $BANK becoming money. While I would personally stand to greatly benefit from it accumulating real value, I feel that a governance token that is also trying to be a capital asset token or ‘money’ token is operating at cross purposes to itself.

I think the issues mStable has had around its MTA token are the reason I’m wary of this development. For those not aware, mStable’s MTA is their governance token. You stake it in their gov contract, and you are issued vMTA, which decays over time based on how long you choose to lock it up. You vote with vMTA.

However, locking up the MTA is also used to ‘boost’ your earnings in their Save contract, and their feeder pools. You’re not rewarded in more of the underlying asset, but rather in more MTA.

So we have cross purposes: MTA’s value is continually driven downwards because of the issuance rate and lack of DeFi utility. This continued downward pressure on the price erodes the returns on locking it up for Save and LPing. This makes ‘investors’ in the MTA token unhappy, and they complain about it in the discord continuously.

On the governance side, the generous issuance is great, because it enables more ‘governors’ to partake in voting. The token is inexpensive, so it makes it easy to acquire a stake. All DAOs strive to have as broad a pool of active voters as they can. Were it a ‘pure’ gov token, I’d feel like MTA is ‘doing it right.’

Rolling this all up, I’m skeptical that turning $BANK the gov token into a capital asset is going to serve its underlying purposes. I feel like $BANK should have an internal set of DAO-specific uses. For capital asset, I’d prefer a separate token tailored to investors or hodlers, who have different motivations and requirements than the DAO members themselves.

Well, no. Really, I would prefer to just use ETH, because that’s what ETH is supposed to be for, right? I feel like the tripart thesis of ETH is best exemplified by Bankless DAO using it exactly how we pontificate it should be used.

Ξ.000002

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I like the idea of $BANK as a reward token. New projects could submit proposals to the treasury and receive a $BANK grant which can be used as bounties to complete jobs for the project.

Having it tied to a monetary value, i.e. advertising dividends, could lead to some unintended grey areas for taxes or future regulatory issues. Perhaps keeping it as a utility token that can be redeemed for some sweet, sweet swag / NFTs might be a good start. I’m thinking more along the lines of Pachinko winnings than actual money rewards.

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I agree that we shouldn’t manage the issuance to create a USD peg or stablecoin. There would certainly be regulatory risk associated with that schema. We could simply lower the required number of BANK as the price of the token appreciates in order to keep membership affordable. However, if we get a large influx of new members to the DAO, there is still a possibility that there won’t be enough to go around, especially if current members don’t want to sell or provide liquidity and reduce their voting power.
We want to be able to respond quickly if an adverse scenario does occur which causes the price of BANK to fluctuate out of the bounds of what the DAO considers acceptable. Making a proposal to change the amount of tokens floating about and/or changing the amount of BANK required to participate might be a contentious issue if put to a vote and would certainly require at least a few days to implement. Maybe that’s okay for now, but I still think it would be good to discuss the scenarios and at least have a plan of how we’d like to respond when an event does occur.

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This post really resonated with me. I think the MTA example is quite useful, and there are probably other gov token projects we can review and learn from to fine tune the tokenomics for BANK to best serve the DAO’s mission.

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@tomahawk, @trustindistrust.eth, and @tesa_daa I’d love to hear your thoughts on my ideas at:

I can think of a couple of cons that come to mind.

Firstly we should be mindful of the collective bias we all share, that BANK becoming money increases our wealth. While our primary goal is for masses to go bankless.

From a pragmatic scene, I can’t see the majority of tokens being money in the future crypto economy. Living in a banlkess society, it would be easier to just use DIA(any stable coin) for day to day transactions (medium of exchange) and eth as Ultra sound money (store of value). Having many moneys is not only inconvenient but also confusing for outsiders who we’d like to embrace the bankless life style.

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I’m catching up on all the conversation. I haven’t caught up to the Discord conversation, but that’s next.
Thanks everyone for commenting. All of your comments were a genuine pleasure to read!

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THIS

IMO, we don’t want people drawn to the DAO because they like the BANK token. We want people committed to the mission of transitioning the world to using sound, digital currencies and decentralized money protocols instead of holding their wealth in sovereign currencies which can be debased and centralized banking institutions that can censor transactions.

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I think a second bias we may have despite the fact that a BANK with financial value increases our wealth is that the BANK we all received was unexpected and could feel underserved if it’s worth something. I mean we already had a lot of value just being premium subscribers to the best podcast out there, discovering and having fun with the POAPs… So getting BANK makes us want to give back, invest time or even money for the DAO, and that is a real bias.

An interesting perspective here would be from the people who joined the DAO by buying their first 35K BANK.

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I’ll chime in here as someone who purchased their 35k $BANK. I was planning on joining on substack and simply forgot to do so in time. Once I saw the creation of the DAO and what they had going on, I recognized that this was the community that I was looking for in the crypto world. The pull was strong, just as it was when I stumbled into the Burning Man community IRL 8 years ago. The openness, the willingness to share talents, the supporting of each other in our own and joint efforts reminds me so much of the Burners that I knew I’d found the right place. That is what convinced me that it was worth selling off some ETH. I do believe that people value what they pay for. They need skin in the game, and I put mine in because I saw the value.

All that to simply say, I didn’t buy $BANK as a store of money, nor to pad my portfolio. Have their been times when I thought it would be nice if $BANK went to the moon? Sure. If it every hit $100 I’d be super happy and probably buy the most expensive bottle of bourbon I could find to celebrate.

BUT, (there is always a but)

I realized early on that if $BANK goes up too much, it becomes that much harder for those that may not be as fortunate as I to be able to join us in trying to change the world, and we need as much help as we can get. To sound overly dramatic (because I am sometimes), we have an opportunity here to upend one of the longest standing, entrenched, and corrupt systems in the world - the financial system. It is rigged in favor those who already have more than they could ever need, at the expense of those that just want to have a place to live, be able to pay their bills, and not have empty their savings if their kid ends up in the hospital. To put it nicely, WE ARE AT WAR, and our foe holds vast resources. We need all the fucking help we can get.

So what is my point?

How do we create something of value, that people can invest in knowing that it will appreciate over time? I mean, that’s what builds wealth right?

That kind of leaves us with only two paths. $BANK goes up, some of us are happy, and we become more exclusive. $BANK goes down, we have wider doors, but less incentive to invest.

Can’t we find a 3rd, 4th, or nth path?

What can we create that helps us bring people into the community, and not price them out? Maybe create another token that could be used for farming or investing in defi, or creating our own ECF (Electronic Crypto Fund), or something entirely unthought of… We have so much brain power in the DAO that we can figure this out! Defi is creating all kinds of ways to experiment with money that could never be done before. Let’s do more of that, and find ways to share that wealth. WE CAN BE THE CHANGE WE WANT TO SEE IN THE WORLD.

Sigh. I feel like I left more things unanswered than answered.

I’ll now step off my soapbox.

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In general the DAO would benefit from increased value of BANK, our budget is in BANK (generally) so we could lower compensation (in BANK) and do more thing with the same amount. Then I think the question is, do we need to dedicate time to this specific question on increasing BANK value? (One could argue it would appriciate if we create value)

There is also no magic 35kBANK limit that can’t be moved, if BANK appriciated to say 1USD we could either set the amount based on a USD amount or just lower BANK amount to appropriate level the next Season.

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I think this is the way that we do it. 35k Bank makes sense right now. It will make zero sense at 1Bank = 1.00 usd. We should set up a schedule from 0-100 usd per $Bank so that those of us in the genesis group benefit from our first in position but we can also get new insights and talents along the way. I do not think it needs to be a linear progression based on a fiat dollar amount the tokens are worth but more of a curve or step function where as the price per $Bank moves up the higher the total fiat to join. Currently $Bank =$0.02 that is $700 to join. At inception Bank was 0.09 and there was a massive sell off over the first 4 weeks to get us down to 0.028. Currently for the amount of work the DAO is doing the value of $Bank is extremely underpriced in my opinion.

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(Warning: Unpopular opinion) I am revisiting this topic after a few months and EIP-1559. I never understood how ETH could be used as a utility token while simultaneously having a high price. The higher the price of ETH, the higher the transaction costs and the more people are priced out of participating in the Ethererum ecosystem. This is an argument for sidechains and layer 2 - reduction of transaction costs.

I feel that this is the same logic being applied to BANK. Bankless DAO is theoretically for everyone and wants to “bank the unbanked” but at the same time, Bankless members want the token value of BANK to increase. Achieving both seems unlikely without a ceiling in the BANK price. The higher the price of BANK, the harder it is to achieve member status in Bankless DAO. With a limited supply of tokens, growing demand, and potential revenue streams, it’s hard to imagine the value of BANK staying at a low level. A possible solution may be to create 2 tokens that accomplish each goal separately - a value accretion token, vBANK, and a governance token, BANK.