Brain Dump #3 - Is $BANK Money?

./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.

It doesn’t matter if it’s considered money or not. For all US residents, if you receive anything of value in exchange for a service, it’s considered income and you have to pay income tax on the Fair Market Value of that item.

On the business side, (at least in US law), any exchange of money or something of value exceeding $600 in fair market value has to be 1099’d, unless it’s to a corporation. That’s the only way to legally expense it.

So what we call it doesn’t really matter with how we are using it.

I also think if we find ways to incentivize $Bank holders to spend their tokens within the DAO, it would stabilize. If everyone just acquires and holds it, it will become rarer and therefore price go up. As mentioned in the discord, the idea of spending $Bank for an annual membership fee, that circulates the $Bank back into the system. Selling NFT’s in $Bank. Maybe provide consulting or services internally to members in exchange for $Bank. Let’s create a full economy with the token.

Something that came up on the grants comitte around the use of the exsiting tipping system. My personal take: Get rid of !tip command completely.

Have DEGEN do

/hype @frogmonkee 100

  • sends 100 HYPEs to @frogmonkee
  • HYPES can be redeemed for BANK
  • BANK can be deposited in exchange for HYPES

1 BANK = 10 HYPE
Replying with :hype: emoji to someone will send them 1 HYPE

Orgs and companies do something similar to this as an internal reward system. HYPEs have zero value outside the dao but still has value for those that want to redeem. Having a system like this give us finer control on how each member can get awarded for their contributions.

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I think BANK will become money over time as the DAO continues to produce more value. We are responsible for convincing people why BANK is valuable and I think we are well on our way to doing that. As long as we keep spinning out amazing projects and providing members with awesome benefits, BANK will be money.

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The concept of money and how people agree to what is/ and what is not money is rapidly changing. As we progress further down the line, cyber communities will play a major role in deciding what is money for them as a community. I also see several tokens being used to serve the function of money at different levels and within different communities and projects/blockchains. some “monies” will exist entirely in cyberspace communities/metaverse while others will trascend both cyberspace and the offchain world. I agree, $Bank will be whatever we want it to be. afterall $BANK is the people.

I kinda hate the term, but BANK is 100% dogfooding. As the concept of “money” evolves, I hope this community will have painted a picture of how/why the term is subjective and fluid.
Be the BANK you want to see in the world!

Nicely detailed post. For me, however, the essence can be distilled to this -

Exactly. What makes people want to hold any other tokens that are currently relatively good at storing value? It’s either -

A) they entitle you to capture of the DAO’s revenues - dividends, etc. This is why people buy stocks. All DeFi tokens are a good example.

B) membership perks - in this model holding BANK is like holding a membership pass to an exclusive clubs that provides value. This has to be real value that you are willing to pay for - not just getting discounts for stuff you don’t want, etc.

I think we need to focus on both - how do we generate revenues for the DAO and what do people get out of being Bankless members (other than learning about how DAOs work or getting paid for their contributions). Both are good discussions to be had.

Everything else is just schemes adding sugar on top in the best case and ponzinomics in the worst case. Staking or yields cannot be the foundation of why any token holds value. You can not justify value by getting % yield on something whose value converges towards 0. Protocols that make this the cornerstone of their existence usually go viral for a short period of time, until they crashland to essentially nothing.

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