Creation of the tokenomics committee (Draft 1)

Title: Establishment of the Tokenomics Committee
Authors/Squad: davoice321#4405 gav#8283 Above Average Joe#5427 LiveTheLifeTV#5415
Date Created:09/13/2021

Formatted Document in Detail:

Summary

Establish and fund a new entity within the DAO: The Tokenomics Committee (TC). The Committee would have the power to research, develop, implement, supervise and adjust $BANK utility bolstering activities (via tokenomic and other methods) that would be approved by the overall DAO membership and supervised/audited by the Treasury Guild.

BACKGROUND

Since the DAO’s inception, the community has been engaged in a broad conversation about the overall value and role of the $BANK utility token. These discussions and polling revealed that the community believes the value of $BANK should be safeguarded and that the DAO should take active steps to bolster its utility. Increasing the utility of $BANK will attract talent and enable the DAO to fund more projects that drive the DAO’s mission and values.

MISSION & VALUES ALIGNMENT

By increasing the economic bandwidth and utility of the BANK token, the overall strength of the DAO treasury will be multiplied, leading to enhanced capabilities and increased productivity across the DAO.

Contents:

  1. Specification of the proposal:

  2. Snapshot wording

  3. What is the TC

  4. Initial $BANK allocations to the TC

  5. Oversight and accountability

  6. Funding

  7. Auditing the TC

  8. The language for the snapshot poll that will signal community approval for the creation and funding of the Tokenomics Committee

SPECIFICATION

This Snapshot will seek approval for the following:

– Yes: The DAO shall establish a Tokenomics Committee (TC) with the following responsibilities:

  • Research and propose ideas to boost the utility of the $BANK token

  • Create a process for Treasury Committee formation and recruit individuals from across the DAO to serve on the Committee

  • Establish an initial budget of:

  • 500,000 $BANK to support previous activities related to securing community consensus, developing initial strategies and more. Post Snapshot approval, a portion of these funds will be used to drive the organization and formation of the Committee and leading its initial activities.

  • 2,000,000 $BANK to support development, implementation, auditing and reporting of Committee activities on an ongoing basis

Formation of the Tokenomics Committee

The Tokenomics Committee will be established in two phases:

Phase I: Assemble a tokenomics squad, consisting of the following DAO members (@AboveAverageJoe, @Davoice321, Yves, Gav) who would be responsible for:

-Conducting research and analysis on potential utility bolstering strategies to propose to the Committee after it is formed, including smart contract development and economic strategy
-Recruit individuals from across the DAO to potentially serve on the Committee and develop a process for community approval of Committee members
-Outline the powers and responsibilities of the Committee and seek community approval for initial activities.

Phase II: Formally establishing the Committee and engaging in initial tokenomics strategy implementation activities

Background

What is the Tokenomics Committee?

The Tokenomics Committee will be an entity with cross-DAO scope, with the following responsibilities:

  • Developing and implementing strategies for bolstering the utility of the $BANK token (see below for strategies currently under consideration)

  • Gathering consensus from the community on which strategy (or strategies) would be implemented

  • Deploying and reviewing the impact of $BANK bolstering activities, tracking results, reporting to the community and making adjustments where necessary.

Current Status of Tokenomics Committee and Activities to Date

Phase I of the Tokenomics Committee formation process is more than 60 percent complete. The squad has engaged in the following activities to date:

  • Gathered initial community consensus around the idea of actively bolstering $BANK”s utility and developed strategies for achieving this aim
  • Outlined four initial strategies for bolstering the utility of the $BANK token for potential Committee review and approval
  • Established a preliminary organizational framework for the Committee and its initial membership
  • Engaged in cross-guild conversations related to how much non-$BANK revenue would be allocated toward utility bolstering activities
    -Developed a preliminary roadmap of initial Committee activities that would guide its efforts during Seasons 1 and 2
  • Recommended preliminary thresholds for the utilization of non-$BANK revenue to increase the utility of the $BANK token (e.g., 25% of the DAO’s revenues to increase the utility of the $BANK token).

Establishing a Budget for the Tokenomics Squad and Committee

The initial budget of 500,000 $BANK (funded from the community treasury) would be utilized to:

  • Compensate existing squad members for activities conducted during Phase I of the Tokenomics Committee research and formation process, as outlined in the table below. (60% of budget, 300,000 $BANK).
Squad Member Activities Estimated Hours Spent on Activities
Davoice431 -Gathering initial community consensus supporting the concept of engaging in activities designed to bolster the utility of the $BANK token

-Contributing to the development of initial strategies for bolstering $BANK’s utility

-Helping to flesh out Tokenomics Committee concepts

-Planning for initial Tokenomics Committee activities and roadmap|100+ Hours|
|gav|Engaged in community discussions to form consensus around how the Tokenomics Committee would look and operate

Wrote initial proposal and worked on updating the document following tokenomics meetings

Discussed and fleshed out different strategies that the committee could engage in

Worked with the legal guild to have clarity over how the committee would be able to operate if it is created|~50 hours|
|AAJ|-Coordination and advancement of Tokenomics discussions

-Shepherding of proposal versions

-Squad selection

-Research coordination for strategies|100 Hours|

-The remaining 200,000 $BANK will be used to fund the following Phase II activities:

Phase II Activities, With Estimated Budget

Activities Estimated Budget
Committee Organization: Includes fleshing out initial roadmap, recruiting Committee members from across the DAO, etc. Explore other DAOs and external professional service providers that can help develop tokenomic models with the TC ~20,000 $BANK
Utility Bolstering Strategy Development
Includes fleshing out initial utility bolstering strategies, developing additional ideas and beginning implementation efforts ~70,000 $BANK
Implementation Activities
Strategy research and advisory, initial smart contract development, front and back end development, User interface designs, and marketing etc. ~110,000 $BANK

After the Tokenomics Committee is formally established it would receive a budget of $BANK (from the community treasury), allocated per season, beginning in Season 2. These funds would be used for expenses associated with the further development of smart contracts, interfaces, research, analytic, and operational administrative costs and renewal of various incentives, such as liquidity provision (e.g., Balancer pool).

Note:

  • Initially, we recommend the Committee receives 2 million $BANK for Season 2
  • For subsequent Seasons, the Committee would provide the Treasury Guild with a proposed budget, which would need to be approved by the Guild and ratified via Snapshot vote as part of the overall DAO seasonal budget
  • Any unused funds will be rolled over to subsequent seasons

Committee Activity Oversight, Accountability

The Committee will have the right to:

  • Suggest initial and ongoing thresholds (percentage of non-$BANK revenue and value accrual activation thresholds) – and present these thresholds to the DAO for ratification via the forum

  • Plan and Implement strategies and tactics on a proactive basis – and present these strategies for community ratification via the forum

  • Perform certain interactions with smart contracts (if necessary) to allocate Treasury revenue to various $BANK value bolstering activities (via a multisig)

  • ¾ multisig to include Yves, Gav, Above Average Joe and Davoice321 (for Phase I activities). The multisig members will be expanded once the Committee is formally established

  • The Committee’s activities will be overseen by the Treasury Guild.

In most cases the Committee will have the power to enact policy and implement activities associated with the value accrual strategies ratified by the DAO (via the community forum) on its own. However, before recommended activities are undertaken, there will be a notification period so that members of the DAO can comment on strategies and provide feedback.

Major and significant recommendations and strategies will be put to a DAO-wide vote prior to implementation.

If a strategy is put in place that – in the future – the DAO wishes to substantially change, it can be modified via a community-wide vote that will require a supermajority consensus (+66% approval rate) to be enacted. (Note: As mentioned above, all proposed strategies will go through a process of development, review and community vetting/voting prior to enactment.)

Auditing the Tokenomics Committee

An auditor from the Treasury Guild will be assigned to the Committee who will have the following responsibilities:

  • Reviewing Tokenomics Committee activities and strategies

  • Ensuring that Committee members are acting in the best interests of the DAO and aligning with agreed upon goals and agreed KPIs of DAO, and reserving the right to advocate for the removal of any Committee member not in alignment.

NEXT STEPS

Move To Snapshot for ratification and on-chain execution

  • Move To Snapshot As-Is
  • Make modifications (Comment below)
  • Reject

0 voters

Thanks for the proposal. It seems like you have already done a fair bit of research on this - so what would be an impactful example of a token use case to roll out, besides providing liquidity in Balancer, etc?

It seems to me that this proposal is requesting a lot of resources (initial funding) +25% of DAO’s revenues (?!) and tries to establish a very formal structure for this, which I am not sure is necessary at this stage vs say, having one person spend X hours researching / month, and then the DAO voting on any proposals that come out of the findings.

I’m trying to think of a good example of other utility tokens that are being successfully used for other purposes than HODL / gatekeep / govern / rewards / LP yields in a impactful and sustainable way and which drive adoption more than the product itself, and I can’t quite visualise what you have in mind. For me it would be good to hear about and test roll out some specific initiatives on this front first, before going ahead with something of this scope.

2 Likes

Thank you for a great post. I find the budgets to be problematic, for Phase 1 we’re saying the squad should be renumerated for work done in an amount that is around a full seasonal budget for a guild. So I would very much like to hear more about these strategies that you’ve been working on before settling on how reasonable the budget is.

For me this amount of back-pay for gathering consensus (in part) is a bit problematic I must say. Most projects have had much lower (at least specified) amounts to ask for work done before a vote, in a nutshell, should we start working on strategies before we’re approved to spend. But this is a discussion for another place maybe.

For the 2M, it’s a lot without a clear guidance on what you’re planning to do. So I would think this needs to be clarified. I would also like the proposal to split renumeration of members from their operating activities to increase the value of BANK in their budget. This would allow you to present what kind of work youre estimating to be done here and how much is to be used for tokenomics. Way more transparent from the start.

My suggestion would be to moved the 2M at the very least to the S2 snapshot, and keep this for the first phases. Based on that you’re estimating 200hr of work of the 500k, you should be fine until the S2 snapshot.

Would the revenue % of non-BANK revenues be on top of the 2M?
I think 2.5M BANK (50% of guild budgets or over 2x our largest project last season) is an ask that needs a lot more clarification. Do it in steps and ask for a smaller amount until you can present something a bit more tangible in terms of strategies and why you need 2M + ETH per season.

just my 2 cents.

3 Likes

I have some observations on top to what was said before.

  1. This retroactive token recognition may create some unbalances in the treatment of contributors and violate governance rules.

In Season 0 the only remuneration was given by a Coordinape round, even if people worked tons of hours to organize the work in the Guilds. Nobody asked for retroactive payments concerning specific tasks.

In Season 1 funds could be requested to the GC. This was the proper way to address the issue. As far as I know, nobody asked remunerations for the preparation of proposals (Frog would be billionaire :slightly_smiling_face:).

  1. In addition, I have also the feeling that the 2M amount is too high and that the presented program is too generic (for such an amount). The GC is a flexible committee, able to immediately respond to requests. It provides a fair assessment, which takes into consideration every potential problem (included legal observations). I think that proposals for tokenomics can follow the ordinary workflow of our governance system.

Just to clarify: I consider tokenomics of immense importance. I only don’t see the need of subverting our governance rules.

3 Likes

Gonna try to address all the comments so far with this follow up:

-Permanent liquidity allocations
-Single sided BANK staking
-Liquidity mining incentives
-Token Swaps
-Yield generation (Alchemix, etc)
These are a handful of ideas that off the top of my head may be under the scope of the tokenomics committee.

The revenue allocation is actually not set, 25% was a suggested number. we’ve also discussed minimum balances/revenue streams to warrant use of non-bank funds.
The details surrounding those parameters are debatable, so rather than codifying any exact amount right away, an example is given.
(Those revenues could become single side staking rewards for instance)

I actually agree with this. I think at most 40% should be allocated that direction, and would encourage this number’s reduction, though others in the squad may have more to say about it.

A lot of this was outlined in greater detail in previous proposal versions, and it was mentioned that the scope of the proposal in that format was too large. The plan is for the 2m to provide sustainable incentive amounts + development and marketing budgets throughout each season. Much of these funds will end up in guilds as they are hired to perform these tasks.

This breakdown hasn’t actually been discussed yet. I’ve been operating under the assumption that the 2M bank is for tokenomics and development specifically, and will not be allocated to committee members. (perhaps this can be codified in the proposal)

Yes, it would be. However, the percentage, and eligibility parameters haven’t been set yet. I’m a fan of 250k Min balance, 100k/Season Min revenue = Eligible for 25% of seasonal revenue for tokenomic purposes only.

Since most of this funding is actually going to the implementation of incentives, with the intent to expand the economic bandwidth of BANK, I feel comparing it to other projects (which mainly are development budgets) is apples and oranges. I’d love to specify more which incentives are going to do what, but that is going to require results from the research guild on tokenomic activity effectiveness, and we’re planning on gathering approval in the forums for incentives before implementation.

In terms of overall incentive allocation, this comes out to .8% of the DAO’s total supply per year, which is (compared to most incentive programs in DeFi) far less funding than most of our competitors.
If broken down into 5 different tokenomic activities, that’s 400k/activity for Development AND implementation per season.

Actually, Bankless Academy Did ask for retro compensation for season 0, and it was granted (albiet less than they asked for) It just didn’t happen until season 1.
I feel reducing the amount as I had mentioned above is a healthy move to alleviate this concern somewhat.

Finding these points of ambiguity/clarifying is exactly why this post is labeled (draft 1)
I hope my answers can provide some clarity. Thank you for the feedback.

Are you talking about the liquidity mining of other protocols, which allow you to earn their own token for staking and other activities? The problematic thing about that as I’ve seen so far is that either A) the rewards are not high enough to make an impact B) are high enough to attract ppl to hold the token at the cost of a significant dilution of the token’s value → downward price movement.

Either way, we probably don’t need to discuss the details of any specific program just yet. My point is - I agree with what was said above, at this time I would prob request a budget just for the work of any dao members needed to come up with some specific proposals, in much more detail.

Once we have a detailed proposal for eg a liquidity mining program - then I would expect an assessment of how much value it would bring and how much money we need to spend on it to make it most effective. Not sure pre-approving such budgets makes sense.

2 Likes

It is a good idea to have improved tokenomics, and thank for sharing a great post.
Nevertheless, would like to point out that retro-compensation should be explained in more details, it is stated 100+ hours, without much details to offer, and should be aligned with DAO rules.

Regarding budget for Season 2, I am fan of a more milestone planned budgets, so that you list some obvious goals that will be reached with tokenomics. From the proposal, it seems that you are asking solid amount of money in Season 2 (2M $BANK) with goals to implement strategies and plan on proactive basis, but there is no clear outcomes that will be visible and measurable?

1 Like

Thanks everyone for their comments. I just want to pop in to respond to two themes I’m seeing in the response, and to chart next steps.

  1. Overall 2M Allocation for Tokenomics Committee to Commit to $BANK Bolstering Activities

As outlined in the proposal, the 2 million $BANK allocation would be an overall budget that would be allocated toward the Committee’s utility bolstering activities. The Committee would then allocate these funds to specific Guilds for implementation by the Tokenomics Committee.

These funds will provide the Tokenomics Committee with the flexibility (and dedicated budget) required to, most importantly, execute on agreed-upon strategies. Note that the strategies would only be implemented (and budget allocated) upon community review and approval.

The key thing to remember is that the 2 million budget would be allocated, to the Committee, but not dispersed until after the strategy development, review period, implementation details are determined.

  1. Retroactive Compensation

As illustrated by the detail of this proposal the squad has already dedicated significant time and effort into gathering community consensus, researching potential strategies, developing the structure of the proposed Tokenomics Committee, engaging in cross-guild conversations and initial planning, and other activities. The hours ranges provided in the proposal cover these activities, and many more.

As @AboveAverageJoe mentioned, In the next version of the proposal, we will reduce the requested amount to 40% of the initial $BANK allocation.

Next Steps

I appreciate everyone taking time to review the first draft of this proposal. We will be submitting a second draft based on these responses that:

  1. Makes it clearer that the allocated 2 million $BANK budget to the Tokenomics Committee will only be dispersed after community review of the details of specific strategies recommended by the Committee — the majority of funds will be allocated toward implementation-related activities, including smart contract development, etc.

  2. Reduces the initial share for retroactive compensation to 40%

We will submit the revised draft in the next week or so, which will be the basis of the Snapshot vote ratifying the creation of the Tokenomics Committee and the initial budget allocation.

Many points of opposition have been raised above, which I agree with. But I will raise my own points to:

First, let’s start with the macro level view of this proposal. As I read this, what tangible value has been accrued? Historically, the activities being remunerated fall into:
• Engaging in community discussion
• Proposal writing and scoping
• Initial strategies for bolstering BANK utility (Where is the documentation for this? What actionable insights?)

Since when are we in the habit of rewarding administrative overhead before value was ever accrued? If there was an actual document showing the research completed thus far, then I would be more willing to remunerate work completed. Joe raised the point that Bankless Academy got remunerated – Yes, but they got remunerated for value accrued. They had already started drafting design graphics, course content, and deployed test released.

Furthermore, this proposal is not thoroughly staffed. There is the assumption that the TC will pull resources from dev guild, marketing guild, and design guild with no representation from any of these guilds. Reckless assumption of resources is how projects fail. Please reread the project proposal workflow:

Second, let’s talk budget. 2M? 40% if the entire S2 seasonal budget? With 0 indication of how those funds will be spent? You write

I’d love to specify more which incentives are going to do what, but that is going to require results from the research guild on tokenomic activity effectiveness, and we’re planning on gathering approval in the forums for incentives before implementation.

Then do that first. Ask for the BANK to put together the research first before this next step.

That leads nicely to my third point of whether we even need a TC committee right now. I don’t think we do. For one, we’ve been exploring different tokenomic ideas in a decentralized fashion., such as with the Balancer proposal, which led to robust discussion. Furthermore, IcedCool is working on a proposal for Tokemak. Why add this extra layer of coordination and friction when we already have a POC that we can make tokenomic decisions in a decentralized fashion?

What happens if I want to propose a tokenomic program? Do I have to go through the TC first and get their backing? If not, then what’s the point of the TC? If so, then that creates friction. Could this entire initiative be rolled up into the Research Guild and then individual initiatives be broken down into Projects with their own budgets?


For these reasons, I have voted to reject this proposal outright.

3 Likes

I was going to write a long reply until I read what @frogmonkee wrote. I agree with each comment. Creating committees are helpful when there is no direction at all, but we don’t want overkill with a political nightmare within the DAO.

I specifically like the idea of adding this within the research guild and then creating specific projects. This way each tokenomic idea can be thoroughly spelled out, communicated, and a proper budget can be voted on that perfectly fits the project for approval. Then with the blessing of the research guild and the approval of a budget a team can be put together to complete the tokenomic concept (after proper feedback from the community).

2 Likes

Compensation is a delicate subject and rewards for KPIs is what I thought Bankless DAO was moving towards.

A couple of points in general:

  1. It would be good to gauge what other DAOs are doing and what compensation they are paying for similar jobs.
  2. A refined KPI list of achievements or a roadmap and payouts for milestones reached should be required (if not already) for every grant request.
  3. Rather than form a committee immediately, why not ask members of each Guild and the community to nominate people and then vote for committee members. It seems that the same names come up repeatedly for the positions of power with very little notice to other members.
  4. Committee members should have term limits. This goes back to diversification opportunities.
  5. A minimum number of Members should respond to a poll in the Forums before it heads to a Snapshot.

I am against this proposal as it does not adequately benefit the Bankless DAO community.

4 Likes

Thanks everyone for your feedback on this proposal.

Given the response to the proposal, we won’t be moving ahead with this effort.

@AboveAverageJoe, as you posted this proposal, please close the poll and archive this post. Thank you.

I love these suggestions. When drafting the proposals, remuneration wasn’t talked about much, and little thought went into the method thus far. I labeled this proposal as draft 1 specifically to get this wider community input, and will be integrating much of these suggestions into the second draft.
On 5: It is generally considered in good faith after at least 30 respondents in favor, which this is far shy of.
Ironically, a previous draft of this proposal had many more details, but the thought at that time was the scope of the proposal was too wide, and it was pared down. Based on the feedback here, many of those points will be recaptured in the next draft.
As far as KPIs, I like the idea, but I’m not well versed in implementation, and would need more help to bring that into focus.

If you’re willing and able, I’d like you to join our next meeting in #tokenomics to help with this process a bit

Many good responses here. One that I did not see much mention of was in relation to the committee establishment process. Rather than a small squad making recommendations or selections to the committee, I would prefer to see a DAO-wide committee staffing process of some kind, where candidates:

  • can be nominated by anyone,
  • can provide their bios and qualifications for all to review,
  • can post their tokenomics viewpoints or philosophy for others to consider their potential impact in the committee,
  • are elected in a transparent process on forum or snapshot.
1 Like

While I support some of the specific functions of this proposal: for example single side $Bank staking and incentivising liquidity providers.

I think the $Banks could be better spent directly on events and activities.

Funding metaversal events such as giving a free decentraland Bankless T-shirt or Meka-droid costume, or funding giveaways, treasure hunts, QnA, Parties.

Basically funding FUN, communities and experiences will drive the “utility” of the $BANK, not artificially bolstering its value.

For example, check out the nft-club, the tokens pay for itself!

1 Like

maybe more research first, seems like there is funding and resources available within the research guild for some of the preliminary steps proposed here.