Tokenomics of BanklessDAO🏴

[Icedcool]

This post is to kick off a discussion of our tokenomics of $BANK and the BanklessDAO🏴.

The DAO’s Mission:
Onboard 1.5 Billion people to bankless ideas.

The DAO’s assets as I know it:

• We have a large amount of $BANK
• We have on chain revenue in the form of merch purchases - $Robot and ??

In service of that mission, we have the challenge of projects and work to be done, but with no assets to pay for that but our own. We also have a lot of volunteers and core contributors that need to be compensated for their time and work, both in the short and long term.

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We have the opportunity with $BANK to drive its use and valuation in service of supporting the overall goal of the DAO.

This enables the DAO to have an asset(without investing) that can be used to fund projects/guilds for effort the DAO needs(both maintenance and major initiatives), as well as contribute to internal DAO economics.

Internal economics could be:

• Paying core team members for their efforts
• Paying for work done by Guilds and their squads
• Internal DAO markets and trade
  • NFT’s?
  • Bounties - Tip bot!

Externally driving the valuation and use of $BANK would allow it’s adoption and use in the overall defi ecosystem, with it potentially being a financial instrument to be staked, both in the DAO and at different locations, used as collateral, etc.

We could drive valuation with options like:

• Stake $BANK to get lvl2 - This creates Opportunities like:

  • Get $Less, which also grants yield in the form of percentages of revenue(as $BANK?, Eth?, Different token?)
  • I’ve seen discussion of membership fees and that staking could cover those.

• Require $BANK to purchase Bankless educational products, or passes.

  • Onboard, or others?

• Have Merch exclusives that can only be purchased with $BANK.

  • Regular Merch can be bought in any way.

• Sky is the limit.

With $BANK as money, the DAO as an organization has the challenges of both a startup and an emerging digital nationstate in that we have to find and create revenue streams and manage costs, as well as drive the use and acceptance of our denomination both internally and externally.

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This post is to kick up discussion and to be explicit about the idea that the DAO will treat $BANK is both a monetary asset and a governance token to be used to fund and vote. Some DAO’s treat their governance token as ONLY that, and actively drive down it’s valuation.

I would love to hear what everyone thinks.

• $BANK is a financial asset AND governance token
• $BANK should only be a governance token
• Something else - Explained below

[Icedcool]

This doesn’t even get into LPing, which I see as something the DAO will probably need to do as a function to provide enough liquidity that trading would be stable if major purchases happen, or we have a large influx of people.

[ricJones_grizzy]

Stake BANK to get discount on subscription and merch?

[Kouros]

I think probably a good option to get revenue is that instead of requiring BANK to access onboard for example. They buy a NFT/POAP type of badge as a season pass… that grants access for a period of time or course… then a new NFT will be needed for the new period or course etc. This is a subscription model but you get the NFT also which is nice

Also, to get some people on board… some starting courses should be made free.

[tomahawk]

I think one of the main considerations in this early stage should be the inflation rate target. If we want to onboard more talent into the DAO and we assume most members will hold and accumulate BANK, we need a mechanism for supplying additional BANK to the market to stop the price from appreciating and driving up the cost of entry. The trick is knowing how much supply to add.

My suggestion would be to scale the issuance of new BANK to be equal to the net rate of growth of the DAO times the cost of participation. So currently for example, we would take a regular look at member numbers (weekly, perhaps) and mint 35k BANK for each net add in membership.

The new tokens could go to stakers of BANK or to the DAO treasury, assuming there is a mechanism in place to circulate it. There are other options as well, I’m sure, but I’ll consider just these two options for the sake of this post.

If it were to go to stakers, it would only be released to the market when someone sells, so it wouldn’t ensure liquidity for purchasers without price appreciation as an incentive for stakers to sell. Even then, there would be some stakers that don’t take profits and just accumulate. This scheme might produce some price volatility.

Adding BANK to the treasury would keep it mostly locked up unless rewards to members kept up with issuance. But if the DAO itself is also a LP, adding newly minted BANK to this liquidity on a regular basis would ensure that new supply is available to anyone wishing to buy in. To me, this seems like a safe way to avoid price runup, but doesn’t incentivize holding BANK other than the utility of being able to participate (which is fine with me personally). It also might not pass the Snapshot if enough members want their BANK to appreciate in value.

Maybe the best solution is somewhere in the middle, send some of new supply to the DAO’s LP contract, and some to reward holders/stakers. That way the price of BANK can appreciate some but will still add available tokens to the buyers market. This might also need to be coupled with a periodic reevaluation of the participation cost or stake, since it would be likely get more expensive to buy in to the DAO over time.

[tomahawk]

More central to the question in the poll, I think we should keep it governance only for now until the DAO has reached critical mass. I remain skeptical that we can allow a monetary premium to accrue to BANK without the effect of pricing out new members, which I believe is antithetical to the mission of the DAO and could hinder membership growth during the bootstrapping phase.

Once we have critical mass to the movement and have built a substantial treasury, it makes a lot more sense to start treating BANK as a capital asset and a way to share profits to incentivize membership and holding BANK. I’m wary of perverse incentives if the market sees BANK as an investment vehicle. It might bring in holders who are not committed to the mission and only care about BANK going to the moon.

[tomahawk]

Similar to the comment by Above Average Joe in the tokenomics channel, I think a subscription model is interesting, especially if combined with staking. If you stake enough, membership pays for itself, which keeps the incentive to hold BANK rather than just buying some when you need to pay dues.

[Icedcool]

I remain skeptical that we can allow a monetary premium to accrue to BANK without the effect of pricing out new members, which I believe is antithetical to the mission of the DAO and could hinder membership growth during the bootstrapping phase.

A fair skepticism and concern.

I think we could fairly easily mitigate that with technology solutions, like setting a USD equated value instead of a $BANK token amount, or other such solution.

Or maybe we don’t use $BANK at all for access, and people have to purchase NFT ‘passes’ at a set price of 10$ month/year or whatever.

[wolfehr]

I think there are two ways for $BANK to provide value to holders. One is by increasing the price of $BANK and the other is distributing a portion of DAO revenue to token holders. Based on the discussion in bankless episode 62 I’m not sure there is a long term difference between the two besides perception. The larger the portion of revenue going to the DAO, the larger the treasury $BANK controls, the more it’s value should go up. People can capture that revenue whenever they want by selling some $BANK. There is likely a psychological impact though that should be considered (i.e., in one I see ETH streaming into my wallet and the other I the value of my $BANK is growing faster).

I think long term the value of $BANK will be based on the size of the treasury it controls and the useful things you can do with it. As a result, I think the focus should be on activities that generate on-chain revenue for the DAO and ways to make $BANK useful.

On-chain revenue is already a major theme with lots of discussions elsewhere, so I think this discussion should mostly focus on if $BANK should be used as currency within the DAO (i.e., the Is $BANK Money? discussion).

I think Brave’s BAT token provides an example of one way we could approaching making $BANK useful (BAT whitepaper). One reason BAT has value because it’s the currency used within the BAT ecosystem. $BANK can also be useful because the DAO produces lots of media, cultural, and education content people will want access to. Some possible examples:

• Require or provide a discount for educational services purchased in $BANK. For example, you can purchase a premium subscription to DAO onboarding content for 1000 $BANK/year OR you can purchase an annual subscription for $100 USD or $80 in $BANK
• Require or provide a discount for DAO storefronts (e.g., merch shop or NFT auction house) purchases made in $BANK
• Require or provide a discount for sponsors to pay in $BANK
• Guild bounties are denominated and paid in $BANK.

I’m not opposed to staking rewards, and believe that could increase the price of $BANK by reducing supply, but I don’t think it’s the best sustainable way to provide value because all the value is coming from depleting the DAO treasury in exchange for removing $BANK from circulating supply; it doesn’t actually create revenue or a use case for $BANK.

I think the DAO would also need to provide LP rewards so that people can acquire $BANK to pay for the things like those mentioned above.

How to pay contributors is definitely an important factor to consider. Without contributors, we won’t be able to do any of the above. Part of me also feels that if your contributing, it should be because you believe in the DAO long term and shouldn’t expect an immediate monetary reward. People who join startups and found companies often don’t make any money, or lose money, short term to realize there vision.

[Kouros]

I’m a supporter of the NFT subscription model. I’ve said it in different conversations. So even if the liquidity of BANK is low NFT grants you access to our services and products, generating revenue straight to the DAO and at the same time increasing the value of BANK.

[wolfehr]

I like the idea of using NFTs as the permission mechanism.

In general, I think people should be able to purchase access to DAO services (i.e., and NFT that gets them access) using fiat or crypto, but you get a discount for using crypto and an extra discount for using $BANK.

[trustindistrust.eth]

As I outlined in the “Is $BANK money” discussion, I am against overt/direct monetization of $BANK. I think the token should remain a pure governance token, and that it remaining as such doesn’t hinder the DAO’s goals in the slightest.

The DAO:
Should create units of culture in order to propagate ideas of bankless-ness
Should maintain a Treasury that accrues the value created by contributors
Should vote to distribute Treasury funds to those contributors, meatspace organizations that further Bankless goals, and other endeavors as seen fit by $BANK holders

Should not create a capital asset that interferes with the ethos of the brand
Should not co-mingle the goals of financial stakeholders with governance stakeholders, which are often at cross purposes (see public shareholder companies and the unethical things done to consumers)
Should not by these actions, create a token that is difficult or expensive to acquire
Should not project an image of avarice, that because people were subscribed to a certain media outlet, they then take steps to maximize the airdrop they were privy to.

I agree that $BANK could have many potential uses, and perhaps those uses wouldn’t be diminutive to the DAO’s stated goals. But it’s my opinion that keeping the token ‘pure’ removes no potential from the DAO (except the financial windfall of its current membership) or its goals, and has opportunities to re-use existing tokens and infrastructure that already exist.

I feel strongly enough about this that, were the DAO to support conviction voting, I would lock up my entire stack for 4+ years in order to prevent this shift into value. We don’t though, so the alternative that supports my feelings about this ethically would be to send all but 1 $BANK to a burn address, and refusing $BANK offered for my contributions (which I still plan to make to the Research and perhaps Writers Guilds).

That isn’t intended as a whine or some sort of tantrum. I just want to communicate what this means to me. Thanks for reading.

[frogmonkee]

@fifilechien @tomahawk @hamish.eth @trustindistrust.eth @davoice321 @Kouros @wolfehr @AboveAverageJoe

Jesus, did I get everyone?

I’m catching up on all these conversations and I like the direction. I want to drop my 2 gwei in. I’m leaning towards BANK is a social token and shouldn’t be directly tied to value.

I think we should try to emulate SWAGG Network when it comes to driving value. You can read more in their announcement post, but SWAGG is a social token that derives its value from how its used within the community:

[angyts]

I like this idea.

So the NFT or 35K BANK would be the permanent member.

Whereas, there will be daily, or weekly, monthly or yearly passes denominated in fiat. like $2 per month.

[Kouros]

I think BANK operates in a similar way to SWAGG at the moment?

[Grendel]

There is probably a way to combine the financial instrument application with that of recognizing $BANK as a community / governance token.

The fact that to be part of the DAO it is necessary to own $BANK, gives a deflationary push as participants will not want to part with a minimum amount to maintain their status.

One could think of inserting an additional “status” between lvl1 and lvl3 to incentivize people to save or buy / get more tokens.

If the onchain and offchain revenues were partially converted into $BANK, this would allow to support the price from a financial point of view.

Using it as an internal currency of the DAO, with incentives to HOLD them, would connote it as a community / governance coin.

Obviously there will always be cash out pushes, but if they were balanced by revenues they would not reduce the value of the $BANK token

[fifilechien]

Would be interesting to explore the Swagg network’s purpose, what they want to do and how the value accrual works for them.
I guess there are so many things the DAO can be at the same time: a community, a club, a media, a service provider, a brand, a relayer, a fund, an educator, a grant/donor and so many more… Hard to imagine one tokenomics fits all.
We could imagine to separate the governance from the DAOs finances and financial-oriented products. But also hard to imagine a financial-sided token and a governance token as separate systems, just because as some point there will be a conflict of interest between the holders of one and the holders of the other.
One thing is certain, the Bank token must have value for Bankless DAO to have a real impact. In my experience working in non profit organizations, there’s only so many things you can get done without funds, be them to spend on expenses or to keep people motivated.

[OverAnalyser]

@wolfehr

I like the idea of using NFTs as the permission mechanism.

In general, I think people should be able to purchase access to DAO services (i.e., and NFT that gets them access) using fiat or crypto, but you get a discount for using crypto and an extra discount for using $BANK.

I think this is spot on, by giving a discount for people to pay for things (subscriptions, merch etc) in BANK you create buying pressure and trade volumes.

In someways returning BANK to the DAO treasury is unwanted as it reduces diversification of the treasury… (I know some people have proposed a buyback and use model [link unknown]) .

[frogmonkee]

Moving to archive. Please reply to reopen.