Draft Proposal: Tokenomics Workstream Q3/Q4

[seven7hwave]

Fund the Tokenomics Workstream Through the end of 2022 and Re-elect Kent as its Leader

SUMMARY:

The most recently-approved phase of the Tokenomics Workstream ends on June 30, 2022. This proposal outlines the scope and budget for the following six months, through the end of 2022.

PERFORMANCE REVIEW:

In this section I’ll take a look at our stated goals from the prior proposal (Q2) and evaluate our performance.

1a.) Reach our current goal of $10,000,000 worth of stablecoins in our treasury.

Our number-one-priority goal was a big one–and on this count we fell short. The logic for having $10M in stables was that it would give us roughly 18 months of runway at a monthly budgetary spend of $550,000/month. Currently we have $4.56M in stables, and roughly 10 months of runway. This is a good amount to work with, and the DAO is in a much better position than other DAO’s–but the bottom line is we didn’t reach this goal. Why is that?

For starters, I should have been more aggressive about advocating for stacking stables when the price of FOX was much higher. In late-2021 I suspected a bear market could be coming and believed that the DAO was woefully unprepared for this eventuality. (Additionally, regardless of views on market direction, basic risk management principles dictate that partial diversification out of a volatile native token is a mandatory best practice.) Hence, I made stablecoin accrual our number-one priority upon getting things rolling in December. I believe this focus helped inspire the DAO and TMDC to build a meaningful stablecoin treasury, which was funded primarily through FOX/USDC Olympus Pro bonds, along with an assist from Success Token sales to Coinbase Ventures and other strategic partners.

Ultimately I’m just one Workstream leader and community member out of many, and have no carte blanche over the proceedings. However, more could have been done. I advocated for selling FOX on the open market during Q1/Q2, but backed down when confronted with community concerns about optics. I should have been more adamant about the logic behind this; we could have parted with a relatively small amount of FOX when the price was in the $.50-$1.00 range, and would have a much higher stablecoin reserve. But I’m also consensus-seeking and generally avoid conflict. I feel like my conflict-aversion tendencies resulted in me not arguing as vociferously as I should have with respect to selling FOX for stables. I should have been more confident and adamant in making these arguments to the community and the TMDC. An interesting lesson, and one that I will carry forward in this role as I aim to be a more effective Workstream Leader.

There were additional factors that played a role in our stable shortfall. One is the growing community aversion to FOX emissions (via our bond sales)–particularly those tied to bond discounts. This resulted in us sharply reducing our bond emissions in Q2, which led to less stables flowing into our treasury. Currently we’re generating about $100,000/month via those bonds. Previously we were generating roughly $100,000 every day!

In addition to having fewer stables incoming into our treasury, we also were forced to deposit stables into Rari Fuse in order to service those debts and lower our liquidation points. These expenses added up to roughly $1.5 million in Q2. This is a good lesson for the TMDC, Tokenomics Workstream, and DAO in general: be careful with debt! It’s all too easy to take out loans in a bull market, but those chickens can come home to roost in painful ways when the price of underlying collateral suffers a steep decline.

Exiting our Ichi-related positions (OneFOX and AngelVault, which had been approved by the TMDC), resulted in a one-time expense of 90,000 USDC. The TMDC also approved 100,000 USDC for the vFOX / ElasticSwap allocation. Additionally, monthly payrolls for the quarter were almost exclusively funded by stables. This negated the need for additional loans, at the expense of having less stablecoin reserves.

1b.) Expand our diversification beyond stablecoins.

Via our liquidity mining program we gained exposure to WETH and ETH. In June we were able to leverage some of this diversification by selling our WETH, which netted our treasury a little over $300,000. Additional diversification will be important down the road, and is a natural function of our current Liquidity Provider strategy–however, accumulating stables takes priority in this bearish market environment.

2.) Complete the DAOshboard.

Done! Thanks to the tireless work of Darwin, with an early assist from Seth in getting things rolling, ShapeShift DAO has a transparent, updated window into all aspects of its financial condition and performance. Check them out here:

• Treasury Wallets
• Revenues
• Expenses
• Performance

I can’t overstate the value that Darwin provided by making this happen. Thank you, ser, for your dedication and efforts!

3.) Contribute to new value-accrual mechanisms.

In Q2, Tokenomics played a crucial role in getting FOXy up and running (specifically, deliberating alongside the TMDC on tweaking the FOXY Tokemak strategy). Additionally, the Workstream has championed the creation and funding of Yieldies–a financial primitive building on FOXy in order to generalize the yield-generation approach to ETH and ERC-20’s. Yieldies are currently undergoing the audit process, and will soon be on Snapshot for governance approval.

Q2 also saw vFOX get up and running. vFOX is technically a sub-DAO, with members of the Tokenomics Workstream on its Committee. The sub-DAO’s first strategic allocation was ElasticSwap, with many more projects vetted.

4.) Continue to increase awareness of the DAO.

I was able to contribute to DAO awareness via a variety of writing opportunities that Lindsay provided me. Having ShapeShift featured in articles is a great way to raise awareness about what we’re doing here at the DAO.

THE PRIMARY GOAL FOR THE SECOND HALF OF 2022:

Preserve and extend our runway

The paramount, number-one goal of Tokenomics in Q3/Q4 is to help ensure that the DAO remains financially solvent for as long as possible. There are a handful of core tools we have at our disposal to make this happen:

a.) An updated and accurate view of how much runway we have remaining.

This is being tracked by the DAO Runway Spreadsheet I’ve created, which factors in our current stablecoin reserves (all visible on-chain or via the DAOshboard), our monthly budgetary outlay, and debt service expenses.

b.) Our Olympus FOX/USDC bonds

c.) Selling FOX on the open market

d.) Other tools, such as Hedgey OTC or Porter bonds

e.) Budget austerity

In the wake of the violent downswing in both FOX and the broader crypto market, various Workstream Leaders have reacted by enacting or proposing budget cuts. While this is not a fun step to take, we’re in good company; many crypto projects and companies, big and small, are taking similar steps. While the Tokenomics Workstream has no ability (and no desire) to tell other Workstreams what to do with their budgets, it can still play a helpful role in modeling various scenarios, providing timely updates on the status of our finances, and offering advice on how to move forward.

Note that this section lacks a specific stablecoin goal, like the Q2 proposal. I hesitate to shoot for a specific target because: a.) the community has expressed discomfort at the idea, and b.) it’s difficult to advocate for a specific amount of stablecoin accrual in this highly depressed market, where liquidity has dried up and buyers are harder to find. Additionally, the community currently seems divided on whether we should continue to accrue stablecoins or simply make our stand with our current warchest. (I, for one, am strongly in favor of continued stablecoin accrual).

That said, 18 months of runway remains a good goal to shoot for–albeit an aggressive one in this bear market. It may be possible to get there through a combination of the tools described above–for instance, FOX bonds combined with monthly budget reductions. This would be much more feasible if FOX sees a sustained increase in price at some point.

A more conservative goal is to aim for the DAO to raise enough stablecoin income each month to pay for its monthly expenses. 10 months of runway is perfectly feasible over the long-run if we rein in our budget and increase our stablecoin income.

ADDITIONAL GOALS

Build upon the existing DAOshboard

Now that it’s created, what else can be done?

The logical next steps are to create ways to more easily visualize this data, detect trends, and suss out information and conclusions that could be beneficial from a strategic intelligence standpoint.

Contribute to new value-accrual mechanisms.

Reprising this goal from last quarter is an easy choice. In Q2 the focus was on FOXy. This time around, we have Yieldies to champion. This new financial primitive is concurrently moving though the audit and governance processes. Upon its release, the Tokenomics Workstream (along with the TMDC) will provide feedback and input on its strategies and parameters.

The next few quarters will also be a great time to assess new business strategies. Bear markets provide a few silver linings, and this is one of them: an opportunity to sit back and calmly assess what’s working, what’s not, and how to build back better for the next cyclical upswing.

Continue to increase awareness of the DAO.

I already have some potential opportunities lined up for spreading the word via articles, podcasts, and other avenues. With the assistance of our expert PR team, I look forward to continuing to help on this front.

BUDGET STUFF:

Workstream Leader Compensation

The Q2 proposal included a 14,000 USDC/month Workstream Leader salary–an amount commensurate with other Workstream Leaders.

This new proposal stipulates that the Tokenomics Workstream Leader will instead receive $14,000 worth of FOX each month. This will help to reduce our monthly stablecoin spend. Additionally, by going “Full FOX” I want to signal my own deeply-held belief that we’ll survive this bear market, find a lasting product-market fit, and wind up in a much stronger position than we currently are. It’s my sincere belief that WAGMI.

In order to allay any concerns about the FOX immediately being converted and dumped on the open market, this proposal also stipulates that these payments will be made via Boosted FOX, with a 12-month timelock. Per the Boosted FOX proposal, this option provides an extra 20% of FOX following the end of the timelock period. (In the unlikely event that there’s a technical issue preventing Boosted FOX payments from being made, payment will default to regular, non-timelocked FOX.)

Funding for Workstream projects and bounties

In Q2, the Tokenomics Workstream spent a total of 17,681 USDC. These expenses included DAO contributor compensation for their work on the DAOshboard, an analysis of our Ichi AngelVault, and the Boosted FOX proposal. The largest expense (roughly 14,000 USDC) was for an audit of the Yieldy smart contracts.

The Workstream currently has 32,000 USDC, of which 25,000 has been earmarked for the completion of the Yieldy smart contract code. That payment will leave us with 7,000 USDC for Q3/Q4. This proposal requests an additional funding of 13,000 USDC, payable up-front (concurrent with July payroll), which will provide the Workstream with 20,000 USDC to spend in Q3/Q4. These funds could be spent on all manner of projects, from code reviews to detailed financial analysis to in-depth audits of projects that are seeking to partner with the DAO.

POTENTIAL DRAWBACKS OF THIS PROPOSAL:

Imagine a ShapeShift DAO where there was only an unofficial, non-funded, Tokenomics Workstream. In this scenario, a lot of meaningful work would still get done; the TMDC would still function (its budget is not a subset of Tokenomics), and contributors could still find myriad ways to collaborate–all without needing to spend funds from the DAO treasury on Tokenomics functionality or leadership.

WHAT THIS VOTE DOES:

1.) Fund the Tokenomics Workstream with a one-time distribution of 13,000 USDC (payable in July) and a monthly Workstream Leader salary of $14,000 worth of FOX (payable in 12-month-timelock Boosted FOX).

2.) Re-elect Kent as the Tokenomics Workstream Leader.

[Marley]

In my opinion, $14,000 per month seems too high for this role. That’s $168,000 per year. In FOX terms, at current prices, this is around 250,000 FOX each month (14000/.065*1.2) or over 3 million FOX per year.

Other workstreams are cutting budgets, per tokenomics recommendations. All workstreams are cutting budget and staff. tried to ask how many hours are spent on this role a week in a recent call, and the answer was deflected that you enjoy not having to track hours. While I agree that is nice in a DAO, spends should still be justified. Is this role 40+ hours a week?

According to the revenue dashboard there was 10,182,470 USDC raided from bond sales. DAO_revenue_stream_DV_MVP_PY - Google Sheets (Cell M24)

According to the expenses sheet, there was -3,281,844 spent in USDC. DAO_gnosis_expense_DV_MVP_PY - Google Sheets (Cell M56)

10,182,470-3,281,844=6,900,000 USDC. The DAO holds about 4.6M in USDC so I would like to understand how there is a 2.3M discrepancy. Was it OneFOX or something similar? That is a pretty large discrepancy to the effect of ~5 months of runway.

[seven7hwave]

Thanks for the input and questions Marley.

The $14,000 figure was arrived at last quarter by looking at the average Workstream Leader Salary, then carried over to Q3/Q4. Looking at incoming budget proposals, it appears that this amount will be less than what many other Workstream Leaders are asking for.

Note that the important thing in this environment is to reduce our USDC spend; Incremental reductions of FOX spend make no difference with respect to our runway. With this in mind, I’ve requested my salary in 100% time-locked FOX (taking on a large risk by doing this), while also asking for only 13,000 USDC for Workstream budgets and projects. That seems highly reasonable for a six-month spend.

Regarding hours, the question was not whether I spend 40 hours a week in this role - it was how many hours I spend. The answer is that I do not track this, nor do I care. What matters is that we get shit done. However, I can safely say that typical work week goes beyond 40 hours/week, given my constant involvement and presence that extends into evenings and weekends. To put it bluntly, crypto is my life and I rarely detach from this role.

What do I do, on a more granular level? A few examples include…

Monitoring our defi positions and developing strategies to manage them where appropriate.

Applying risk management techniques constantly to ensure we don’t wind up getting our asses handed to us (for example, with respect to keeping our Rari loans above our liquidation points).

Assistance with FOXChain (there’s a high overlap with Tokenomics).

Managing daily DAO drama along with leadership and the broader community.

Providing strategic insight to the TMDC (a role for which I’m not compensated). This entails not only our twice-a-week discussions, but a good deal of deliberation in between.

Maintaining our runway projections (which in this environment with budget cuts, has been fluctuating daily).

Finding ways to extend that runway; for example by weighing options such as Hedgey and Porter.

Deliberating and brainstorming with other Workstream members on new strategies such as FOXy and Yieldies.

Researching new trends and dynamics in order to inform Product and Engineering (for instance, around L2’s and cross-chain bridges).

Promoting ShapeShift at real-world conferences such as ETHDENVER.

Drafting and managing governance proposals.

Assisting Lindsay with PR needs (typically through article submissions).

…and of course preparing and leading the weekly Tokenomics discussions.

Regarding the spread between expenses and revenue, note that the expenses sheet doesn’t include our debt service payments for our Rari loans. As I noted, this added up to roughly $1.5M in Q2 alone. We also funded the vFOX ElasticSwap allocation for $100,000, and spent at least $90,000 on exiting our Ichi positions. (This may have been even more - would need to ping Willy about this).

[Beorn]

Thank you for the leadership in this role thus far, and the new draft proposal.

Personally I am a strong supporter of this workstream, given that it is functionally ShapeShift’s entire finance department and yet costs the equivalent of 1-2 FT employees. It’s also generating substantial revenue, far in excess of its expenses. I think it’s one of our current bright spots in terms of cost/benefit.

’s suggestion that the salary is too high is a reasonable one… I have no strong opinion on this point. Could it be a couple grand less per month? Yes that’d be nice, but it wouldn’t be material. What IS material is the offer to take all of it in FOX token, and time-locked at that. That is a true vote of confidence in the shared goals of the DAO, and will make a difference in runway, since our runway is limited by stables, not FOX. The offer is much appreciated.

I’d also like to encourage us not to focus on proving how “busy” we are. The hours spent are not what creates value. Output and results are what create value. Is a workstream producing results at relatively low cost? Are contributors dependable and accountable to their teammates? If yes, then it’s healthy.

I’d vote to approve as is, and continue to support this workstream given its low cost and significant output from that cost.

[PTT]

This is why I had asked the number of hours you put in for TMDC vs vFOX vs Tokenomics workstream leader as well.

while it is great you don’t have to track your hours, if I asked many of the other workstream leaders they could give me a ballpark minimum on their responsibilities each week and how much time they put in.

There was a point that there were two weeks that you had missed the ops sprint for tokenomics that you had admitted during the tokenomics call when I brought it up that you had just forgotten to put it back on your calendar. But if you were logged into discord as you said each day, you’d see the meeting notification pop up, as all meetings have, and the pings to leadership I make each week asking to fill out the information. I feel like there are some inconsistencies with the things being said vs the actualness of it. Honesty gets you a long way, and I appreciate you admitting you forgot about it, but you have to take that a step further.

also, during your talk on stage, you said you do a lot of risk management and analysis on our positions. I am extrapolating that to meaning you do this for each of the potential partnerships as I had seen you do with a bounty that Dr McCarthy took on the risk analysis on the risk traunched stable coin opportunity that was presented 5ish months ago. If this is the case can you provide us with some of the risk analysis that was done for the fei/tribe partnership that the TMDC agreed to? also, the risk analysis that was done for the oneFOX partnership?

Also, could you provide an analysis on the loans the TMDC has taken out and where they are at in terms of the total cost to the dao to date, and how much the dao has taken out in regards to them? I am not seeing that data provided anywhere and I think it’s important to note.

Also, could you provide the latest plan for the TRIBE/FEI LP payback that they have asked for as this could have massive impacts moving forward? As the tokenomics workstream leader and one of the founding members of the TMDC, I think it’s important that you are transparent about these actions and the potential costs we could see in the immediate future.

Also being in every meeting that is public, I do not agree with your statement that workstream leaders are cutting their budget voluntarily as if something passed governance it would technically take a governance action to require them to do so. every meeting I have been in it feels like there is pressure specifically form the TMDC about cutting costs so the runway is longer. The group was the one that proposed the “bonus” fox program in order to incentivize contributors to lock their earnings into the “hedgey” nft vaults. If this isn’t leading them by the neck, I’m not sure what is. While there is no gun to head explicitly saying to do so, I have seen posts by community members asking workstreams to justify costs, the work they are providing and the value they are adding. This feels like explicit pressure being put on by heavy-handed fox holders to try to prove value or cut costs. While I am not saying asking these questions is wrong, I do think it’s wrong to call this unpressured, or not being asked to cut costs.

[seven7hwave]

Thanks for the questions and comments .

<< This is why I had asked the number of hours you put in for TMDC vs vFOX vs Tokenomics workstream leader as well. while it is great you don’t have to track your hours, if I asked many of the other workstream leaders they could give me a ballpark minimum on their responsibilities each week and how much time they put in. >>

Right - and I outlined typical functions and a weekly hourly estimate in my response to above.

Note that this Workstream Leadership role on the TMDC is part of the Tokenomics Workstream’s core functions, and has been since the original Workstream Proposal: Snapshot, laid out in more detail here Tokenomics Workstream Proposal - DRAFT. Thus I don’t view my input on the TMDC as distinct from the “Tokenomics Workstream” because there’s substantial overlap between the two.

vFOX varies significantly based on the projects we’re vetting. Lately it’s been about 4-5 hours a week between looking at projects and talking to founders.

<< There was a point that there were two weeks that you had missed the ops sprint for tokenomics that you had admitted during the tokenomics call when I brought it up that you had just forgotten to put it back on your calendar. But if you were logged into discord as you said each day, you’d see the meeting notification pop up, as all meetings have, and the pings to leadership I make each week asking to fill out the information. I feel like there are some inconsistencies with the things being said vs the actualness of it. >>

Setting aside scheduled meetings, there’s no requirement for anyone in Tokenomics to be on Discord at specific times; like many Workstream Leaders, I keep my own schedule while of course making it a point to be present for meetings and getting the meat of the collaborative work done during when most of the community is online. (I wasn’t paying attention to any weekly pings to leadership about Ops, because my calendar invite serves as an adequate reminder to complete that form each week).

That said, I feel like an error is being made here in terms of taking a very isolated oversight (I fucked up and forgot to move the Ops Sprint to a new calendar) and using that to imply these things happen more frequently. Those are the only scheduled meetings I’ve ever overlooked, and I challenge anyone to find an instance where I didn’t rapidly respond to questions or needs from anyone in the community. Ultimately, I think the measure of success is: a.) is the Workstream getting shit done?, and b.) is the Workstream leader consistent, dedicated, accountable, and reliable? On all these counts I would argue “yes.”

<< also, during your talk on stage, you said you do a lot of risk management and analysis on our positions. >>

Risk management and analysis is an important element for both our partnerships, and our overall treasury. These are discussed whenever relevant (usually most weeks) during the Tokenomics calls. One example of “non-partnership” risk management was weighing whether we should purchase protective Puts on Hedgic in late-Q2, which resulted in this risk/reward analysis: Hedgic - ETH - Google Sheets. (I’ve revisited Hedgic as the market continues to decline, but the risk/reward remains unfavorable.)

The liquidation points on Rari Fuse loans are the DAO’s biggest risk, hence our constant attention to these numbers. We’re constantly mindful of these lines of the sand, which are currently just under 2 cents on both pool 7 and pool 79. In order to be extremely proactive about keeping our liquidation points safe, we discuss this nearly every week in the TMDC calls (and at other times as well, depending on market conditions), leading us to take protective measures such as authorizing more collateral to be added if FOX fell below a certain price point, and pre-authorizing more collateral if FOX falls within a 50% decline of our liquidation points. As the market sold off sharply the weekend of the 18th, I was ensuring the Workstream/TMDC was aware of these levels and working through ways to keep those liquidation points safe (Discord). Not my idea of a fun Saturday morning, but something that’s core to the functionality of this Workstream IMO.

FEI/TRIBE LaaS partnership:

This partnership was created just prior to the creation of the Workstream, so no risk analysis was carried out in those formative stages. In the interim we’ve been mindful of smart contract risks (including considering smart contract insurance on Ondo in order to mitigate those risks), but were caught off guard by TRIBE’s request to close out these (erstwhile) perpetual vaults, which was contrary to the original agreement.

<<Also, could you provide the latest plan for the TRIBE/FEI LP payback that they have asked for as this could have massive impacts moving forward?

• >>

  This has been discussed recently on both TDMC and Tokenomics calls. To reiterate, our current proposed agreement is to do the following:

  Increase interest rate on the loan to 15%.

• ShapeShift pays Tribe a minimum of $6k per month, and any surplus beyond monthly interest payments goes toward principal.
• Vaulted FOX will be held in escrow and not sold unless ShapeShift defaults or the agreement changes.

We’re still waiting to hear back from TRIBE on this–they need to discuss it with their community–but they were generally amenable to the idea as we proposed it. This tentative $6,000/month expense is included in our runway projections: SS DAO - Runway Projections - Google Sheets

oneFOX / ICHI partnerships:

This vetting process was done in public via extensive conversations with the community–we had representatives from ICHI on multiple Tokenomics calls–and during deliberations with the TMDC. (For the record, I was highly skeptical of the notion that a buy wall could have a lasting supportive impact on an asset’s price. I was happy to support AngelVault after the proposal passed, but was pleased when the DAO decided to wind these positions down.) Prior to that, we were careful to manage our LP in the AngelVault and avoid an unsustainable situation similar to what happened with ICHI.

In early-May, growing concern about our AngelVault led to the creation of a Tokenomics bounty that was given to Professor McCarthy around the theme of “how bad do things have to get before AngelVault becomes a liability?” This risk analysis was started by The Professor, but abandoned once the decision was made to exit all ICHI-related positions.

<< Also, could you provide an analysis on the loans the TMDC has taken out and where they are at in terms of the total cost to the dao to date, and how much the dao has taken out in regards to them? I am not seeing that data provided anywhere and I think it’s important to note.>>

Agreed - this data is crucial. I’ll pin this in the public tokenomics channel for better visibility.

As of June 18th (the last time we made changes to our pools), here’s how things stood:

Pool 7:

https://global.discourse-cdn.com/standard10/uploads/foxcookieco/optimized/1X/4529ecf3871123bbbd486bbe943c7a02487ac1f4_2_690x311.jpeg

Pool 79:

https://global.discourse-cdn.com/standard10/uploads/foxcookieco/optimized/1X/56f67bcfe0ffee3203d240e28682c9216735e17f_2_690x402.jpeg

Pool 7 liquidation point: $0.01984410872

Pool 79 liquidation point: $0.01907196083

Pool 7 is costing us roughly $85,000/month in interest, while Pool 79 is costing us around $1,000/month. (This expenses are included in the Runway projections).

To date (and as viewable in the TMDC-voting channel) the TMDC has approved of a total of 1,448,000 USDC (swapped into FEI) to pay down the DAO’s pool 7 Fuse loans:

5/3: 150,000 USDC

5/5: 225,000 USDC

5/6: 250,000 USDC

6/14: 500,000 USDC

6/18 - 323,000 USDC

The main takeaway here is that moving forward, the DAO should be very cautious about taking loans; the costs may seem negligible in a bull market, but as we’ve seen in a bear market they can eat away at our runway while also requiring constant vigilance (and addition of more collateral and/or paying down the loans, when required) of our liquidation points.

<< I do not agree with your statement that workstream leaders are cutting their budget voluntarily as if something passed governance it would technically take a governance action to require them to do so.>>

In the wake of some Workstreams implementing reductions, there’s been some disagreement on whether Workstream Leaders have the authority to handle their own budgets without further governance approval. I’m of the view that the answer is “yes,” but ultimately happy to support whatever the community decides in terms of Deficafe’s recent proposal.

<<Every meeting I have been in it feels like there is pressure specifically form the TMDC about cutting costs so the runway is longer. The group was the one that proposed the “bonus” fox program in order to incentivize contributors to lock their earnings into the “hedgey” nft vaults. If this isn’t leading them by the neck, I’m not sure what is. >>

Boosted FOX was formally voted in by governance, and it’s been stressed repeatedly that this is 100% a voluntary program. It’s completely unclear to me how this is “leading contributors by the neck.” I’m proud that the DAO is using Boosted FOX; it’s a great option for reducing our USDC spend, while also reducing the need for budgetary reductions!

<<While there is no gun to head explicitly saying to do so, I have seen posts by community members asking workstreams to justify costs, the work they are providing and the value they are adding. This feels like explicit pressure being put on by heavy-handed fox holders to try to prove value or cut costs. While I am not saying asking these questions is wrong, I do think it’s wrong to call this unpressured, or not being asked to cut costs.>>

In this exact post….you, a community member, are asking a Workstream to justify the work and value it’s providing. I welcome this–and I hope other Workstream Leaders are similarly welcoming scrutiny of their own proposals. Are you “explicitly pressuring” the Workstream by doing this? I don’t think so; perhaps it depends on your definition. But overall, in this bearish environment, it’s beneficial IMO for everyone to take a skeptical, scrutinizing approach, just as you’re doing right now.

An example of more overt pressure would be telling a Workstream Leader they need to cut their budget. I can’t speak for anyone else in the community, but I’ve never approached anyone and said “hey, you better reduce your budget.” In Tokenomics Calls and discussions with other Workstream Leaders, I’ve presented the runway projections and outlined budget cuts as a potential way to expand the runway. Nor do I have any authority to tell other Workstreams what to do. I only have purview over my own budget, and as outlined above am doing my part by proposing to reduce the Workstream Leader salary’s USDC spend to zero.

To further clarify, I’ll restate the following from a prior discussion on Discord:

1.) I’ve been presenting our runway figures to the broader community in every single recent Tokenomics call. The status of our treasury is open for all to see as well, in our DAOshboard.

2.) I also made it a point to bring this up to Workstream Leaders in our weekly discussions, in order to draw attention to our limited runway.

3.) In response to that, most WS leaders have independently made the decision to reduce their spend. This is an important point of distinction; there was no collective decision to reduce spend, and no coordination among Workstream Leaders to do that. It was instead a direct response by individual Leaders to the market tanking.

[Neverwas]

Gm all, I do see some very good and in my eyes important conversation pieces raised in the last few posts. As a broader concept I do see the ideal of accountability playing an important role for community/workstream contributors. I can see this taking a few different pathways when it accounts for contributors.

If the DAO is taking the stance that it is behaving as traditional salaried roles we have to understand the structure/process that was established and the intended purpose. Part of the bureaucracy I believed was intended to be removed from establishing a DAO in the first place. Every DAO is implemented slightly different but if you do tweak this model you have to look at the whole to better understand causation.

Traditional orgs are expansive for numerous reasons, but as to management and accountability certain process has been established for purpose. Salaried roles have needs, on the workers side established accommodations i.e. compensation packages and on the business side a need to show/prove direct accountability or that the value is continuously received primarily within oversight.

This goes to the point I keep bringing up about the title and the position verse the role and task. As independent “owners” we are accountable to show and prove our value as needed. This could be to a workstream leader as to why you are a continuing contributor or to the DAO community. It is the Contributor’s responsibility to show/prove value.

In the post by it was broken down why he felt the spend wasn’t alining with ask, I saw that the response was sharing task which makes sense, but then the puzzling piece leading off with arrived with looking at the average workstream leader’s salaries. Every workstream leader should have distinct and very different roles/tasks how does the average pay or in this case “salary” play into account? Unless the number is just that an associated figure that represents a title verse the tasks.

Side note, not a personal attack but this concept that we are better for taking the locked fox or deferments. These are like stock options, receiving pay in this is like the very powerful and well to do CEO’s taking all pay in stock and a $1 salary, this is done for a number of reasons and laws. But for this point I will say because they can afford it and then choose to sell when they feel the need. This is very dangerous when you conflate this ability with governance power as well, the double edged of providing to those who have the means to better ensure that it is harder to remove them from that going forward. This is one of the larger in my eyes failing points in current DAO’s with governance tokens.

Lastly the point expressed from about not having a strong opinion about compensation, when I have seen a few posts directly questioning this for a number of different topics. I am not sure why this is the case in this situation but I will voice concern for a larger issue and I can be wrong so please do not take this as a personal jab.

The comment of, because compensation is being taken in “stock options” it is more palatable as I have heard from many larger FOX holders is troubling. Because of this power structure of protection and insolation of large Holders(voters) we are further accelerating the power vacuum of FOX whales cementing control of the DAO. I get the comments of well take all your compensation in FOX and you can become one too, but this is a very limited use case, you need to have excess to gain even more. Sound familiar the have’s continue prospering while the have not’s are sold the dream of possibility. So the DAO removes the “Top Down” structure to replace it with top down from surprise a different source, but with the caveat of no regulation and less overhead, sounds like any rich persons wet dream.

Beorn:

I’d also like to encourage us not to focus on proving how “busy” we are. The hours spent are not what creates value. Output and results are what create value.

Agreed I don’t think that anyone is asking for busy work, but how do you judge results for a workstream thats goal is increasing the value/utility of the FOX token and Treasury? I believe that this data was asked for as well, and was given to a degree by in his reply. Value is a personal proposition tailoring that in a digestible manor is the goal, now if that is just tailored for large FOX token holders is that gaming the system?

[seven7hwave]

<< Every workstream leader should have distinct and very different roles/tasks how does the average pay or in this case “salary” play into account? Unless the number is just that an associated figure that represents a title verse the tasks.>>

Considering Tokenomics adds crucial value to the DAO, and also entails a good deal of time commitment (as outlined extensively above), I feel like it’s reasonable to take other Workstream Leaders’ salaries into account. This is how I initially arrived at the initial figure of 14,000 USDC/month from the prior proposal. Given that logic (and if anything, the demands of this position have only intensified during this bear market,) I figured it made sense to carry that figure over from the prior approved proposal (while eliminating runway impact by taking it all in FOX). Lastly, there is one thing we can say with certainty: if the DAO runs out of stables, the DAO will likely have to shut down. Boosted FOX provides a great way to incentivize continued contributions without impacting that runway.

<<But for this point I will say because they can afford it and then choose to sell when they feel the need. This is very dangerous when you conflate this ability with governance power as well, the double edged of providing to those who have the means to better ensure that it is harder to remove them from that going forward. This is one of the larger in my eyes failing points in current DAO’s with governance tokens.>>

To clarify, under this proposal there would be no option to arbitrarily sell the Boosted FOX until at least a year has passed. I designed this specifically to allay concerns that the FOX would simply be immediately converted to USDC, adversely impacting the price of FOX.

Regarding governance, it sounds like you’re concerned that Boosted FOX could hamper governance by creating larger concentrations of tokens in some cases. Nothing about this particular proposal would create a situation where one token holder is able to dictate what happens with governance. Additionally, Boosted FOX allows contributors to leave themselves better-positioned to benefit from an eventual recovery in FOX (i.e. they’re getting more FOX than they would otherwise receive). Regarding broader governance questions, there may be room for improvement beyond the current one-token-one-vote approach; I’d welcome explorations along these lines in Tokenomics!

It’s unclear to me how any of this proposal is “gaming the system.” Choosing to receive a highly volatile token in a project without a (current) product/market fit in the midst of a bear market does not strike me as gaming the system. Yet I’m advocating for this option because it a.) helps the long-term finances of the DAO, and b.) I truly believe that we will find that lasting product/market fit.

Additionally, considering that the Boosted FOX proposal has already been approved by the community, I already have the ability (as does any contributor) to choose to take all my salary in timelocked FOX. This proposal simply makes that choice codified and locked in.

[Neverwas]

GM I hope that because this is linked to a post originating from a personal matter, it isn’t taken as such from the context of my reply beyond the explicitly stated and broader discussed topics. That said I will respond to some callouts.

seven7hwave:

Lastly, there is one thing we can say with certainty: if the DAO runs out of stables, the DAO will likely have to shut down.

Why with certainty? A DAO without stables is doomed?, the treasury has lots of FOX right, what is the point of having it if it means nothing or has very limited use case. I understand that this statement is very broad and intentionally so, of coarse there are other intended purposes. As a value store, a hedge against deflation being top of mind in relation to this conversation. But I also see the quoted statement as very broad, even “scary” and added pressure for most readers.

seven7hwave:

To clarify, under this proposal there would be no option to arbitrarily sell the Boosted FOX until at least a year has passed. I designed this specifically to allay concerns that the FOX would simply be immediately converted to USDC, adversely impacting the price of FOX.

Understood I don’t see a statement about you selling in the referenced quote, I made a comparison to stock options and compensation packages, but nothing about your desire to sell, in fact this statement is directly related to the voting power that is accumulated in this fashion, did some calculations of over 3 million FOX in a year, that is considerable voting power and available while locked.

seven7hwave:

Nothing about this particular proposal would create a situation where one token holder is able to dictate what happens with governance.

You are accumulating large monthly acquisitions of FOX I fail to see how this doesn’t effect governance, of coarse it does. Even more than you would be if you just took compensation in normal FOX now that it is “boosted”. Of coarse it is a risk crypto in its current stage is very volatile, but also provides potential for high reward.

seven7hwave:

Regarding broader governance questions, there may be room for improvement beyond the current one-token-one-vote approach; I’d welcome explorations along these lines in Tokenomics!

Thank you for this I know that you have stated this before as well. I was referring to this in the original post that you quoted not your personal situation and ultimate ability.

seven7hwave:

It’s unclear to me how any of this proposal is “gaming the system.” Choosing to receive a highly volatile token in a project without a (current) product/market fit in the midst of a bear market does not strike me as gaming the system.

I wasn’t saying that this proposal or you are gaming the system

Neverwas:

Value is a personal proposition tailoring that in a digestible manor is the goal, now if that is just tailored for large FOX token holders is that gaming the system?

This is a statement of our current governance token system and how getting proposals passed is a very personable proposition, dictating value and what it means to voting individuals. Questioning if just tailoring this to a few large FOX holders is gaming the system verse creating a real majority desire of getting it done.

seven7hwave:

Additionally, considering that the Boosted FOX proposal has already been approved by the community, I already have the ability (as does any contributor) to choose to take all my salary in timelocked FOX. This proposal simply makes that choice codified and locked in.

I understand, and don’t have to agree with it, when you have the large and influential token holders lobbying for this at every turn doesn’t make it right it just makes it so. This is to my larger expressed point, three voting addresses all but assured this. 2.3M, 900K, and 700K so we go on, do we choose to work on this or do we double down and create a larger divide?

Thank you for taking the time and effort to reply and engage in conversation for the community to follow along if they choose to do so.

[seven7hwave]

<<Why with certainty? A DAO without stables is doomed?, the treasury has lots of FOX right, what is the point of having it if it means nothing or has very limited use case. I understand that this statement is very broad and intentionally so, of coarse there are other intended purposes. As a value store, a hedge against deflation being top of mind in relation to this conversation. But I also see the quoted statement as very broad and even “scary” and pressure for most readers.>>

Thanks for pointing out my over-generalization here, neverwas. I should have qualified that statement: if the DAO runs out of stables, it will be in dire straits. In addition to being forced to sell FOX at what would probably be a very low price in a protracted bear market (thus pushing the price of FOX even lower), there would probably be a crisis in confidence as the community reacts to the state of the treasury. This could result in contributors leaving the DAO, as well as FOX holders dumping their tokens. These trends can reinforce one another, leading to a downward spiral in the asset’s price.

I base this outlook on the history of the last cycle; dozens of ICO’s held value in native tokens, which then declined 99%+ from their highs and subsequently shut down. This scenario is much more likely if we run out of stables.

I’m not trying to scare anyone or apply pressure; my apologies if I came across that way. My goal is to present, in a transparent fashion, where we’re at, and ways to extend our stablecoin runway.

<<You are accumulating large monthly acquisitions of FOX I fail to see how doesn’t this effect governance, of coarse it does. Even more than you would be if you just took compensation in normal FOX now that it is “boosted”. Of coarse it is a risk crypto in its current stage is very volatile, but also provides potential for high reward.>>

Let’s be specific about what the proposal entails: it’s only for Q3 and Q4, not the entire next year. At current prices that’s 1,482,000 FOX following the completion of the term in December. (It would only be 3 million if this were extended another half year). Granted that is a relatively large amount of tokens–but we already have holders with similar amounts and our governance functions well in terms of gauging and requiring support. Is there room for improvement? Could we find ways, as you insinuate, to encourage more holders to vote and not have situations like the Boosted FOX proposal where the top three addresses are the lion’s share of the vote? Quite possibly! Again if the community thinks there’s a need for governance changes I would welcome that debate and discussion, with Tokenomics pushing that along.

[seven7hwave]

Another point to consider: the total amount of FOX held at the end of this period would represent 0.392% of the current circulating supply (looking at coinmarketcap’s circulating supply), or 0.356% of the circulating supply (using coingecko’s figures). That number will decline as the DAO has more FOX vested to it. IMO our governance system is robust enough to handle individual token holders with less than half a percent, or even a full percent, of the circulating supply.

There are currently 27 addresses with more than 1.4M FOX (granted, some of these are Sablier streams and bridges); the eventual addition of another address with that amount would not, in my view, have an adverse impact on our governance process. $0.07 | FOX (FOX) Token Tracker | Etherscan