SCP-184 Tokenomics Workstream Renewal Proposal (08.01.24 - 02.28.25)

Proposal Discussion
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Summary
ProfMcCarthy is seeking the ShapeShift community’s approval for the continuation of his leadership in the Tokenomics Workstream from August 1, 2024, to February 28, 2025. This proposal includes a request for compensation of $14,000 per month in FOX tokens and outlines strategic focuses on analytics, fee optimization, operational coordination, and enhanced dashboard development. The proposal also includes a $8,000 discretionary budget for dashboard and other data analysis work, along with a one-time bonus of $10,000 in FOX tokens if the DAO stablecoin holdings / runway is greater than 9 months on the date of February 28, 2024.

Abstract
Under his stewardship, the Tokenomics Workstream has improved operational efficiency, financial transparency, and progress in dashboard development over the past six months. Despite challenges posed by volatile markets, operational bottlenecks, and in optimizing fee structures, ProfMcCarthy has adapted strategies and improved DAO operations, setting a robust foundation for future success.

Motivation
This proposal aims to continue ProfMcCarthy’s role as Tokenomics workstream lead, leveraging his experience here at Shapeshift, in finance, economic development, and DAO treasury management analysis. ProfMcCarthy hopes to continue to improve and hone his understanding of the intricacies of DAO operations, multisig coordination, and the challenges of decentralized governance to help create and steer tokenomic strategies moving forward for the greater success of the DAO and the Shapeshift platform.

While recognizing various successes, ProfMcCarthy also acknowledges some oversights encountered during the past term. He sees these as learning opportunities, implementing new controls, policies, and procedures to prevent the recurrence of past challenges:

  1. Dynamic Fee Adjustment Mechanism Analysis: Ongoing refinement of fee models to align better with market fluctuations, allowing for greater fee generation to the DAO and improvements to stablecoin runway.
  2. Increased Focus on Stablecoin Runway: implement a twelve week plan to improve stablecoin holdings, with increased FOX and other asset TWAP/Swaps to stablecoins.
  3. Enhanced Financial Dashboards: Further development and refinement of dashboards for revenue, liquidity, treasury, and rFOX activity to bolster decision-making.
  4. Robust Contingency Plans: New processes for managing unexpected financial scenarios, enhancing DAO resilience.
  5. Greater Transparency for DFC Decision Making: Continuing to iterate on the DFC Memo (& other sheets), while going back to simpler notion agendas. Improve the simplicity and ease with which it takes to access information discussed during DFC meetings.

Specification
In his continued role, ProfMcCarthy will focus on the following areas:

  • Analytics and Fee Optimization: Collaborating with the product team to refine fee models based on detailed analytics of user behavior and market conditions.
  • Operational Coordination: Acting as a liaison between the DFC & the multisig signers, creating weekly asks and a regular cadence, to create smoother and efficient transaction signing and governance action item fruition.
  • Strategic Financial Management: Overseeing the creation and refinement of financial dashboards, managing asset diversification analysis for the DFC, and implementing stablecoin strategies chosen by the DFC to enhance the DAO’s financial health.

In addition to the above, ProfMcCarthy will:

  • Conduct and document 2 DFC meetings per week, ensuring operational transparency.
  • Publish detailed meeting agendas and minutes for all scheduled meetings.
  • Hold bi-monthly office hours to engage with the community and respond to inquiries within a timely manner.

KPI
ProfMcCarthy has set a specific KPI:

  • Achieve 9 months of stablecoin reserves by February 28th, 2025 ($160k*9=$1.44M), with a FOX bonus of $10,000 USD worth of fox tokens when this goal is achieved.

Benefits
Continuing ProfMcCarthy’s leadership will ensure stability and innovative progression in the Tokenomics Workstream. His extensive expertise in economics and proven track record in strategic decision-making provide a strong foundation for the ongoing revitalization of the DAO’s tokenomics.

Drawbacks
Allocating resources for his compensation and the pursuit of dynamic tokenomic strategies carries inherent risks, especially in volatile markets. Ultimately, the largest drawback is the monetary cost, though this is mitigated by being (almost) completely denominated in FOX Tokens. The other drawback is the USDC from the treasury used for payment for dashboard and other data analysis work, though this is a small amount ($8,000 over 6 months).

Vote
For: Endorse ProfMcCarthy’s continued leadership for the next term
Against: Oppose the renewal
For with changes: Endorse ProfMcCarthy’s continued leadership, but with changes (detailed below)

2 Likes
2

Thanks for this renewal proposal!

I’m in agreement with most of it, I was just surprised by the bonus/KPI part. I have two concerns about it. While your role as a WS Leader and your impact on the handling of the DAO’s Treasury have clearly been positive (and I thank you for this work):

  1. This KPI might lead to misaligned incentives. Achieving it largely depends on DFC decisions to sell assets (as long as the DAO is not profitable). While it can indicate the DAO’s treasury good health, it could also reflect suboptimal management decisions for the DAO, even if unintentional.

  2. The bonus is distributed only to the WS Leader, despite being the result of collective efforts/decisions taken by the WS Leader and DFC members. If a bonus should exist I’d suggest a shared reward system that acknowledges this, with perhaps a larger portion for the WS Leader to reflect their coordinating role.

I think better metrics, without getting into the threshold for each one, should be related to FOX Tokenomics and not directly to the Treasury’s health, for example:

  • Fee optimization results: if we manage to measure this properly (which, I know, isn’t easy)

  • Active Token Holders: for example keeping track of the number of unique addresses actively using the token as planned by the tokenomics: for fee discounts (important as it ties it to revenues), rFOX, LP’ing… not just holding it.

  • Token utility, could be measure based on: token velocity (how often FOX changes hand), distribution across the use cases above, holder retention. And maybe other factors to build a “score” we hope to reach with our tokenomics.

  • Percentage of Tokenomics-sponsored proposals passed: somehow it has been a pretty active WS for good quality proposals (serving the DAO and FOX as a token). Showing these proposals are in sync with the desires of the community makes me think the WS is achieving its purpose. This one obviously presumes the proposal quality would continue, and with you as WS Leader I know it would.

1 Like
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@Fireb0mb1 , as always, thank you for your thoughtful comments! I have integrated them into the final Vote that I want to put up. Please take a look and let me know

Tokenomics Workstream Renewal Proposal (08.01.24 - 02.28.25)

Summary

ProfMcCarthy is seeking the ShapeShift community’s approval for the continuation of his leadership in the Tokenomics Workstream from August 1, 2024, to February 28, 2025. This proposal includes a request for compensation of $14,000 per month in FOX tokens and outlines strategic focuses on analytics, fee optimization, operational coordination, and enhanced dashboard development. It also introduces a shared bonus structure ($10k total of fox tokens) to recognize the contributions of all key team members involved in achieving the defined KPIs. Additionally, this proposal introduces a $8,000 per term USDC allocation for dashboard work and other contracting needs for the tokenomics workstream.

Abstract

Under ProfMcCarthy’s leadership, the Tokenomics Workstream has made significant progress in enhancing operational efficiency, financial transparency, and dashboard development over the past six months. Despite challenges posed by volatile markets, the Workstream has adapted its strategies to improve DAO operations and lay a solid foundation for future growth. Moving forward, the focus will be on refining financial management strategies and further aligning with the DAO’s long-term goals.

Reflection and Strategy Adjustment

Acknowledging the successes and the areas for improvement over the past term, ProfMcCarthy has taken the opportunity to refine the Workstream’s approach by implementing new controls, policies, and procedures. Key adjustments include:

  1. Refined Fee Models: Continuous adjustment of fee mechanisms to better align with market fluctuations, aiming to optimize revenue generation for the DAO.

  2. Expanded Financial Dashboards: Further development of comprehensive dashboards for tracking revenue, liquidity, treasury, and rFOX activities, enhancing data-driven decision-making.

  3. Improved Resilience Plans: Strengthening contingency strategies to manage unexpected financial scenarios and maintain DAO stability.

  4. Enhanced Transparency: Ongoing efforts to simplify and improve documentation and communication around DFC meetings and decisions.

Motivation

This proposal leverages ProfMcCarthy’s expertise in decentralized finance, economic analysis, and DAO treasury management to continue guiding the Tokenomics Workstream. His deep understanding of DAO operations, multisig coordination, and decentralized governance challenges positions him well to navigate the evolving market landscape and implement effective tokenomic strategies.

Specification and Future Focus

In his continued role, ProfMcCarthy will concentrate on the following areas:

• Analytics and Fee Optimization: Working closely with the product team to refine fee models using detailed analytics of user behavior and market conditions.

• Operational Coordination: Facilitating smooth communication and coordination between the DFC, multisig signers, and broader DAO operations, ensuring efficient transaction processing and governance actions.

• Strategic Financial Management: Leading the development of advanced financial dashboards, overseeing asset diversification, and executing stablecoin strategies to strengthen the DAO’s financial health.

Revised Goals and KPIs

To align with the updated goals, the following KPIs will be tracked and reported regularly to the community:

  1. Fee Optimization Effectiveness:

• Measure the percentage increase in total fees generated over the past quarter by refining fee models.

• Target: Achieve a 10% increase in fees generated by the end of the term.

• Report quarterly on changes made to fee models and their impact on revenue.

  1. Dashboard Development and Utilization:

• Track the number of completed dashboard enhancements (e.g., new metrics, visualizations) and their adoption rate by the DFC and community.

• Target: Develop and implement at least three major dashboard updates by the end of the term, with a 75% utilization rate by stakeholders as measured by a survey of some kind.

• Report monthly on the progress of dashboard updates and utilization metrics.

  1. Contingency Strategy Implementation:

• Track the number of contingency strategies developed and tested for unexpected financial scenarios.

• Target: Develop and implement at least two new contingency plans and test them through simulations or real-world applications.

• Report every two months on new strategies, testing results, and any adjustments made.

  1. Transparency in Decision-Making:

• Monitor the frequency and clarity of communication around DFC meetings, decisions, and documentation. Also assess clarity of communication with survey?

• Target: Publish agendas, minutes, and summaries for 100% of DFC meetings, with a simplified format accessible to the community.

• Report after each DFC meeting with a summary document available on the community forum.

  1. Community Reporting Frequency:

• Track the frequency and consistency of reporting KPI progress to the community.

• Target: Provide a comprehensive KPI report every month to the community, detailing progress on each of the above goals.

• Report monthly via the ShapeShift community forum, including any challenges, adjustments, or notable achievements.

Other Components to Track:

• Engaged rFOX Holders:

Measure the number of rFOX holders participating in trading activities on the platform.

• Cross-Utility Traders:

Track the number of traders who are also rFOX holders and the volume of their trades.

• Conversion to rFOX:

Assess the number of traders who purchase FOX and subsequently become rFOX holders.

• Active Usage for Fee Discounts:

Monitor the number of unique addresses using FOX for fee discounts, and measure the frequency and volume of their transactions.

• LP Engagement:

Track the number of token holders participating in liquidity provisioning (LPing) activities, and evaluate changes over time in the volume and diversity of LP positions held.

• Utility Diversification Score:

Develop a composite score that reflects the distribution of FOX usage across various planned tokenomics use cases (fee discounts, rFOX, LPing, etc.).

Shared $10k Total Bonus Structure to the DFC

The $10k bonus will be a shared reward system (split evenly among DFC members) recognizing the collective efforts of the Workstream Leader and key contributors, including DFC members. The $10k of FOX tokens would be distributed if and only if the DAO increases its stablecoin holdings to >$1MM by the end of this term.

Benefits

Continuing ProfMcCarthy’s leadership will ensure stability and continued innovation within the Tokenomics Workstream. His expertise in economic strategy and proven track record in decision-making provide a robust foundation for advancing the DAO’s tokenomics.

Drawbacks

There are inherent risks in allocating resources for compensation and pursuing dynamic tokenomic strategies, particularly in a volatile market environment. However, these risks are mitigated by the proposed shared bonus structure and a focus on diversified metrics that align with the DAO’s long-term goals.

Vote

• For: Endorse ProfMcCarthy’s continued leadership, supporting the strategic advancements and refined goals proposed for the next term, alongside the $10k of fox distributed reward system to the DFC and $8k of USDC for dashboard work.

• Against: Oppose the renewal, eliminating the Tokenomics workstream and ceasing progress on the above efforts for the DAO.

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@Fireb0mb1 , I forgot about the metric for governance proposals put forth and passed. I will add that as ones to report on. Good thinking!

1 Like
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Thanks for taking my input into account, the new KPIs are great and better aligned with the Workstream goals in my opinion!

One thing that hasn’t changed though is that the bonus is solely decided by one KPI goal that the DFC could fulfill with decisions that could advantage its members (bonus) but might not advantage the DAO (e.g. selling a lot of FOX to reach the goal without care for the impact on FOX). That’s why I’ve suggested more KPIs relative to FOX’s tokenomics and hoped one or more would be decisive in allocating the bonus.

Again I want to stress that with you and the current committee members I don’t think this would happen, it’s just an important thing to consider when setting up any kind of incentive in my opinion. That being said, considering the current people involved I still support this proposal.

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Gm, gm! :sparkles:

The results are in for the [SCP-184] Tokenomics Workstream Renewal Proposal (08.01.24 - 02.28.25) off-chain proposal.

See how the community voted and more ShapeShift stats: