[SCP - 63] Operate an Umee Validator on behalf of the ShapeShift DAO

Proposal Discussion
1

Summary - This proposal would accomplish the following: A validator will be run on the new Umee blockchain with the intention of providing a revenue stream for the DAO. This is the third validator proposal from TaxiStake.

Abstract - Umee is decentralized infrastructure for cross chain interactions between networks. Umee connects users to create lending and borrowing positions, move capital across chains, discover new yield opportunities and explore DeFi applications intersecting networks in a seamless and trustless manner. Umee’s mainnet launch is imminent. TaxiStake was involved in two incentivized testnets for the Umee network and has been selected as a genesis validator for the Umee mainent. Here is a link to our Umee genesis transaction pull request: https://github.com/umee-network/mainnet-gentx/pull/95/files

The validator will be run under the TaxiStake name until we pass the ShapeShift governance process, then it will be renamed to ShapeShift DAO.

You can find more about Umee on their website: https://umee.cc/

Specification - We are proposing that the ShapeShift DAO expands it’s validating footprint with a mainnet validator on the Umee network. Umee has a working Tendermint to Ethereum bridge that will allow the ShapeShift DAO to potentially hold or interact with wrapped ATOM in the Gnosis safe. The Umee platform also will allow users to take loans against these ATOM in the form of stablecoins. The web-app is available to test here: Umee — the Cross Chain DeFi Hub

TaxiStake is working to schedule an AMA with the Umee team for the ShapeShift community.

Setup and maintenance of the validator will be done by TaxiStake under the ShapeShift brand name. Rewards, in the form of UST, will be distributed to the DAO’s Gnosis Safe to diversify the income streams of the DAO. Once the Umee mainnet is launched, it will be assessed if the DAO would prefer to receive wrapped ATOM instead of UST.

Since November 2021, the ShapeShift DAO has received approximately 102,556 UST from validating operations partnering with TaxiStake.

We are proposing that the Umee validator commission be set at 5% and the commission from the ShapeShift validator will be distributed to the DAO treasury and TaxiStake in a 70%(DAO)/30%(TaxiStake) split of minus $2600/month for operating and maintenance expenses. The term is set for a 12 month period starting March 1st, 2022 through February 28th, 2023. TaxiStake is requesting 10,000 FOX for the initial setup and creation of an Umee validator. Umee users who delegate to the ShapeShift Umee validator will be supporting the ShapeShift DAO as well as securing the Umee network. TaxiStake will convert the Umee into UST until Gnosis Safe adds ATOM support or synthetic ATOM on ETH is possible.

Benefits - By creating a third validator for the ShapeShift DAO, it will continue to expand revenue generating activities from staking.

Drawbacks - There is a request for 10,000 FOX ($3,600 @ $0.36 FOX).

Vote - If you vote “ for ” this proposal you are voting to create a ShapeShift DAO Umee validator with the specific details laid out in this proposal. 10,000 FOX will be sent to TaxiStake. TaxiStake will provide regular payments of stablecoins in return for the use of the ShapeShift name on an Umee Validator.

If you vote “ against ” you are saying you do not believe this Umee validator should move forward per the details presented in this proposal.

2

The original draft of this proposal included pre-approving a LUNA and Gnosis Chain validator with the same terms. I decided to pull it into the discussion section. Is there appetite for approving several more at this time? This form is a good place to discuss this. I can add it to the Ideation post if sentiment to this proposal is strong.

3

This is awesome - very glad to see the DAO’s potential staking activities rapidly expanding. I am definitely in support of the UMEE validator as proposed with the current terms and I would also be a strong supporter of going ahead and pre-approving both a gnosis and Luna validator right now as well under the same terms. I think it is best for the DAO to expand its staking activities as fast as possible, so let’s make that happen if we can 1f642

The way to think about it is there is compounding rewards for the DAO establishing a wider presence staking across more chains that will naturally attract more stake to all of its staking activities (leading to more revenue for both the DAO and TaxiStake).

4

I love the ShapeShift DAO <> TaxiStake partnership and would support many new validators being added.

ShapeShift historically placed itself in advantageous positions by supporting early networks and assets with promise. Being a genesis validator for Umee and potentially other networks in the future I feel continues that tradition and would be a great ecosystem strengthener.

Thank you TaxiStake for doing the exploratory work to discover these opportunities, and putting the DAO in a great position to continue its relationships with up and coming new blockchain innovations and services.

5

Thanks and for your support. I’ve edited that post to add a poll. Hopefully we can just include them in one proposal 1f603 :fox_face:

6

Support from me for GNO/LUNA/UMEE validators.

7

Would also love to see a Secret (SCRT) validator at some point as well!

8

Wooot, generally in favor of the DAO partnering with Taxi Stake to stand up as many ShapeShift DAO validators as we can as soon after genesis as possible. Excited to see UMEE, LUNA, and Gnosis on the list of upcoming validators, and hope to see even more follow 1f680

10

could JUNO possibly be added as one of the next ShapeShift DAO validators taxi stake spins up as well before this goes to snapshot?

11

Yes, I think that JUNO is reasonable. Doing research on GNO, it doesn’t allow delegation the same way that xDAI STAKE did. It might not be a good fit for the DAO. I’m still researching. (So we might swap GNO for JUNO).

12

Just a couple quick clarification questions.

Is the $2,600/month in operating and maintenance expense paid by TaxiStake?

How was the 70/30 split determined?

Any estimate on how much in commissions are expected to be received per month?

13

The $2600/month is paid to TaxiStake for running the validator on behalf of the ShapeShift DAO. Instead of asking for that to be paid monthly, in FOX or some other stablecoin, we take that out of commission earned by the validator. On Osmosis, TaxiStake has been claiming the rewards weekly. Once the Osmosis is claimed, it is swapped on the Osmosis DEX for UST. The liquidity is deep enough that this can be done in one swap. Then, 650 UST (1/4 of $2600) is sent to TaxiStake. The remaining UST is then split 70/30. 70% is sent over the bridge to the DAO Gnosis safe and 30% sent to TaxiStake. What’s super cool is this is onchain so we have to be honest about it. TaxiStake rounds up in favor of the DAO.

It is really hard for me to estimate commission, so I am hesitant to do that. The commission, in UST, is determined by the commission rate of the validator, amount of tokens staked, inflation rate, block chain fees, and the price of the token when claimed. The commission rate will be set at 5% so the other 95% will still be earned by delegators like normal. I CAN say what we HAVE been earning. Umee mainnet has launched since this proposal was posted and we received a delegation grant from the strategic fund through March. The Validator is live and has 10,000,000 UMEE delegated to it. It is earning about 2,000 UMEE a day, at current inflation and delegation. So that is a pretty rough estimate of what the commission will look like if as a DAO we can maintain our current position with about 10,000,000 UMEE delegates. This number should increase the more that gets delegated and UMEE validators eventually start charging a block chain fee which is currently set at 0. TaxiStake has already delegated 47,945 UMEE to the validator.

14

Thanks for the details . I’m by no means knowledgeable on validators, so this was helpful. The thing that stands out is that the DAO is incurring 100% of the cost but only reaping 70% of the reward. I know this isn’t your first go around with this, so I assume the DAO doesn’t have an issue with that.

15

discourse-post-upload20231125-65354-orpb97.png GunnarBuddy:

DAO is incurring 100% of the cost

I’m not sure what cost the DAO is incurring? Maintenance and hosting are paid by TaxiStake. We are asking for some FOX upon passing but that is one time, 10,000 FOX (~$3300). Our AWS bill is larger than this most months 1f605

So far we have sent over 110,000 UST back to the DAO from the other Validators

16

discourse-post-upload20231125-65354-zsozg2.png Marley:

The $2600/month is paid to TaxiStake

Okay got it. I think I misinterpreted this quote to mean the DAO paid this to TaxiStake. Instead, you are saying this is collected through the 650 UST and the 30% commission. Is that correct?

17

discourse-post-upload20231125-65354-orpb97.png GunnarBuddy:

650 UST and the 30% commission

Correct. The 650 is withheld from the rewards earned by the validator

18

support this 100% - wen Juno?

19

100% agree on a Juno Validator. Huge things happening there IMO.

20

Can we add an addendum to this proposal to include EVMOS for when the chain is re-launched?