[SCP-72] Funding & Leadership of Tokenomics Through June 2022

Fund the Tokenomics Workstream Through June and Re-elect Kent as its Leader

SUMMARY:

The ShapeShift community approved the creation and funding of the Tokenomics Workstream in November 2021 (SCP-40). This measure elected Kent as the Workstream’s leader, and provided a budget for the Workstream through March 31, 2022.

With that date quickly approaching, it’s time to outline the next phase. If passed, this proposal will fund the Tokenomics Workstream through June 30th, 2022, and re-elect Kent as its leader.

PERFORMANCE REVIEW:

So…how’d we do in our first four months?

Broadly speaking, I’m feeling pretty good about things. We have a functioning, vibrant Workstream with many regular contributors. Our weekly Tokenomics calls are amongst the most heavily-attended of the DAO’s events–a good indication of robust participation and engagement. Meanwhile, we’ve made steady progress on both diversifying our treasury and tapping into new revenue streams.

But of course I’m biased; your vote is what really matters! For a more objective analysis, let’s take a look at the initial goals I outlined in the original proposal back in November (Snapshot)

1.) Creating a “State of the FOX” snapshot that provides an updated view of our treasury, current partnerships, and value-accrual strategies. With a clear picture of where we are now, we’ll be better-positioned to execute on our strategic objectives.

This “DAOshboard” is still a work in progress. However, via Zapper we now have a good (but not completely comprehensive) view of both our treasury and our various DeFi positions. Tentative work has started on revenue-tracking. Thanks to the work of the TMDC, we also have a clear view of what positions the Committee has entered thus far–and soon we’ll also be able to track how those positions have performed.

The DAOshboard still needs more integration of everything in one place, plus nice visuals to make it easy to understand. So I’d label this one a work in progress.

2.) Creating strategic treasury management diversification goals, for consideration by the Treasury Management Committee.

These goals were laid out at the onset of the Workstream and TMDC (which came into existence at about the same time), and centered primarily on hedging our treasury against a bear market in FOX.

3.) Diversification of the treasury (pending Committee approval).

And how’d we do in terms of building that stack of stables? Well, I wish I would have been more aggressive about finding ways to sell FOX over-the-counter (OTC) when the price was near $1.00. Because sure enough, we hit a bearish crypto market and FOX now trades far below that level.

Fortunately, along the way we developed a highly-effective way to turn our FOX into stables without hurting its price: FOX/USDC Olympus Pro bonds. Through these transactions–spearheaded by the Tokenomics Workstream and TDMC–we accumulated well over $3M in USDC. A portion of this was used for payroll, which meant that contributors FOX didn’t have to be sold on the broader market. More importantly, the treasury now has more than $3.5M worth of stablecoins. This is only 35% of the way toward our $10 million bear market goal. However, it represents significant progress from where we were in early-December (effectively zero stablecoin exposure).

It bears mentioning that the Olympus bonds were not the only source of stablecoin revenue; both the sale of the FOX Success Token and our Cosmos Validator also contributed to our stable stack. Thanks to everyone who contributed to those efforts!

Meanwhile, the treasury also added non-stablecoin diversity via TOKE rewards and TRIBE LaaS rewards. The DAO also has gained increased exposure to ETH via its FOX/ETH LP Tokens.

4.) Building a team of tokenomics contributors.

In Q1, the Tokenomics Workstream benefited from the highly active contributions of over a dozen community members. This included members of the TMDC (separate from the Workstream, but closely related and somewhat overlapping in scope), as well as the broader community and the Fox Foundation. Simply tune in to the public tokenomics channel, or our weekly calls, to get a sense for how this new Workstream has generated early momentum.

Much of these contributions have come via non-compensated feedback and suggestions. However, multiple bounties were also issued for various activities, including (attempts) to get FOX listed on other platforms; smart contract code audits; and due diligence on proposed integrations.

5.) Contributing to the creation of new value-accrual mechanisms for FOX.

This last goal was somewhat secondary to the more immediate goals of getting the Workstream up and running, as well as finding ways to increase our stablecoin exposure. However, we did manage to find new revenue streams via our DeFi positioning; specifically, via our Tokemak reactor (which yields TOKE rewards) and our FEI Liquidity-as-a-Service (LaaS) program (which yields TRIBE rewards). Tokenomics also contributed to discussions around the creation of the upcoming FOXy staking mechanism and vFOX sub-DAO–the latter of which plans on making strategic allocations in promising projects.

Moving forward, the Workstream is well-positioned to place an increased focus on the value-accrual component of Tokenomics. It doesn’t hurt that the platform itself has evolved in recent months; it’ll soon be easier for projects to integrate with ShapeShift, and in turn open the door to new revenue-sharing opportunities.

What didn’t go well?

The one initiative that failed miserably was our attempts to get FOX listed on AAVE and Compound. A proposal to swap FOX for FEI also failed in the TRIBE proposal process, despite support from most of TRIBE’s primary players.

Moving forward, I suggest that the DAO bring in someone with a crypto-oriented business development and relationship-building perspective to assist with these types of tasks. We need to really “sell” other communities on why ShapeShift’s token is so cool. Yet I am not a persistent salesly guy; that’s not me.

We need some help here before making another attempt at these (and other) listings–someone who can put together a cohesive strategy. This should include AMA’s to educate the target communities, but there’s also a deeper need for long-term relationship-building via participation on other Discords and forums.
Despite its relatively high brand-name recognition, ShapeShift is not yet regarded highly enough in DeFi circles to the point where we can simply waltz into another community and gain immediate enthusiasm and acceptance for token swaps or listings; we must earn their trust and support. I’m not sure whether this type of role even falls under the scope of Tokenomics (although we would certainly assist with those efforts if they were handled elsewhere in the DAO). In any case, we failed mightily on this front and need to change our approach.

FURTHER GOALS:

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

This seems very realistic! We’re averaging $100,000/day via our FOX/USDC bond, and already have $3.5M worth of stablecoins. Even factoring in $500,000/month for payroll, we should be able to reach $10,000,000 by the end of June assuming the current bond dynamics hold firm. There may be other ways to generate stablecoins as well, such as executing arbitrage strategies in our AngelVault.

1b.) Expand our diversification beyond stablecoins. Once we’ve hit our goal, we’ll be in a good position to add other tokens to our treasury. Reasonable initial targets would be “blue chips” such as ETH and wrapped BTC. (Note that we’re already accumulating ETH via our LP token buybacks).

2.) Complete the DAOshboard.

We’ve already got most of the components in place; let’s put it all together!

3.) Contribute to new value-accrual mechanisms.

This is intentionally broad, as it covers a multitude of initiatives, including FOXy, TMDC deliberations, and vFOX, as well as other strategic initiatives that will likely arise as a result of the Tokenomics and its many contributors (similar to how the Workstream contributed to new revenue streams in the prior quarter). I anticipate that this area will take up the lion’s share of our attention in the coming months.

4.) Continue to increase awareness of the DAO.

In our first term I was able to promote ShapeShift via a variety of channels, including speaking engagements at in-person events (ETHDENVER and Ethereal), as well as via media interviews (via Decrypt). This is arguably invaluable in terms of making both users and potential contributors aware of what we’re doing. As such, I aim to build further outreach momentum–with help of our newly-minted PR rockstar Lindsay–in Q2.

BUDGET STUFF:

I’m pleased to report that of the $50,000 allocated for Workstream bounties and contributions, only $4300 was spent during the initial phase. Thus, we currently have 45,700 USDC in the Tokenomics Colony sub-treasury. As such, I’m requesting 4300 USDC (to be allocated at the beginning of the term in April) to bring us back to an even 50,000 USDC for Q2. That gives us just over 16,500/month for the next quarter, which should be more than sufficient to accomplish our goals.

WORKSTREAM LEADER COMPENSATION:

The original Tokenomics proposal included a conditional performance bonus rather than a salary:

“The Workstream Leader has no associated salary for this first term. However, should the Workstream meet its goals over the following four months, the community will have the option of rewarding its Leader a $45,500 performance bonus.”

As described above, I believe the Workstream has executed on its original goals and performed in a manner that’s helped strengthen the DAO’s financial position. This proposal’s budget includes the payout of that one-time bonus.

This proposal also includes a monthly Workstream Leader salary of $14,000 for the following three quarters.

Total through June 30th, 2022: $4300 (Workstream contributor/bounty allocation, payable in April) + $45500 (Workstream Leader performance bonus, payable in April) + $42,000 (Workstream Leader monthly salary for three months) = $91,800.

POTENTIAL DRAWBACKS:

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 $91,800 as described above.

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

  • Do you support this proposal in its current form?
  • YES
  • NO

0 voters

3 Likes

First of all I want to thank you for your hard work for the past four months. I really like the name DAOshboard for the “State of the FOX” and I would like to suggest adding FOX making it the FOX DAOshboard haha.

I have a few questions:

I wish I would have been more aggressive about finding ways to sell FOX over-the-counter (OTC) when the price was near $1.00

Would having access to a dark pool would have helped and does the DAO even need access to it?

This is only 35% of the way toward our $10 million bear market goal.

What are the plans for the $10 million? I could not find if there were any plans for it.

Moving forward, I suggest that the DAO bring in someone with a crypto-oriented business development and relationship-building perspective to assist with these types of tasks. We need to really “sell” other communities on why ShapeShift’s token is so cool. Yet I am not a persistent salesly guy; that’s not me.

Would this be its own workstream or could that person work under your guide? How much compensation would such a person receive? If it is a new workstream I would suggest “Strategy & New Ventures Workstream”.

Despite its relatively high brand-name recognition, ShapeShift is not yet regarded highly enough in DeFi circles to the point where we can simply waltz into another community and gain immediate enthusiasm and acceptance for token swaps or listings; we must earn their trust and support.

In your personal opinion, what is currently ShapeShift USP compared to other DeFi that we could highlight to earn their trust and support?

My opinion and suggestions.

I’m not sure whether this type of role even falls under the scope of Tokenomics (although we would certainly assist with those efforts if they were handled elsewhere in the DAO).

I think this should fall under your purview, as the subject matter expert of Tokenomics I think you could start by documenting your previous ideas, workflows, and reasoning for your strategies/failures. Then work together with Marketing or maybe Growth & Globalization to iron out the details and I agree you need a helping hand if this were to be done.

we failed mightily on this front and need to change our approach.

I personally did not think of it as a failure but as an awakening to the fact most DeFi are being saturated with similar offering. That is why I propose this workstream to go into regulated market so that we could explore creating exclusives token for ShapeShift and other DeFi product for that token. We could also assist aspiring Film Maker such as this to explore “DAO Film Studio” and have their unique projects token on ShapeShift platform.

Thank you.

3 Likes

Thanks for reading, and for the questions!

<< Would having access to a dark pool would have helped and does the DAO even need access to it? >>

I’m not aware of any crypto dark pools personally, and in this case it may not have been much help. Dark pools are good at preserving the anonymity of market participants, but generally aren’t as good at offering the ability to sell XYZ asset without impacting the market price; OTC deals with just one specific counterparty tend to be the best choice for this type of trade. That said, we’ll keep an eye out for solutions that might fit the bill!

<< What are the plans for the $10 million? I could not find if there were any plans for it. >>

Basically the plans are to do nothing with it. The purpose of the $10 million is to sit on the sidelines and serve as a rainy day fund in the event FOX hits a long-term bear market. With a monthly run rate of $500,000, this would allow us to weather a 20-month bear market without having to sell FOX at relatively cheap prices. We usually chat about our progress toward this goal in our weekly Tokenomics discussion.

<< Would this be its own workstream or could that person work under your guide? How much compensation would such a person receive? If it is a new workstream I would suggest “Strategy & New Ventures Workstream”. >>

That’s a good question! This could potentially be its own Workstream. Ultimately it’s up to the community. I see it as a better fit for not just under Tokenomics, because business relationships touch many aspects of the DAO.

<< In your personal opinion, what is currently ShapeShift USP compared to other DeFi that we could highlight to earn their trust and support? >>

It really boils down to our ability to integrate various DeFi platforms into our interface. On top of that, the advent of FOXy will add to the USP; holding FOX (and staking it in FOXy) will allow holders to share in the DAO’s success. We’re still early, and there’s a bit of a narrative challenge; a lot of people in DeFi aren’t really aware of ShapeShift (they’re newer to the space), or if they’ve been around awhile they still think of ShapeShift as the trading interface they used back in 2017-2018.

<< I think this should fall under your purview, as the subject matter expert of Tokenomics I think you could start by documenting your previous ideas, workflows, and reasoning for your strategies/failures…>>

Thanks for the feedback on this! Yeah there’s definitely a case to be made for a Tokenomics-centric approach. Will need to get insight from the other Workstreams to get some input on their own needs.

<< I personally did not think of it as a failure but as an awakening to the fact most DeFi are being saturated with similar offering. That is why I propose this workstream to go into regulated market…>>

Great point on things being saturated. One of the challenges we face is to create a comprehensive, easy-to-understand explanation of why anyone should want to own FOX. IMO ShapeShift doesn’t need an “Investor Relations” in the traditional sense…however, someone who can articulate these things (perhaps framing it like you did on your example page) could be invaluable. Let me give this some more thought - perhaps there’s room for this type of work under Tokenomics bounties. There’s also a tie-in with Marketing as well, as ultimately this is about getting the word out about the DAO and its products and token.

4 Likes

Thanks for the reply @seven7hwave.

I’m not aware of any crypto dark pools personally, and in this case it may not have been much help. Dark pools are good at preserving the anonymity of market participants, but generally aren’t as good at offering the ability to sell XYZ asset without impacting the market price; OTC deals with just one specific counterparty tend to be the best choice for this type of trade. That said, we’ll keep an eye out for solutions that might fit the bill!

I heard of Kraken Dark Pool before but after some digging, they are not operating now. I guess due to the nature of a public ledger this is not possible to do. But realistically no one wants to hold on to a large amount of FOX at a high price without some sort of reward, maybe the Sucess Token is a good compromise.

Basically the plans are to do nothing with it. The purpose of the $10 million is to sit on the sidelines and serve as a rainy day fund in the event FOX hits a long-term bear market. With a monthly run rate of $500,000, this would allow us to weather a 20-month bear market without having to sell FOX at relatively cheap prices. We usually chat about our progress toward this goal in our weekly Tokenomics discussion.

Too bad the DAO can’t park the $10 million at Circle Yield, we could earn 5% and use it to pay 1 month of workstreams.

That’s a good question! This could potentially be its own Workstream. Ultimately it’s up to the community. I see it as a better fit for not just under Tokenomics, because business relationships touch many aspects of the DAO.

I think first the workstreams need to suggest some new ventures that the community could vote on because if the current workstreams could not support the new ventures it would be pointless to pursue.

It really boils down to our ability to integrate various DeFi platforms into our interface. On top of that, the advent of FOXy will add to the USP; holding FOX (and staking it in FOXy) will allow holders to share in the DAO’s success. We’re still early, and there’s a bit of a narrative challenge; a lot of people in DeFi aren’t really aware of ShapeShift (they’re newer to the space), or if they’ve been around awhile they still think of ShapeShift as the trading interface they used back in 2017-2018.

I can’t wait for FOXy but personally, I’m still waiting for something more exclusive but I don’t have any clue what that is hahaha.

Thanks for the feedback on this! Yeah there’s definitely a case to be made for a Tokenomics-centric approach. Will need to get insight from the other Workstreams to get some input on their own needs.

I think I’m starting to agree with some discussion on Discord that all the Workstreams need to be glued together by someone like a Project Manager or someone like that haha.

Great point on things being saturated. One of the challenges we face is to create a comprehensive, easy-to-understand explanation of why anyone should want to own FOX. IMO ShapeShift doesn’t need an “Investor Relations” in the traditional sense…however, someone who can articulate these things (perhaps framing it like you did on your example page) could be invaluable. Let me give this some more thought - perhaps there’s room for this type of work under Tokenomics bounties. There’s also a tie-in with Marketing as well, as ultimately this is about getting the word out about the DAO and its products and token.

Yes, I think this is a good bounty program to simplify the reason to own FOX but the thing is it is too technical (you need some knowledge of UI/UX) even if I have an idea how to showcase the reason to own FOX the best I could do to participate in it is to send a wireframe with the reasoning on why I design it as such.
Another example is this bounty I wanted to participate but because I need to learn GitHub first for something that could be written on a markup editor I just give up.
But I also understand why it is hard to justify hiring someone full-time to do this kind of task. The best compromise I could suggest is to create a rolling bounty where anyone who wants to participate has to put their name in a list and given a time limit to complete the task, you will be paid based on how many you manage to complete in that time frame.
If it is not fully completed the next person will take over and the next until finished.
Then based on the quality of work that person could be hired to monitor and refine other writing bounty.

Haha thank you for reading my rant have a great day.