Hello Foxes. FOX Holder and community member @thekiloalpha has voiced a variety of concerns on twitter: https://twitter.com/thekiloalpha/status/1613728988970778624.
I’m posting them here to ensure that the comments have more visibility, and to also address them in a more detailed fashion than could be done on twitter.
Thanks for taking the time to voice these concerns, Kilo. Critical perspectives and dissenting opinions are essential to preventing the DAO from devolving into groupthink. I’ll do my own part to address your questions/concerns here, as some of your thoughts pertain directly to the Tokenomics Workstream and the related proposal. I’ll also make some comments about your other thoughts, although I don’t profess to speak for any other Workstream here.
1.) @ShapeShift $FOX are 11 months away from running out of $. Recently i’ve observed several OG team wallets dumping millions of $FOX. Why?
By “OG team wallets,” I assume you mean longstanding wallets that might be accounts owned by formerly centralized ShapeShift employees who are receiving Sablier streams? Or maybe something else? In any case, it’s impossible to know the motivations of why someone would choose to sell their FOX right now. Perhaps they need the cash. Perhaps they want to move into another crypto asset. Everyone is free to do as they wish with their tokens.
Many active contributors to the DAO are taking precisely the opposite approach, instead electing to receive a portion (or all) of their salaries in time-locked FOX. (I don’t have the precise figures for January Boosted FOX in front of me, but can find those shortly; it constitutes a substantial chunk of the DAO’s monthly spend).
Choosing to receive Boosted FOX is a strong vote of confidence that the DAO will emerge from this bear market and find an endurable product/market fit. To put it another way, many of the people closest to this project are electing to have long-term exposure to the DAO, while forgoing the ability to benefit from it financially in the near-term.
2.) Just one stream has a monthly burn of $40k-$50k to operate in a bear market. What the actual fuk.
As a community member who’s supportive of the Marketing Workstream proposal, please let me voice some of the reasons for that support. (Again, this is my own opinion as just one member of the community).
a.) The Marketing team has shown incredible engagement, passion, and enthusiasm in the wake of some serious downsizing and restructuring that occurred last year. The current proposed spend of roughly $37,000 USDC per month represents a substantial reduction from the Workstream’s 2022 spend across two separate marketing-related Workstreams, which if memory serves was well over $100,000/month
b.) The DAO arguably still needs marketing in a bear market, keeping the ShapeShift name top of mind and engaging with the broader crypto community. The proposed incoming team has done a commendable job at this IMHO, whether it’s getting the word out on twitter, working with partners, planning IRL events, and helping to shape the DAO’s messaging. Meanwhile, nearly 25% of the overall monthly spend is being requested in time-locked FOX. This has the impact of reducing the hit on the runway while also creating more committed, long-term FOX holders.
c.) You talk about the monthly spend as if it’s “high.” Again, the impact on the runway is $37K/month. It’s perfectly fine to spend money, even in a bear market, as long as you have funds in the treasury. This is precisely the purpose of having a runway. Do you have any suggestions for where the Marketing Workstream might optimize its spend?
3.) Tokenomics workstream leader wants $14k a month (for what?) in a bear market + 20% bonus for taking $FOX.
This is correct; the proposal for Q1/Q2 stipulates that the Tokenomics Workstream Leader (that’s me) will receive $14,000 worth of FOX every month, plus a 20% FOX bonus for time-locking that FOX for one year.
Much like you, I share a deep desire to preserve and extend the stablecoin runway. This is exactly why I’ve elected to receive the entirety of my salary in time-locked FOX over the past six months, and why I’m requesting identical compensation for Q1/Q2. If the DAO fails, this will turn out to be an exceedingly bad decision. However, I’m more confident than ever that it will survive this bear market and emerge in a strong position.
The DAO has ample FOX (over 160 million, currently). What matters is preserving the stablecoin treasury–and my decision (along with other contributors) to receive compensation in Boosted FOX is an effective way to do just that. I can think of no better way to create a perfect alignment between my own contributions and the DAO’s long-term success. I’m in it for the long run.
$14,000/month is in the same ballpark as other Workstream Leaders. As someone who devotes a great deal of time and energy to this project, I want to be compensated for my work. And by choosing time-locked FOX, I’m creating an excellent alignment with the DAO’s long-term success, and signaling my own deeply-held conviction that the project will survive the bear and thrive in the subsequent bull.
“For what?”
A great question–and asking this exemplifies one of the great strengths of DAO’s. Like any contributor, and especially any Workstream Leader, I need to justify my existence to the community–not placate a single CEO or small group of executives.
I believe my continued existence in this role is, first and foremost, justified by my consistent focus on the project’s runway. From the moment the Tokenomics Workstream was formed, I urged the community to take steps to diversify the treasury into stablecoins and avoid the trap of having our entire treasury denominated in FOX. This was in the tail-end of a bull market where financial prudence was not top of mind. I continued this focus in Q3/Q4; in fact this focus on encouraging the community to take steps towards runway preservation was the primary stated goal of the Workstream for that term.
In a bear market, a DAO’s biggest threat is running out of money. Avoiding that scenario, in my mind, is job number one for Tokenomics. (If your line of thinking is more along the lines of “why is Tokenomics receiving a salary when the price of FOX is down sharply, doesn’t that mean Tokenomics is fucking up royally?” please read my thoughts in this thread.)
So first and foremost, a vote for the current Tokenomics leadership is a vote for financial prudence and a conservative, non-degen approach. While I don’t have the ability to unilaterally determine what happens, I can certainly do my best to push the community in this direction. And despite a few missteps along the way (for example, taking out high-APY loans on Rari), the DAO is in a relatively strong position. 10-11 months of runway is not untypical for a startup, and it’s a sharp contrast to the many DAO’s or DeFi projects that have failed in this bear market, and to the many ICO-funded projects that failed during the prior bear market.
The second thing you’re getting with a vote for the current Tokenomics leadership is a continued focus on maximum financial transparency. I may be biased, but truly believe that there is no DAO with more open financials than ShapeShift. Upon starting this role, I made this a primary focus, and on this point I think we’ve wildly succeeded.
The runway projections spreadsheet is a great example; there is no ambiguity and there are no hidden details; it’s open for all to see and comment on. That runway, of course, can change over time based on spending decisions, but the stablecoin runway is something that can be counted on with reasonable certainty (smart contract or centralization risks notwithstanding). The inputs into the runway are based on our treasury, which is of course visible on etherscan but also broken down in a more granular fashion in our various DAOshboards:
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Treasury Wallets: https://docs.google.com/spreadsheets/d/1SmTXEd3ALGWGMpW54qRpvaoCzRw2BQKPXag5K5XS3K8/edit?usp=sharing
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Revenues: https://docs.google.com/spreadsheets/d/1nxIMNGUJKyPGSmmaZ4415KBKwJS6EROFWu9qQZY4y2g/edit?usp=sharing
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Expenses: https://docs.google.com/spreadsheets/d/1SYHWtJuj-fKffQJYXsDktbGOaAlIagCEaXd8JZwZd8E/edit?usp=sharing
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Performance: https://docs.google.com/spreadsheets/d/17S-4Ehz064iPT9XRvnWOcXYK91kAjo-ACyfrWVyWC_8/edit?usp=sharing
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Stablecoins: https://docs.google.com/spreadsheets/d/1qqhut3CZ-E9yAAmo0Oxa8zYKW-WmYX-oeZx13zFLsR0/edit#gid=897788852
Leveraging the open and immutable nature of on-chain data is something I consistently advocate for the DAO. A good example is holding a recent discussion with Bond Protocol, who took the time and effort to present metrics based on the DAO’s bond offerings.
The financial transparency extends to our discourse as well. The weekly Tokenomics calls every Tuesday are open to all. The same applies to the Treasury Management and Diversification Committee (which is not technically part of the Workstream, although I’m a member). Anyone is welcome to contribute.
On top of that, what else does the Tokenomics Workstream Leader role entail?
In Q3/Q4, a growing focus was on the research component. Not too many contributors at the DAO have a good sense for where the crypto ecosystem is heading from a scaling perspective. I’m in a good position to leveraging my prior R&D experience in order to help the community be better-informed about what these developments mean. The output is frequent presentations on Ethereum-based rollups, which I believe will garner the lion’s share of liquidity and transactional throughput in 2023 and beyond. This insight, in turn, can help the DAO prioritize the roadmap and position itself more effectively for the next bull market.
I’ve also outlined a heavy strategic focus for Q1/Q2, as outlined in the proposal. It’s crucial that we keep an eye on this bigger picture and maintain a high-level, 30,000-foot view (something we did a good job of doing at the DAO retreat), even while we delve down into the smaller details of implementing a detailed product roadmap.
4.) Active governance > tragedy of the commons. The treasury has been completely plundered and DAO members just vote away for any proposal without thought.
I fully agree that active governance is better than a tragedy of the commons, which perhaps would be exemplified by apathy and a lack of involvement in the governance process. This would be antithetical to everything the DAO stands for. I respectfully strongly disagree with your assertion that DAO members mindlessly vote for any proposal. This perhaps was more true in early-2022, when the bull market mentality was prevalent and token holders were more likely to rubber-stamp any proposal.
Things have been very different since mid-2022. To provide just a few examples:
a.) In the wake of budget austerity measures, there were several months of deep and contentious discussions about the scope of Workstream Leaders’ responsibilities. This led to a (similarly contentious) proposal clarifying those leadership roles.
b.) Currently there’s a spirited discussion about whether the DAO should add fees to its Thorchain integration.
c.) Recent proposals around the Operations and Marketing Workstreams have also been widely discussed and debated. For more on that, see the recent threads in this forum.
“The treasury has been completely plundered.”
I’m not sure what you mean by this. “Plundering” would entail FOX holders voting to distribute more tokens to themselves, then proceeding to dump the token.
Instead, the DAO has diversified a portion of its treasury into stablecoins in order to create a predictable runway, while also implementing austerity measures (decided upon by individual Workstream Leaders). In 2022, monthly DAO spending frequently exceeded $500,000. In January total spend was less than half that. Meanwhile, the DAO also created a program (Boosted FOX) designed specifically to reduce the near-term impact on the treasury while also creating an ever-growing cohort of longer-term FOX holders.
These three actions are the opposite of plundering; they have a preserving, extending impact, and reflect a focus on ensuring long-term viability over short-term gain. Do some early FOX holders sometimes sell their holdings? For sure. Others sit on their holders or even accumulate more. Meanwhile, the actions of the contributors closest to the DAO (and the DAO in general) reflect a commitment to keeping this project viable and ensuring its survival through the bear market, confident that the DAO will find a viable and sustainable business model.
5.) This ShapeShift stream has no budget, no spreadsheet to support the DAO proposal. "trust me bro”
(this comment is referring to the following statement from the new Tokenomics Proposal:
“The DAO currently has 11 months of runway, through November 2023. This figure is slightly more than the 10-11 months of runway that existed when the prior Tokenomics proposal was written in June 2022.”
The whole point of maximum financial transparency is that there should never be a need to trust anyone. This is the case with the runway spreadsheet, which uses the DAO’s openly-visible, on chain assets as its primary input. There’s certainly a bit of forward-looking projecting involved with expected Workstream spend, but this is based on governance-approved budgets, so it’s typically very close to the expected results. If you want to be more granular with your expense analysis, you can also track Workstream and individual-contributor expenses via the DAO’s Colony implementation.
The runway directly supports my assertions about the runway; as does the historical data in our various DAOshboards. You do raise an interesting area for improvement, though; it would be nice to track runway over time easily in the spreadsheet. I can, for example, look at prior versions of that spreadsheet to see where we were at a given point in time, but I don’t believe this is possible for someone viewing that document.
In terms of the overall Workstream budget, this is a Workstream of one; just myself. Hence it’s as straightforward as what’s in the proposal: the monthly salary of time-locked FOX plus a one-time transfer of around 18,000 USDC for operating expenses.
“I have no conclusions here and nothing else to say other than seems like the ball has been dropped bigtime @ShapeShift with no oversight or top level management ensuring the vision of SS / $FOX is safeguarded.”
What changes would you recommend the DAO make? It’s important that the community takes all opinions into consideration. With respect to oversight, I would argue that the open financials of the DAO make it possible for anyone to provide oversight; the data’s all there.
“If bera lasts another 24-48mo hard to say what will happen. Seems like the team are taking the piss and extracting as much value out of the DAO as possible. No doubt will exit stage left and dump $FOX like some of the old team (who recently dumped @ $0.025).”
Again, I’d argue that the actions of the DAO and its contributors are consistent with long-term value accrual, rather than extraction. Has FOX gone down substantially in this bear market. Certainly–as have many other long-term crypto assets. Is it possible that some individual FOX holders don’t see the long-term value of FOX, and would instead rather sell at current levels? For sure.
“I’d participate more however was shot down immediately.”
Can you please share how you were shot down? This is serious fucking stuff. It’s important that all perspectives are taken into account. Respectful, civil discourse and healthy debate is the lifeblood of a thriving DAO. We need to find ways to ensure that minority viewpoints are always considered alongside opinions that are more widely shared. Similarly, ideas should be weighted based on their merit, rather than based on who is voicing them.
Thanks again, Kilo, for these questions and comments. Please always feel welcome to voice your thoughts here in the forum, or in Discord. We need more of this critical thought if the DAO is to succeed over the coming months and years.