Community Ownership | Retroactive airdrop to historical contributors

Author: @DevOnDeFi

Co-authors and reviewers: @Pepperoni_Joe, @JDCook, @Hammad1412, @Metfanmike, @ElliottWatts, @iluscavia, @bradwmorris, @Matthew_Graham

This post is one of six exploring the comprehensive overhaul of Compensation and Community Ownership at Index Coop. Whilst each topic is a stand-alone piece, they are interrelated. We recommend reading through the posts in the following order:

  1. Compensation & Community Ownership - Next Steps
  2. Retrospective Airdrop to historical contributors (this post)
  3. Dynamic Staking Model
  4. V2 Fixed Salary Hiring
  5. Owl Levels (not yet released)
  6. Flexible Compensation (not yet released)

It is also worth noting that these discussions of airdrop, staking and compensation are occuring in parallel. They are interconnected and can be approved and implemented independently - hold ups in one area does not prevent implementation of another.

The holistic picture of our new Compensation and Community Ownership work was mentioned in the kick off post and is displayed again below.

Summary
As part of a series of posts and discussions on the subject of compensation and community ownership this post seeks to introduce a component part - a retroactive airdrop to historical contributors. For those reading about this subject for the first time, the kick-off post is here.

This post explores what overall percentage of $INDEX contributors could be allocated. With a target ownership % for Index Coop contributors outlined, we propose that this target % of community ownership be achieved through i) a retrospective airdrop to cover contributions in Y1 and ii) even more significantly, use of a staking model to support long-term contributor ownership going forwards in Y2, Y3 and Y4 (the staking model to be explored in a separate post).

This proposal will focus on detailing the specific mechanism and approach for a retroactive airdrop to contributors for their energy and impact brought to help move the Index Coop from 0 to 1 in the first year of operating (October ‘20 to October ‘21).

Background: what is ‘community ownership’ and why is it important?
Community ownership is what it says on the tin: ownership of a protocol substantially spread around its contributors and users, who have influence over the direction of the protocol - in contrast to TradFi, where companies are owned by insiders, privileged and/or larger investors and where little stake and, crucially, influence is held by the typical employee. DAOs and protocols represent new vehicles for harnessing human talent and potential, seeking to evolve from the most efficient vehicle for the last few hundred years til today - the joint stock company.

Community ownership is important for some of the reasons cited above, especially influence (being able to regularly vote on the direction of the DAO), but also to help us achieve a core goal of crypto: creating a more widely distributed ownership economy. 40+ years of monetary experimentation - Bretton Woods 1, 2, the Greenspan Put, QE 1, 2, X, Covid Money Printer Go Brrrr, etc - combined with leveraged fractional reserve banking have created a deeply unequal world today - most accurately described by three classes:

  • Workers who own their labour and little else. No/limited savings. Getting left behind fast as if they hold assets at all it’s in cash (rapidly inflated away by central bankers)
  • Middle classes who own their labour (often more information economy work) and some savings/assets. Rising above Workers steadily, but getting left behind The Rich fast, and finding the cost of their key life items (University/College) inflating fast. The ‘Pinched Middle’
  • The Rich who own assets, businesses, have many credit facilities, often footprints in many countries and a roster of advisors to help them optimize their assets, credit, taxes, generational wealth transfer, etc. They own most of the assets and are getting wealthier faster and faster

The current financial system - by constantly inflating asset prices and eroding the purchasing power of fiat money - screws Workers, slowly squeezes the Middle classes, but vastly enables The Rich with lots of assets and vast access to efficient credit. The crypto economy seeks to destroy this current, rigged system via many prongs, including sound money (thanks Bitcoin!). Another of the key ideals of this crypto economy is wider ownership of the productive assets that make the economy tick, hence why we think enabling contributor ownership of the Index Coop is essential. This ambition might not be realized as perfectly widespread ownership, but substantially wider ownership will represent a valuable leap forward.

Other DeFi protocols are interesting to observe regarding how they have sought to enable contributor ownership, some doing it more tightly in a narrowly focused manner (Yearn), others seeking to do it a little more generally. Thanks to many contributors for helping pull together this data, which shows a range of % ownership numbers (top of range 48.5%, bottom of range: 5%) with a mean and median of 23% and 22%. Exact definitions and counterpoints are hard to establish, but crude yet powerful direction can be derived from this external contributor ownership data.

We believe enabling a contributor ownership % of 28% is reasonable for the following reasons:

  • It does better than the mean and median above, evenly more greatly incentivizing the community
  • We’re in a white hot market for quality crypto talent, which links to the bullet above
  • It gives the contributor base, should it decide to act with one mind (quite unlikely maybe!), the same token voting influence as the largest token holder (Set), which will enjoy 28% when all tokens are vested
  • We need to act NOW to increase ownership of contributors fast - we’re losing talent to other DAOs which have moved faster and more decisively to achieve their ownership ambitions

A quick side note on ownership = responsibility: if we achieve such a substantial contributor ownership target, beneficiaries should bear in mind that ownership of a business or protocol does bring responsibility. There may be situations in years to come where the Coop looks to raise capital strategically and the token holders are one of a number of options to call on (including credit lines).

How are we improving contributor ownership?
Via:

  1. Retrospective airdrop for contribution value added in Year 1: 7% of the aforementioned 28% of tokens - 700,000 $INDEX
  2. Contributor staking model: yielding 7% in Year 2, 7% in Year 3 and 7% in Year 4. Detailed in a separate post

…We think this could enable a slightly more niche meme than Olympus DAO’s 3,3 of ‘7,7,7,7’ :slight_smile:

Kudos to @codemathics for ^^.

Why do an airdrop now?
While there are a range of reasons why contributor ownership has not been looked at intensively enough to-date, this issue does exist. This has meant current contributor ownership is estimated to be <2% of total circulating supply, leaving contributors who work day in, day out to build our project with virtually no stake or real ownership in the project they have helped to build.

Doing an airdrop now, more than a year after launch, enables the DAO to airdrop tokens to proven contributors who have demonstrated that they care deeply about the community, products and protocol. Thus, we avoid airdropping $INDEX tokens to mercenaries who will just sell them and push down the token price. We also have a year’s worth of month-to-month contribution data to leverage as part of a simple but robust model to inform which contributors receive what tokens as part of the airdrop. This seems far better than an at-launch, crude airdrop which is blind to future value add and commitment. We note there was a small, 1% airdrop at launch - so this is technically the second airdrop, though much more substantial.

Finally, doing an airdrop now will enable core contributors to step up their $INDEX holdings as the staking model is implemented, benefiting from the APY offered by the staking model and incentivising contributors to continue to HODL.

How to implement the airdrop? Who benefits?
We propose 7% of the contributor ownership goal of 28% be distributed to the contributors via the airdrop - 700,000 $INDEX to be airdropped.

We believe this percentage of the overall core community tokens being distributed via the airdrop is reasonable as it recognizes:

  • The value of helping a project early in it’s life - moving it from 0.0 to 0.1, 0.2, etc. These contributors took more risk at an earlier stage, when Index Coop was much more of an idea than a living reality with a portfolio of products and impressive TVL (>$500m)
  • The value of continuous contribution - accumulating more context and ability to add value, which is recognized via monthly rewards
  • That contributors in years two, three and four also need to be well incentivized too - let’s look after the founding generation and generations of contributors to come

What will I and/or other contributors receive in the airdrop?
Before we introduce the model, some high level guidance (some is repetitive but given to over-communicate on an potentially very sensitive topic).

The model’s logic is guided by:

  1. The 7% of total $INDEX mentioned above which the airdrop will distribute

  2. A contributor’s value contributed to the Coop in the first year, as measured in USD value of $INDEX they cumulatively received in that year

  3. First year includes Oct ‘21 as very little rewards were earned in Oct ‘20

  4. A contributor’s personal participation in the airdrop will equal:

       A. Personal contribution value in Year 1, divided by
       B. Total community contribution value in Year 1, multiplied by
       C. 7% X 10,000,000 $INDEX
    

Example: if you’d contributed A. $100k of value in the first year, the community had contributed B. $1m of value and C. equals 7% X 10,000,000 tokens. The model would deliver you the following tokens:

  • (A. $100,000 / B. $1,000,000) X (C. 7% X 10,000,000) = 70,000 $INDEX

This model shows a general distribution logic before special situations are discussed and potentially catered for below.

By way of comparison, in Year 1 (Oct ‘20-Oct ‘21) full-time and community contributors earned 134,731 $INDEX compared to 700,000 tokens we propose we airdrop via this model. Their airdrop alone would therefore increase contributor ownership for Year 1 value add by 520%.

Contributors should be able to search for their Discord name in the model Google Sheet and note their potential airdrop.

Request: please review the airdrop model and provide feedback where you feel there are broad methodological issues or inconsistencies. If you feel anything has been missed specifically relating to your rewards/work, please flag this to us using this form Retrospective Airdrop - inconsistencies form.

To remind again, please also bear in mind doing this work in public on such a sensitive topic is hard - those working on this have brought their best efforts over hours and hours and have worked in good faith.

Side note from @DevOnDeFi: I believe this exercise has brought out the very best of knowledge, skills and perspectives in this working group and I am deeply thankful to the co-authors and reviewers.

Special situations

Previously contracted Full Time contributors (FTs) who are still active in the DAO

We value our FTs deeply, and it’s unfair that they’ve become occasional targets of ‘us-versus-them’ in the DAO - in fact we should always heed signals that incentives are driving divides between contributors. We believe it would also be unfair if this airdrop rewarded long-term but non FT contributors more than FTs who have already opted to bore a layer deeper into the DAO - and show highly focused commitment. It wouldn’t be equitable if folks lost out by becoming FTs in the past because the FT packages were quite humble and conservative compared to other packages in crypto (example one, two, three, four).

As such, we propose that for this small number of FTs we assume the months they earned a humble $5k as part of their FT package were in fact earned at $10k/month to input into the airdrop model above. And, where the airdrop would hypothetically deliver FTs more $INDEX than their current FT package’s vesting schedule over two years, we let their FT package’s vesting element vest as per its design but top them up with their airdropped tokens minus their FT package’s vesting component. We understand these folks may have already notified their tax authorities as to their FT vesting package, and will need a ‘top up, custom airdrop’ to participate and not fall foul of tax tripwires. We believe we should work as a DAO to ensure these folks are equitable beneficiaries of the airdrop too, working around their tax mechanics.

FTs who have moved to become external methodologists

We also believe we have a duty to FTs who have fairly and reasonably moved to become external methodologists of their Metaverse Index. In the case of these folks, we believe they also deserve to participate in the airdrop - due to large, historical contributions to the DAO from its earliest days - and be topped up or made good above the $INDEX they have received from their now exited and partially vested FT packages. For the months these people worked as FTs, we also believe we should calculate their monthly USD rewards as $10k not $5k.

Liquidity constraints
While we note that most airdrops, as they are remembered from 2020, are crude and indeterminate of value of long-term contribution and/or potential alignment - often simply getting sold on the market - we think the beneficiaries or this airdrop should enjoy this liquidity profile, which offers some instant liquidity but also creates some on-going alignment too:

  • 33% of air dropped tokens: fully liquid. Arrive in wallet - or as NFT (more below) - on day one of airdrop contract deployment
  • 33% of air dropped tokens: vested monthly in Year 2 (we’re in this year now)
  • 33% of air dropped tokens: vested monthly in Year 3

Update: in case ‘vesting’ is not clear above, contributors receiving the airdrop need to be active at the Coop on future monthly vesting dates in years two and three to receive their tokens.

We note the crucial importance of contributors not receiving large amounts $INDEX and suboptimally herding to sell on a thin market - knocking down the token price - so we think it’s fair to add a condition to the airdrop - that our Treasury gets first refusal when folks are looking to sell. It’s ok for folks to need or want to sell - we all have bills, debts, hope for our kids’ education, etc - but it’s also important we do this intelligently and communicatively as a contributor-base. Treasury aims to build out more of a discrete OTC desk in time too, matching seller demand for buyer demand (typically funds or strategic investors).

Distribution
Distributing the airdrop to contributors could have implications (including tax and others), so we propose investigating whether we can airdrop NFTs to contributors which have $0 internal value but which can be used, at a future time of the owner’s choice, to call the state value of $INDEX denoted on their NFT from the Index Coop Treasury.

Index Coop does not and will not give tax advice, but there has been popular demand to investigate this method, and we also note engineers building tools for such use cases (example from Consensys). Our Engineering and Treasury Teams will need to research available tools, or proprietary options, to enable this NFT idea - this Pod stands ready to assist too. We can also include the Design Working Group if we want to make the NFTs look awesome too.

Stretch goal: some of the contributors to the group working on this project have raised a high-minded and noble idea - the ability for airdrop recipients to be able to, before the airdrop happens, allocate some of their future participation to other people. Example: contributor 0 receiving 10,000 $INDEX in the airdrop can complete a process to say he/she/they want 1,000 $INDEX to go to person A, 500 $INDEX to person B, 300 $INDEX to person C.

More technical scoping work is needed regarding the NFT as a delivery vehicle idea and also the enable-recipients-to-share-proceeds-with-friends idea. We do not want to make light of this scoping work or engineering execution.

Staking Model
We feel a contributor airdrop is essential to retain top talent and ensure a successful future. Whilst newer contributors will not be eligible for the airdrop, they will have access to the staking model as a means of building their own ownership in the protocol. There are also close synergies with the staking model and airdrop.

More details on the staking model are provided here, but a central tenet of this model is that it rewards contributors with vested $INDEX based on their Owl Level and $INDEX holdings. This incentives contributors to increase their impact (Owl Level) and buy/hold $INDEX. Those contributors who do buy/hold $INDEX will receive a greater % of future Index rewards through the staking model. Thus, the airdrop can be seen as a way to bootstrap the launch of the staking model, and give all contributors, regardless of if they have previously had to sell $INDEX the options to continue to receive further $INDEX Ownership. This should also reduce the sell pressure for the airdrop. As a further incentive, NFT/token airdrops used within the staking model will count for an additional 10% of $INDEX, further nudging behaviour.

Working additional 10% incentive example: This would mean if I received 1,000 $INDEX from my Y1 airdrop, and had 100 $INDEX in my wallet, when calculating my staking rewards I would receive 1,200 $INDEX (1000*1.1)+100, in this example this could equate to an additional 120 $INDEX per month (10% APY). Thus, by keeping my airdrop rewards my future ownership allocation is increased.

Conclusion & discussion
Compensation and ownership in a DAO is a huge, multi-faceted and tough subject anywhere, and especially so when - as others have said - it’s discussed and beaten out in public. Doing it >12 months after Genesis and launch is even harder (truly!). We would deeply appreciate the community’s thoughts generally but especially on:

  1. The overall % of community ownership to achieve
  2. The merit of doing a retroactive airdrop
  3. The percentage of $INDEX to include in a retroactive airdrop
  4. The model’s suggested distribution to contributors in the airdrop
  5. The handling of special situations: FTs, ex-FTs
  6. Liquidity constraints of airdropped tokens
  7. Potentially sending NFTs to contributors to make it easier/optimal for them to receive their participation

We believe the airdrop, if implemented well, can be a jump-starting feature of the DAO - bringing core contributors even more deeply into alignment as ‘owners’ - but also be seen in time to be an equitable and legitimate feature of the DAO’s maturation and improvement. However, this is not an easy thing to get right, so do share your critiques and feedback.

Thank you for your time. We truly look forward to the comments.

22 Likes

Post Launch AIRDROP is always going to be controversial. This looks like a complicated Employee Incentive plan focused on $Index rather than equity.

If we focus on incentives for contribution to drive $INDEX price and adoption. I would suggest :

  • multi year lockup of $index. You need to move this supply a long way into the future.
  • DEX LP pool is to small and can’t absorb selling + OTC buys. Why not lock/stake index airdrop in pool. This needs seeding centrally NOT from s/t LM incentives
  • why airdrop 7% on past year. Make it next 12mths and turbo charge growth. Existing guys are here and you will hopefully draw in new talent.

My experience from cefi was broadly up to 3yr lock ins, yield added to staked incentive, rewards were also future NOT past. Equity has dividend but index has large upside + LP potential.

1 Like

So what I’m reading here is, as a FT, I’m being docked from my airdrop due to already having a 2yr vesting contract, but any number of the upcoming likely FT hires get both a FT vest as I already have AND a full airdrop?

3 Likes

Hey @0xModene :wave:

Under the new V2 Hiring Guidelines, FT do not have a token vest.

Instead, they gain a stable yearly salary and access to the Dynamic Staking Model (like all other contributors). For current FT folks, your existing vest still applies, but you will also get access to the further upside offered by the Dynamic Staking Model.

When @jdcook and I were walking through this, our logic was by that by balancing the FT vested packages with the airdrop, we then easily grant existing FT access to the Dynamic Staking Model in addition to their existing package.

This would allow us to effectively move away from a two-tier (in-out) model for community ownership, and put us more on a sliding scale. Whilst at this stage we can’t commit exactly to what the Dynamic Staking Model would return, if it is allocating 7% yearly, it is likely to be significantly more generous for high impact contributors than our existing FT packages.

However, I appreciate that there are a bunch of individual circumstances we may not have catered for - so keep the feedback coming!

9 Likes

I believe the incentives built into the full-time modifications are incredibly disappointing. With the current incentives available to me, I can maximize my income by quitting (and therefore receiving the full airdrop since I have not had any of my tokens vest), and then moving on to a new company or DAO with similar benefits as my current package at Index, all while being able to collect a very large airdrop.

As a side note on the entire wave of community ownership posts, I have been incredibly disappointed. The airdrop combined with the staking model rewards early contributors handsomely but makes it impossible to incentive new joiners without just offering them the standard FT package, particularly in areas where compensation is usually very lucrative such as engineering. I was hoping to see something simple, like a pipeline for getting more contributors on FT vests and making those vests votable, and maybe an extra mechanism to ensure smaller contributors are well incentivized. Instead, we got a massive airdrop and a convoluted staking mechanism that forced contributors to think about the game theory of how much they should stake versus use to pay their bills.

12 Likes

Have to agree that this seems to go out of its way to give full timers who have made outsize commitments to the coop a bad relative deal and it’s confusing.

I also echo that 7% airdrop to past year seems rich to say the least. I would also strongly push back against giving a big portion of that to members who have already left. Why not a smaller airdrop/vest that is forward looking to the people from the past year who stay for the next.

Lastly I would like to see the contributor plan be much longer in scope and maybe less overall on an absolute basis (e.g. 5, 4, 3, 2, 1 over next 5)

With this plan we’ve earmarked ~75% of the entire index supply in 3 years, I worry that is a suboptimal emission schedule

If we’re going to make it #100years we need to have a longer dated outlook when it comes to the community treasury.

4 Likes

Jumping in for a second.

We appreciate the feedback so far on the proposed airdrop, staking model, and V2 hiring guidelines (as they’re all related). Collecting community feedback is a primary motivation for posting on the governance forums, and we expect passionate viewpoints, especially when the topic is something as important as compensation.

Our posts may be falling short in adequately explaining some of the concepts, which is leading to some misunderstanding. To remedy that, we propose holding a community call this week or next to discuss this topic in greater detail and clarify these concepts. Until then, keep the comments coming. We are tracking any concerns or issues raised and will properly address your comments. Ultimately, this is all helpful for arriving at a stronger compensation construct for the DAO.

20 Likes

Wow!

I’m honestly blown away by the collaboration, thoughtfulness, and attention to detail given to the Compensation and Community Ownership by @DevOnDeFi, @Pepperoni_Joe, @Metfanmike, and the rest of the team that put helped put this together. Thank you!!

Frankly, I’ve been feeling skeptical for months that Index Coop would be able to slay Moloch, the god of coordination failure. After reading this and the subsequent posts I’m feeling that Index Coop is on the “right track” to solving its internal coordination problems.

Overall, I am in support of the broad strokes of this proposal and plan to vote FOR after the details have been ironed out.

This really resonated with me and is the key reason why we are a DAO/Cooperative, not a traditional company.

A specific tweak I would make to the proposal:

Add impression mining rewards to the retroactive airdrop and dynamic staking programs.

@Crypto_Texan has been one of the most valuable IC contributors and not including the outsized impact of his work through the impression mining program would be a mistake.

Addional Note - DATA Methodologist Special Situation:

I think it is well-known, and been acknowledged in other places in forum, that @Kiba and myself are clearly in a special situation / grey area with DATA Index.

I do not expect our special situation to be resolved in the Retroactive airdrop, and plan to vote FOR this proposal regardless of the outcome from the Methodologist framework discussions, but wanted to highlight this for @BigSky7, @Pepperoni_Joe, @Metfanmike, @fallow8, and others who I know are working hard to resolve coordination problems across the Coop.

So my comment below is just intended to increase the salience of our special situation to the relevant parties for the Methodologist Framework conversations.

As methodologists, we have not received contributor rewards for our work on DATA Index, have not received anywhere near the same level of support (including financial) for launch and post-launch as other products, and have been effectively locked out of the Methodologist Bounty program.

We are not earning material ownership in Index Coop by growing DATA Index, but are still only earning a 30% fee split from DATA Index.

We look forward to continued collaboration with Index Coop to resolve these coordination problems with these principles in mind:

Once again, thank you for your tremendous effort to slay Moloch at IC!!!

17 Likes

Hefty piece of work with a great deal open to comment. Great to see it on the forum, well done!

My quick take is that a rapid release to long term contributors has its risks but is the least bad option with a chance of succeeding.

The overall % is well reasoned and seems a good fit with respect to Set’s % in 3 years.

The merit of the retroactive airdrop is sound in my opinion. It seeks to quickly rebalance ownership and seeks to do so with people committed to the Coop. Those who have left will not collect most of their allocation from what I understand of the mechanism. Furthermore, and this is essential IMHO, the dynamic staking model DSM mitigates such a release of tokens by strongly encouraging hodl while also accelerating new contributor ownership.

While I do want the Coop to continue for the long-term and know that many have far better insight, I favour getting the tokens into circulation over holding for later.

As is mentioned, ownership = responsibility and future fundraising could come from the community. And what of a bear market? The DSM caters for a bear scenario and sell-offs by sharing emission among those who remain. Overall, tokens waiting to be used will be fought over every now and again and investors will have uncertainty over what will be done with them. Better get them circulating, working, and finding a value.

The outstanding element to address is for the FTs and for that to be agreed. After that, I see there could be almost infinite polishing but also that that delay will begin to diminish the benefits of the idea.

Like Thomas, I agree overall and, once the details are ironed out, I plan to vote FOR.

7 Likes

Thanks for your response PJ, this cleared up my confusion there :handshake:

For clarity’s sake I’m going to parrot back what I’ve understood from this and from our DMs.

  1. My FT salary and vest is the same as it was declared in IIP, that does not change.
  2. In addition, I receive the difference in airdrops (airdrop - vesting) w/33% now and 67% over the next 2 years (topped up on vesting contract)
  3. Any upcoming FTC would NOT receive such a vesting package as mentioned in (1), and would instead be solely on a salary

My only remaining concern is what Noah expresses here

In all, I appreciate the work that’s been put into this. This is a tough one, and I also recognize I’ve not provided much of anything constructive to act on.

7 Likes

Could someone clarify the main benefits of this retrospective airdrop calculated on work already executed in comparison to forward-looking incentives, super-charging rewards for contributions over the next 1-3 years with the same % distribution to encourage inflows of talent and growth?

I think I just want to know the bigger picture because I see the proposed airdrop right now as just a good payout for 20-30 people, but if community distribution is one of the main factors here then I would say there are better ways to do this.

I would vote against it, but maybe it’s just my current understanding

7 Likes

Truly great work on this guys! My only question is in regards to this is; how would we define active at the Coop? What level of involvement would a contributor need to keep up in order to receive their monthly vest?

4 Likes

This is a really great conversation, and I think everyone is bringing up great points.

Only thing I want to bring up and make sure we include in the conversation that I haven’t seen so far, is that I think we should try to involve major tokenholders in this conversation earlier rather than later. This could easily be seen as a cash grab from contributors by existing token holders, and the contributors themselves don’t hold that much voting power. I would hate for us to spend weeks hashing out a compensation scheme that all contributors are bought into, only for token holders to veto the scheme. I think that would be a severe blow to the Coop’s morale.

We should try to find large token holders and get their buy in to have some confidence of electoral success, before the proposal hits Snapshot. That way, too, they’ll have chance to give their feedback and help shorten the iteration cycles.

9 Likes

Completely agree with this. A few of us have been highlighting the case to major tokenholders. So far the reception has been good!

4 Likes

I am broadly FOR this proposal, pending some finessing as below.

Agree - this sums up my perspective pretty well. With exception of the Fulltimers that appear to need some attention, this feels like a least bad mechanism to increase the ownership proportional to contribution, incentivise high value contributors to keep delivering, and become market competitive with web3 ownership and compensation.

From a personal perspective: Generally speaking, those 20-30 are the core contributors of Index Coop, who have been committed for an extended period of time, and perform a huge proportion of the output, so they deserve a good payout. The exact amount can be debated, but proportionally greater than the lesser contributions is fair.


It’s worth highlighting again, that unless we are able to reward and incentivise the core contributors to stay, we are at imminent risk of losing them to offers that are currently being made by other protocols. The market does not care about our feelings, and ultimately individuals need to act in their interests.

9 Likes

Thanks, @Cavalier_Eth. Respectfully, I would say IC isn’t at a stage where we should be giving blanket rewards for previously accounted and paid for contributions considering, in my opinion, IC is actually in a challenging place right now.

  • Organisationally, TTM, identity etc
  • Products, our last two products have $6M TVL in 6 months or so (BED/DATA)
  • $INDEX, liquidity is bad considering we have a dedicated MM on-side
  • Treasury is 50%+ down, albeit in a bull market + near ATH’s (if people haven’t experienced what a bear market can do, there are no exceptions). Whatever we are doing in combination with the above liquidity concern is not being received by the wider audience in terms of $INDEX price, and essentially is IC’s runway.

I believe INDEX 2.0 looks to create the right leadership and organisation structure to remedy this, and I would essentially like to explore removing the airdrop component of the proposal altogether and bolster, heavily, all future payouts to contributions that help us lead the org, release great products and market them - which hopefully all core contributors are in prime position to capitalise on immediately (and maybe this is done via unexplored compensation structures).

Also, I get this is going against the grain with the majority who stand to gain here, but let me be explicit in saying that, like you all, I only want IC to succeed and I have no issue with the notion of showering INDEX to the contributors that make IC the undeniable, gold standard decentralised asset manager. I just think the past 6 months has presented some major hurdles to overcome before that is the case.

10 Likes

We (1kx) have been following the development of this plan closely and agree with the general direction. Empowering contributors should be a primary goal of any successful DAO. It’s unfortunately a difficult problem to solve when governance power is directly tied to a token, which is why we are seeing some DAOs begin to experiment with NFTs and/or hybrid voting methodologies. The proposed solution by the team behind the Community Ownership plan is very thoughtful and remains cognizant of many of the challenges of post-launch airdrops.

Some recommendations:

Ensure protocol longevity.

  • The community treasury is one of the DAO’s most vital resources. In the genesis event, the treasury was allocated 52.5% of the total INDEX supply, of which approximately 41% remains. Some of this has been or will be further diversified into stablecoins and other strategic assets. Carving out a 28% allocation for contributors out of this finite resource will drastically reduce the longevity of the protocol by limiting the community treasury to 13% of the total INDEX supply.

  • We do however understand the need to adjust the current tokenomics to better reflect our values of community and contributor ownership. For these reasons, we recommend scaling down the total ownership allocation plan from 28% to 16%. This leaves an allocation of 25% to the community treasury while still improving contributor ownership to levels closer in line with other DAOs.

Incentivize current and future contributors.

  • Some of the comments here have highlighted a strategy that would allocate a portion of this airdrop to future contributors. We agree - incentivizing future contributors is a must and we should ensure there are sufficient resources in the community treasury to do so.

  • We recommend distributing 4% of the total supply a year for the next 4 years with an annual review in order to add new contributors to the mix.

  • This could jumpstart growth at the DAO by incentivizing new contributors to up their output in order to receive their yearly ‘bonus’ and existing contributors to stay longer with a much more competitive pay package while also meeting the overarching goal of elevating community voices in governance over time.

Revise the vesting terms.

  • The proposed dynamic staking model does seem a bit complex, but we understand the need to incentivize contributors receiving these payouts to hold rather than selling into an illiquid market. A vesting period is appropriate for these yearly distributions regardless.

  • We recommend each yearly distribution is subject to a 3-year vest with a 1-year cliff. Contributors that are no longer with the DAO would forfeit the remainder of their distribution similar to equity terms at a traditional start-up.

Overall, we are delighted by how thoughtfully the Coop has approached these problems and are happy to help in any way we can as these conversations progress.

18 Likes

Against what? Unobjective takes / cherry picking data points are not helpful IMO

Why is a Set employee suddenly concerned with liquidity? With a >28% stake its unlikey set are looking to enter positions…

Also, you are against community airdrops to reward early contributors. Yet Sets effectively got a >28% airdrop at genesis. Do the people who have contributed to get Index to where it is today really deserve less than a few % collectively in comparison?

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Hey @Viktor, hopefully I can clear some of these points up for you,

  • The treasury being over 50% down from ATH isn’t cherry-picking, it’s the data right now and I was highlighting it as a concern considering it is our effective runway as a DAO and has decreased drastically despite the best market conditions possible. Ultimately this means we will burn through INDEX faster for initiatives so that was on my mind when reflecting on the size of the airdrop.
  • My concerns for liquidity has nothing to do with my employment with Set. I outlined in my post the reasons why we should look into it and I think this was ultimately well-received. Now there is a plan of action to improve it soon.
  • I am not blanket against community airdrops, I just wanted to explore a better structure to create forward-looking incentives whilst rewarding retroactively, I think @Dmitriy_Berenzon has a great post & suggestions on this.
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I am 100% for looking into the NFT / hybrid voting methodologies @MrMadila surfaced this and I’m aware @afromac @mel.eth likely many others would be keen to see the coop progress this opportunity to build governance power for the community.

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