Community Ownership | Retroactive airdrop to historical contributors

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.

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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?

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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!

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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.

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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.

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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.

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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!!!

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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.

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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.

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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

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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?

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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.

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

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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.

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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.

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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.

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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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Amazing work everyone. Love the work that has been done on this thus far.

Really nice to see 1kx, providing feedback your expertise and insights are highly appreciated. I strongly agree with this and the other recommendations in this reply. I hope that we do implement the comp based on these recommendations. These recommendations are setting the standard for IC to think more sustainably when it comes to major initiatives within the DAO.

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