Coop Contributor Compensation Conversation

Other Miscellaneous
21

Firstly, fantastic proposal!
Secondly, thank you for all the effort and deep thinking that has gone into this post.

Is this exclusively the exchange issuance and mint functionality or do we consider on-market buying of our products via aggregators or saying bonding curves like what Fei Protocol is doing?
The net affect is to absorb DPI units but not always create new circulating supply. The counter point is on market purchasing could prevent redemption from occurring.

I am more a fan of only considering the Index Coop portion of the revenue.

Questions:

  1. Is this an additional reward to the existing Contributor Rewards scheme ?
    1)a) If so, will it be like the Impression mining with those on Stipend or FT benefits being excluded.

My thinking - This is an additional rewards scheme and is open to everyone which creates a dilemma for Internal Methodologists.

  1. Tracking the units of our product could be difficult and how do we capture additional value accretive actions ?

Example: A sale followed by a value add of providing on-chain liquidity. The act of providing on-chain liquidity is significant but falls outside of this scheme. Further to that, the act of providing liquidity means the LP token will have a varying composition of DPI and XYZ units over time. This increases the reporting burden.

  1. A 5 year royalty like payment is an interesting concept. The drive is to get as much onboard ASAP to maximise rewards to IC and the individual. Great idea. But why 5 years ? Is there a caveat that the individual must be an active contributor to the community for this duration.

My thoughts: Naturally, better results will come from being more deeply involved at Index Coop. However, if the individual optimises for their time it will position them to try replicate success elsewhere within defi and then just hit the big ticket items for Index Coop when they arise. This has potential for individuals to drift from Index Coop and enjoy the royalty like renumeration stream.

Edge Case:

Say for instance DPI gets listed on Aave and a DPI2x-FLI product emerges on that platform. Any AUM measured of that lending protocol is going to be potentially a lot higher than it would have otherwise been without the FLI product. You can bet the house someone like myself, who is apart of both communities is going to try move any leveraged product to Aave over Compound. That is a pull from the Aave side by being a contributor their and strong push from the Index Coop side with how rewards are structured.

There appears to be a strong first mover advantage in all this. There is only one Aave and one Compound, but many opportunities beyond DeFi.

I also want to be fully transparent as I have two big ticket items ready to fall into this proposal.

To be clear, the post is amazing and the stuff I raise above should not take away from the stellar effort in putting this together. Battle testing an idea is the best way to gain an holistic overview of what could happen.

I don’t think we used game theory or played out what could have happened when we launched other initiatives. Profit driven rational actors will always game the system, also AKA opportunists :wink:

5 Likes
22

@Metfanmike This is a strong first attempt at producing a framework that - Encourages Contributor Actual Performance, Is Transparent and is based on Metrics.

As a new member of this community I am impressed with some of the 3rd Party Integration Traction achieved. Previously I worked on a more centralised project so fully underrstand the work required to onboard Bitgo, Fireblocks, CEFI exchanges e.t.c

I actually think we may have an advantage Longer Term with CEFI exchanges / 3rd Party Integrations by fully commiting to the DAO Model. Couple of reasons :

  • Vibrant Energised Community with different pools of experience. Community is 1 of the top criteria’s on Listings. INDEX is way more decentralised than most although you still appear to have a large Set Labs holding.

  • DAO framework to incentivise contributors retroactively. You can draw in more networking opportunities e.g if you got Fireblocks for $10k this is good value. The only other way of enabling this would be to draw in some of their top customers to lobby on your behalf. It looks like you have plenty of holders of Aave, Sushi e.t.c in the Index Coop which is a great start.

  • Transparency leads to better decision making. What I have been impressed with is how many decisions and metrics are published.

Integration Strategy - my observation is we don’t just need to be transparent with rewards we also need to focus on :

  • Distinction between distribution and liquidity of INDEX Governance Token versus Actual Indices

  • Revenue and Costs Accrued to INDEX Stakeholders versus Growth of AUM

  • Clear articulation of differences between ST versus LT Strategic deals (e.g If you plug in a leverage option versus an Institutional plugin that will take along time to grow AUM due to Adoption curve slow in this segment)

2 Likes
23

First of all great work, @Metfanmike! I think you’ve outlined a framework that the community can rally around and iterate and improve upon over time. Maybe not all the details are exactly right, and perhaps they never will be, but this feels like the directionally correct approach that moves us all in the right direction. It is far better approach than my prior suggestions on this thread. Thank you again for working through the nitty gritty details :pray:

Also wanted to agree with two specific comments @Matthew_Graham made:

I definitely agree that this creates a dilemma for Methodologists (not just internal). Personally, I would not want to be seen as “double-dipping” or “being an opportunist” by getting a revenue share both as a Methodologist and as a contributor doing BD for DATA. I think the Methodologist is already directly compensated for their BD activities via the revenue share agreement for their own methodologies/products.

1 Like
24

Thanks for the feedback, Thomas! I owe @Matthew_Graham a response as well, and will hit on some eligibility questions, but I’ll just say to this point that we should just exclude that specific product’s AUM from consideration since methodologists benefit from increasing AUM already so are appropriately incentivized to help with BD, to the extent they want to. That said, hypothetically, if a methodologist lands an initiative that directly drives AUM - both for their product and other products - I don’t see why the revenue share for the other products shouldn’t go to them for helping to create new AUM flows for (in your case) DPI, MVI, FLI, BED etc. Win-win. No double-dip. What do you think?

2 Likes
25

Completely agree! This would should help drive Index Coop network effects too if the BD work that one Methodologist does is translated to other products that benefit other Methodologists / Community Treasury (i.e. @Kiba 's work with CREAM, @mringz work with Polygon, etc.)

1 Like
26

A number of people have said it better than I can but this is such a great post @Metfanmike - thank you for thinking this through and posting.

Directionally I think this is spot on, with some eligibility requirements to be fully defined, and - then - some real world implementation examples shown in time to acts as inspiring models.

3 Likes