Without a value accrual backstop, tokens are perceived as marginally better than valueless. The INDEX Coop is currently distributing the majority of emitted tokens via a liquidity mining program to individuals who are unclear as to why they should not sell the token at market price upon receipt.
Indicating the intention to return streaming fees to token holders, whether through taking a risk backstop or other means, is necessary. The Coop is mature enough that it should be clear this is the primary INDEX value accrual model in the near term.
Abstract :
0.6685% DPI streaming fees would be issued to INDEX stakers. INDEX would become risk backstop for system.
-Implement Index staking and streaming fee dividend systems
-Implement risk backstop system
Motivation :
Token is perceived as worthless by broader market. Perception of token value lifts treasury, and thus, ability to carry out programs to grow DPI.
If token demand spirals downward, team members will lose motivation and treasury will be less potent.
For :
Agree to general framework of risk backstop and returning streaming fees to INDEX Holdrs
Against :
Disagree to streaming fees to INDEX holders via risk backstop
I’ve removed IIP-12 from the post thread title.
This is a great step in building consensus towards distributing DPI fees to INDEX holders.
Once you’re ready to make an IIP please make a pull request to the IIP repo here:
there are dpi liquidity providers that are not index stakeholders in my case, I do not gain index, but rather the appreciation through the rates I earn when I withdraw eth / DPi Ip
I don’t think you did the math on this. With $30M DPI marketcap the Coop gets $200k revenue annualized (this assumes we keep $30M after liquidity incentives end). With INDEX at $4 that’s only a measly 6% APY and even less if your plan “works” and INDEX price increases.
DPI in treasury is better spent on growth activities than paying to passive holders that don’t provide value to the Coop, if someone does provide value to the Coop then we reward them more INDEX tokens giving them more power of Coop governance.
I voted against this proposal for the simple reason I think it’s too early.
I think we need to build AUV, build reserves, build cash flow so we are self sustaining (i.e. cash positive without distributing INDEX) Only then do we reward passive INDEX holders. There is lots to do before that point.
My initial thoughts were in the road to 1% some of these have changed overtime, but not the one on rewarding INDEX tokens.
Voted against, will be expanding on these thoughts in a future post but to summarise:
We should be building up a buffer in the treasury, Yearn use a $500k min, only the surplus goes to gov stakers.
$INDEX should be given out for contributions or actions that benefit growth of the Coop, this will bring value long term. Giving earnings to passive token holders leaves us nothing to re-invest in the future.
As a contributor I’m focused on doing useful things for the community and earning Index tokens. This allows me greater say when it comes to a vote on what to do with our treasury funds.
This isn’t about paying out in INDEX, it is paying the DPI streaming fee to INDEX
As I mentioned, this is a huge net positive for the treasury. For one, treasury INDEX earns the same DPI fees I’m talking about, and the treasury owns a large % of overall INDEX. Not everyone will stake, the treasury will surely earn a steady income from this.
If the tokens don’t have value accrual, the 500k ($1.8m and falling) INDEX in the treasury continues to erode in value due to INDEX demand issues. If they have a value accrual backstop, the treasury earns the same fees
and maintains a robust valuation.
You are willing to light $1.8m (INDEX value) at current reserves on fire in the process of getting cash flow sustainable when the treasury itself is still going to be earning a majority of those same streaming fees?
Surely it makes more sense to use treasury INDEX for growth in the short term than to rely on minuscule streaming fee. Isn’t there an open call to spend the money? (Call For Growth Programs To Spend Treasury Tokens)
If you are referring to the month long extension of liquidity mining of DPI:ETH uniswap. Then yes, I am for that.
My oreference would be to use all DPI streaming fees to fund the coop treasury until we get a solid buffer.
INDEX token value is volatile and we have a fixed supply.
We want (and need) to distribute INDEX tokens - otherwise we don’t become decentralised and that puts the founders at risk.
I think that using INDEX to maintain a MASSIVE liquidity is useful as it will encourage long term actions that benefit us:
Added as collateral by Maker and AAVE
Ownership of DPI by other DAO’s (YAM)
Purchase by large retail (who need to be assured of exit liquidity).
However, I don’t want to give away INDEX without the coop getting some benefit (community building, methodologists, liquidity), and I’m not looking to pump the price by incentivise the L2 pool.
The aim of my recent post was to use sparingly INDEX to promote activities we want (lockup of DPI and liquidity) while building the none INDEX reserves. The experiment would also result in building new contracts to allow intrinsic yield from DPI and future funds and server as a proof of concept.
Giving DPI (or INDEX) to INDEX holders / stakers who carry no risk does much less to secure the long term development of our contracts and understanding of customer behavior and leaves us with a single asset reserve fund (INDEX),
To be honest, there is little we can do to avoid rewarding whales.
They get the benefit to spending a smaller fraction of their holding on gas.
They can provide more liquydity for mining
They can risk lock ups for longer
The can use multiple wallets if we decide to cap rewards.
Were we have the advantage is working within the community. Everyone has the same 24 hours a day, sow e have the same opportunity to work to build the community, the website, the developemnt of the code. The coop needs to increase it’s number of productive active members so it rewards them. For many of us, that is the best way to increase our INDEX holdings.
I can’t be sure you understand my point. I am not talking about giving away INDEX.
I’m proposing a program in which INDEX stakers would receive the DPI streaming fee in exchange for providing a risk backstop (in Discord, I mentioned a tiered reward system based on lockup time: 0.5x for 3months, 0.75x for 6 months, and 1.0x for 1 year).
This seems rather clear from my proposal, yet everyone seems to think I’m talking about distributing INDEX to INDEX holders. I am not.
What I mean to say by the willingness to light the treasury’s value on fire, is that the treasury holds $2m (and falling) worth of INDEX. That is the primary growth lever, not $15k a month from streaming fees.
If the INDEX token value in the treasury continues to erode because there is a demand issue, partially because some of the coop are signaling to INDEX holders that the token doesn’t and won’t capture value) it puts the coop in a position of weakness. The Coop had $8m two weeks ago and now has $2m and trending further down.
If the treasury value continues to erode, it puts the project in a position of weakness. Whereas, if the coop can take some simple steps to stabilize demand, it puts the coop in a position of relative strength.
What’s more, is the majority of the streaming fee would still accrue to the treasury if they wanted, as they hold the majority of tokens!
Lastly, It is fundamentally unsustainable to use the INDEX token to fund liquidity unless it is inflated to heck. And frankly, to continue to run growth programs with a token from the treasury, with no steps toward stabilizing its demand, is fiscally irresponsible.
Yes the INDEX treasury has dropped over the last 2 weeks. But it’s still up compared to 30 days ago.
THAT is why I want to distribute INDEX and hoard DPI. It reduces the volatility of the coop reserves. We transfer some of the INDEX price risk from the coop to the stakers.
We don’t have a bottomless pit of INDEX (but we do have lots), has do have a need to distribute the INDEX tokens (and I don’t want to give them away).
Honestly, I’m more focused on building DPI AUV and less focused on INDEX price.
At the moment, I’m accumulating INDEX, so personally, I would prefer it to stay low. So, I, like everyone, has a preference.
THAT is why I want to distribute INDEX and hoard DPI. It reduces the volatility of the coop reserves. We transfer some of the INDEX price risk from the coop to the stakers.
I think it’s far simpler to just do value capture backstop and move into a position of financial strength.
re: Price up over 30 days, I’m not confident this will hold. Higher INDEX price has a lot of positive knock on effects for the coop
At the moment, I’m accumulating INDEX, so personally, I would prefer it to stay low. So, I, like everyone, has a preference.
I appreciate your honesty and this seems like the reason that some of the main contributors don’t want to do it as well.
Perhaps we could work out a system where contributors could be guaranteed a rate of INDEX into the future per month so that they could capture price appreciation upside as they continued to work for the coop?
For example, if you are receiving ~500 INDEX per month for contributions, you can lock in at least 500 INDEX for 12-18 months whether INDEX is worth $4 or $40.