DPI Streaming Fees Returned to INDEX

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.

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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.
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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)

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for me they are benefiting from themselves using the index on whales’ own cause in the governance just look at the vote on the index

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),

Elivis,

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.

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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.

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I think I follow.

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.

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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.

If that happened, would it change your votes? @kiba @overanalyser @DarkForestCapital

I think this is a good idea and suggested something like it to Felix last week, the proposal is still being drafted.

Having vested rewards wouldn’t change my opinion on building up a safety net of DPI in the treasury though, if I’m being rewarded in $INDEX then the motivation is to make the Coop as successful as possible regardless. I still think the best route to that outcome is by building up the treasury first, and continuing to reward $INDEX holders for valuable participation (voting, risk-backstop) in the native token (as AAVE, Synthetix, Yearn, mStable, etc do).

Having $100k+ DPI as a buffer hedges against $INDEX price, allows the Coop to pay for development/design/biz dev if required and is still under control of token holders. Streaming fee once target is reached could be used to buyback $INDEX from the market to pay monthly contribution rewards, giving some buy-side pressure and going some way towards covering our outgoings.

Paying DPI streaming fees to $INDEX holders now has no discernible benefit other than pumping the token price (even that can’t be guaranteed) at which point all the freeloaders will sell, so we are back to square one.

I don’t see why you won’t address that returning the streaming fee to INDEX stakers is almost the same thing as returning the streaming fee to the treasury – because the treasury owns a majority of all INDEX!

If the treasury wants $100k DPI as a hedge or for diversification, go buy it with x% of the treasury. You know what would be great? If that % was lower because INDEX was allowed to have price discovery.

Paying DPI streaming fees to $INDEX holders now has no discernible benefit other than pumping the token price (even that can’t be guaranteed) at which point all the freeloaders will sell, so we are back to square one.

I am not trying to pump the token, this is such an uncharitable interpretation of this. And to act like this has no benefit is simply being blind. No discernable benefit. How about the purchasing power of the treasury, for a huge one.

freeloaders will sell, so we are back to square one.

Who are you talking about? This would attract long-term holders bidding on the token. Although you have so much disdain for these people, the irony is they would be providing a ton of value by ascribing the treasury purchasing power.

Seeking to maximize one’s stake before the token can find price discovery comes at the expense of the coop.

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I second your view on this topic @LemonadeAlpha

If price of index is higher, the Coop has more capital to work with and a longer burn rate.

Many commenters here seem to want to artificially keep the price of $index down so that they can continue to acquire the token at low price. This might hurt the coop in the longer term. This causes more centralization of index tokens than decentralization.

Only with price increase, $index becomes more attractive and would increase the number of members going the coop. I am not talking about shady practises to hype up the project or the token, it is doing the bare minimum to signal that the coop cares about the index holders and the liquidity providers.

@DarkForestCapital comment of

“freeloaders will sell, so we are back to square one.”

is very wrong, there are no freeloaders in the coop at the moment. Everyone who put in capital is risking suffering from not so impermanent loss. If we don’t care about people who are risking their capital, it will discourage people from participating in the coop.

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I have a fundamental difference of opinion on capitalism and the efficacy of financial incentives to produce productive results.

there are no freeloaders in the coop at the moment

There’s almost 2,000 token holders and less than 100 active contributors (and that’s a very liberal definition of ‘contributor’) so not a true statement.

signal that the coop cares about the index holders

There is no differentiation between “the Coop” and INDEX holders, we are all one. It’s fundamentally impossible for us to not care about ourselves. We might have different time horizons or ideals on who we should be.

The difference between the Growth Program mentioned by Lemonade and this is that the growth program is about growing contributors to the community whereas this post is about growing investors in the community and making the big assumption that they will eventually become contributors which all data proves is not the case. What makes people want to contribute AND invest is doing dope shit, lets focus on that rather than pandering to capitalists which is fundamentally a system predicated on not doing shit and waiting for other people to make money for you.

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There’s almost 2,000 token holders and less than 100 active contributors (and that’s a very liberal definition of ‘contributor’) so not a true statement

I stand by my statement. The 2000 token holders didn’t get their tokens through an airdrop. They risked their capital to provide liquidity. Not all contributions are similar, but providing liquidity has been core to bootstrapping DPI and a important contribution.

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Index was supposed to be a governance token, that doesn’t mean it should be the means of gaining passive income coming from DPI holders that are taking the real market risks here.

Most INDEX holders got their tokens for free, DPI holders are investing in the project with their hard-earned capital.

As of today, Index holders are perceived as hostile by dpi holders.

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Look at this comment guys. This is why we need to reward INDEX holders. These guys think most INDEX was airdropped. And the real investors are those who invested in DPI …

Kindly understand what the proposal is. Treasury would benefit a lot if this proposal is approved and implemented.

Remember this is bull cycle, and the price of INDEX is $4. If bear cycle starts people will lose interest. So its time to build the community of INDEX holders. Give them more reason to invest.

Let’s not be blind. And do not wait until $100m. It’ll happen anyway. Don’t let INDEX holders down. INDEX holders are crucial part of this ecosystem. Let’s build a strong community around the governance token first.

Give more reason for people to invest and become part of INDEX. In that, some people will become contributors. But most investors will spread the word about INDEXCOOP. Usually People will do something if they’ve their money in it.

If you still think rewarding INDEX holders is too early now, then it’ll be too late soon.

Let’s be open minded. It’ll all be win win for everyone, if INDEX holders are rewarded.

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Jumping in here - As it has been discussed in the intrinsic productivity w/ $INDEX as risk backstop here, I do agree with the idea of using $INDEX as a risk backstop and $INDEX stakers receiving some sort of compensation for that risk taken (similar to Aave’s model).

Reading everyone’s comments, it seems the main contention is around the timeline in which a risk backstop mechanism is implemented vs. whether it is ever done. IMO, we are still working through the idea of intrinsic productivity and whether / how compelling it is to keep moving forward with the conversations here. And we believe that activating intrinsic productivity will have good benefits for DPI holders and the broader community at large.

To reframe this a little bit, it seems the important idea is to make $INDEX a productive asset (vs. rewarding $INDEX holders), and the ideas above do help get $INDEX closer to having these properties.

This is certainly something we should and will continue working through and finding a sensible solution on.

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Thanks for saying this.

I think one last point to consider is that opening up the broader crypto community to the potential of the INDEX token as a productive asset, leading up to implementing intrinsic productivity, could have tremendous net benefit.

I think this holds even if it is just a portion to start. If we gave say 1/6 of the fee every month over 6 months to implement, that allows the treasury to continue to earn the majority of this fee while also making the potential of INDEX tangible. This could have a major benefit for the purchasing power of the Index treasury.

Lastly, and maybe most importantly, I think relying on intrinsic productivity in order to be able to provide a return to token holders is something to tread carefully on. IMO, it makes way more sense to separate the businesses:

  1. The core business of methodology and management. For which a streaming fee should eventually be the base income for the business, even if intrinsic productivity fails INDEX holders should receive a portion of this fee because it is forecastable and stable.

  2. Asset Management on top. This is an experimental business. It doesn’t do a bunch for confidence in INDEX as an asset if we’re only able to commit to yield if an experimental business is successful.

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I’m new here but after looking at the expanded vision for INDEX I thought that giving discounts and benefits like slower deterioration on leveraged products to INDEX holders/voters might keep people within the platform and create more types of value for the token. This is off topic but the vote is closed… :wink:

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