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.
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.
“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.
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.
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.
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.
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.
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.
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:
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.
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.
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…
Second, It’s really difficult to hold a token that has no value accrual mechanism in the DeFi world, where everything is about compounding. This is also why we see so many people asking for DPI yield farming initiatives. It’s not different for $INDEX, and we should listen to the market.
Nevertheless, this initative should be sustainable. We could incentivize it with a predefined percentage of AUM management fee. I’m a big fan of mechanisms that increase rewards based on the staking duration, to reward early believers first.
I also think that $INDEX (still to be distributed) should only be rewarded to end users (DPI holders) and builders (Index Coop members), as it creates a positive feedback loop. We should not incentivize an $INDEX staking mechanism with $INDEX itself - it’s hot air.
Let’s figure out a way to incentive people to keep INDEX, agreed. Voting isn’t enough without a cash flow generation. Problem is you’re looking at a security IMO in that case. And in that case I’d advise against doing it.
I think the most logical sense here is that INDEX holders get a small percentage of streaming fees from all products issued by INDEX. Creates incentive for people to own INDEX , and furthermore grow and develop all Index Coop-distributed projects.
Create a separate address for INDEX-owner fee accrual and distribution for each index fund, separate from treasury.
As far as I see it, the most important people in the Index ecosystem are Set Protocol and methodologists and none of them seem to have a problem with current token model. Those are the teams putting in the most work and generating all revenue, not token holders.
Are we forgetting what “maximizing shareholder value” has done to our world?? You guys are operating in an old paradigm, and one that is highly destructive and short-sighted at that.
“Are we forgetting what “maximizing shareholder value” has done to our world??”
Good point but there are many things to take into consideration. The coin needs to be spread among enough people for them to collectively pass the threshold where the coin has lasting value and to decentralize ownership. This is pretty much a “new paradigm” since inflation is controlled from the outset and used to spread the asset. If INDEX is rewarded to people for putting in real work or taking real risk it will take become meaningful and a measure of value. If it’s given out arbitrarily it will have a shifting and arbitrary value.
Thats not necessarily true but either way has nothing to do with sending DPI to INDEX holders. INDEX is already used for what you say " real work or taking real risk " so not sure what your point is.
I can’t really say what is best regarding sending DPI to INDEX holders at the moment, I’d need to study more. My point is that the tokens need to have use cases and I agree that we should endeavor to not repeat old mistakes. The way in which you distribute rewards will (or will not) build credibility and shows what is valued in the community. I’m not opposing that anything should be paid to Set Protocol and methodologists but there could be long-term benefit coming from connecting DPI and INDEX for holders to strengthen their hands.
I mean I think this is more about your philosophy on capitalism which I am sure you will continue fleshing out over the next few decades and come to realize that incentivizing human behavior is really hard and capitalism is the best system ever conceived for wealth accumulation, but I digress.
It’s not even about maximizing shareholder value, if that were the case, I’d propose that Index Coop treasury can’t participate in the staking program and that the idea of a risk backstop is not necessary.
But as is this program would return a substantial (likely 60-70%+) amount of the streaming fee to the treasury and simultaneously increase fundamentals-based demand for the INDEX token. I have yet to see a compelling rebuttal to that last point.
Distributing fees to INDEX holders does not change. fundamentals at all since INDEX holders will always have a claim on those tokens. They can vote to distribute them in anyway they want at any time so treasury and projected revenue should already be priced in regardless of the current distribution mechanism. Even if it did change fundamentals, our fees are so low we would be spending almost as much in gas to deploy contracts and send claim txs as we would be receiving in fees so there’s not much economic incentive anyway. 2,000 INDEX holders * $4 per claim tx = $8,000 which is ~25% of DPI value in treasury) For most holders that means they are spending more in gas then they receive in DPI
yea capitalism is a bit off topic but we have a fundamental disagreement in that I don’t think humans need to be incentivized, they just need the proper environment to pursue what they are internally motivated to do. Capitalism is a terrible incentive mechanism on a societal scale. Free markets are best used as metabolic regulation pointing us in the right direction which can lead to ‘wealth accumulation’ if so desired (e.g. in capitalism)
Hey community, can someone explain or guide me in the right direction. I am looking to understand more about the streaming fee and how fees are currently distributed amongst token holders. Does the 0.95% streaming go to Tokensets/DeFi Pulse and then from that 0.6685% distributed amongst token holders? Who is considered to be the Set Creator? Are there any other fees that are paid out to token holders? Looking for any information. Thanks
