Llama is publishing this statement to highlight any potential issues that may arise.
Llama is a closed community in the early development phase whereby individuals have come together and apply for grants that leverage the knowledge and skills of the broader community. Several members of the Index Coop community are actively contributing via supporting various ongoing grants.
At the time of writing, the individuals mentioned in the links are currently active members of both communities, Aave and Gitcoin grants.
Other members of Index Coop have joined Llama, been active contributors and then when the grant application was unsuccessful remain idle in discord. The number of active contributors changes with workload.
The Llama Diversified Index was developed with Gitcoin’s treasury front of mind. Numerous Index Coop contributors provided input when designing the balanced portfolio construct. All future proceeds from LDI flow to Llama’s treasury and there is no commitment/arrangement with any individual relating to the proceeds from LDI.
Llama values its community members and their relationship with Index Coop. As no individual is directly financially linked to the product and only has indirect exposure to LDI via Llama like the Bankless community is to BED, we do not foresee any potential conflict of interest arising.
Thank you for your statement, it raises a number of questions.
If Llama is a community that forms groups of individuals that come together for specific grants, and LDI is a result of a Gitcoin application, does that mean that the income resulting from $LDI will be directed towards to Gitcoin?
I’m not sure I follow the logic that INDEXcoop contributors will not receive future benefits from %LDI. Surely the goal of $LDI is to benefit the Llama community and thus all contributors. I suppose an analogy would be that there are no plans for INDEX holders to benefit from $DPI streaming fees, however, to claim that INDEX holder have no beneficial interest in $DPI would be a bold claim.
I see a number of key differences between Bankless and Llama.
entry to the Bankless DAO / discourd is open to anyone who purchases 35,000 (??) $BANK, or to those who are invited as a gusts on their discord.
Bankless DAO and their funding mechanism is visible (on and off chain).
The leadership structure of Bankless DAO is viable.
I’m not aware of any members of Bankless DAO who were also senior members of INDEXcoop while the BED index was being designed, negotiated and launched.
So, I remain to be convinced that a closed community like Llama does not present a potential for conflicts of interest that are not publicly acknowledged and openly discussed.
Thank you for the questions. Hopefully our answers gain your acceptance.
In short, No. All proceeds flow to the treasury and given Llama is in the build phase it is reasonable to assume any revenue generated is likely to be reinvested in growing Llama. The text below did allude to this and Llama thanks you for clarifying.
Perhaps no two DAO are identical copy cats
It is very common for early stage communities to be gated. Once Llama is nearer to launch, Llama will have worked through points 1 and 2, but currently these are things yet to be determined. Once determined, Llama intends to be as transparent wherever possible.
Regarding leadership structure, Llama is building a core team and hiring as needed. @HelloShreyas is the founder and no Index Coop member is Full Time and with Full Time defining who is core, no Index Coop community member is core to Llama.
We are excited that you raised the below, we might be able to share some alpha here. But keep in mind this is just an idea at this stage.
Llama has presented the idea during the commercial discussion with Index Coop, that if Index Coop provides Liquidity Mining incentives for LDI, subject to certain performance goals, Llama will reward Index Coop with some kind of ownership in Llama. Index Coop then has the same exposure as all other joint community members. This will align community incentives through ownership.
Oh and FWIW this idea came from a non core Llama member, who is a part of the Index community member. Innovative collaboration is just one example of how the two communities are strong through a LDI partnership.
We seek guidance here, @Matthew_Graham, did ask a few times if there was any COI or if anyone has thoughts around this topic. Others have also been added to the chat and since been silent eagerly awaiting direction. Llama believes some folks failed to reply :(, others deflected to the governance forum and those who did reply gave a green light to proceed.
If this is an issue, then please do let all Llama community members know where they stand and if necessary, other community members from Llama can assist.
Thanks for the detailed follow-up @Llama ! I’ll out myself as the person in that group chat who deflected to the governance forum – I’m uncomfortable with only a few people making a “closed room” judgement call about conflicts of interest and much prefer them to happen in the open.
That said, I feel like there may still be some more information needed to make a good judgement call here. Unfortunately, I haven’t had the privilege of working with @AcceleratedCapital and @Ahuja and it would be helpful to learn more about their involvement with the Coop & Llama. It’s also unclear to me if there are other Coop contributors involved (@ElliottWatts and @verto0912 were linked in the post above).
Finally, I really appreciate Llama’s willingness to support the COI process – there’s no blueprint for this and I imagine it can be frustrating to not know how to resolve!
Medium level: Index Coop holding some Llama would help align our organisations (regardless of what mechanic and business terms we use to potentially enable that)
But, I guess where I would like some more clarity is what grants these IC contributors leverage on what $/token terms. IC’s monthly payments to contributors are open - understanding the scale of these grants, which as I understand are closed, would help me understand the balance of incentives. If they’re approx 50/50, that’s one thing - 20/80 towards the third party makes the IC contributor potentially think and operate differently.
Going beyond this discussion, I think IC folks working with third parties on projects with IC should disclose the exact terms of their multi-sided incentives. This respects the open, crypto philosophy. For example: if I was going to propose an influencer-following crypto index with a third party (say a quantitative shop) I would disclose the terms I work with the third party under, or at least the bet I’m making re potential, yet-to-be agreed terms.
While I support being more transparent, this isn’t always possible as NDAs are commonplace. I have concerns that forcing too much transparency in ways that people can’t necessarily comply with will cause the coop to lose current and miss out on new high-level talent, especially as many folks are deeply embedded in many places around the small crypto and even smaller defi ecosystem.
Some fair points re NDAs and maybe too much detail @oneski22,
If ‘exact’ terms is too much/not practical, ‘general’ terms where there’s not a contractual blocker would seem fair. Unless there was a contractual issue, I would personally be very happy to share that info (and more) with the Coop.
Llama received a Gitcoin grant for work relating to Gitcoin’s finances. Similar grants have also been awarded to Llama from other DeFi communities. Although Gitcoin has no involvement with the LDI product, it was the need to create a balanced fund for this grant that lead to the LDI methodology being developed.
A balanced fund utilising the methodology could be deployed using gnosis safe and this would suffice for Gitcoins needs. Instead of doing this, Llama opted to pursue collaborating with Index Coop and developing the LDI product which has the potential for future extrinsic use cases.
The TL:DR is receive a grant, develop an investment strategy and then realise it has the potential to be so much more through collaboration.
Let’s talk incentives and motives. It is fair to conclude Llama will distribute funds from the grant to those contributing to the applicable grant’s deliverables. The simple logic here is Llama brings people together and submits proposals to various grant programs and a portion of the grant proceeds goes to the individuals for their toil. Similar can be said about other grants/proposals.
Given Llama is early stage, the questions around which contributors from Index Coop will receive tokens can not be answered. These details are very much unknown, eligibility, timing, amount and if LDI even features in that conversation are still all unknowns within Llama. Llama reiterates, anyone contributing at Llama is speculating on what could be and there is no forward guidance. The value add for Llama is the relationship with external partners, great value is placed on the Gitcoin relationship, less so LDI.
It is typical for genesis allocations to be broad in context and high level in design. There are many variables to consider. In relation to LDI, perhaps toil is rolled into an overall allocation that includes other contributions - pin pointing what is LDI specific, that is very unlikely to happen.
In a post token environment when LDI is operational, then Llama will likely adopt something similar to a working group and will need to determine how to reward community members for their contributions. The intent is to support the product as best as possible.
Llama hopes this addresses the above concerns around incentives and motives.
We hope to add Index Coop to that list of valued partners
In my opinion these recent comments about interests and alignment add the transparency and understanding I need - and we should crack on and get to work on a potential partnership.
I understand certain Index Coop contributors are making a bet on the Llama token distribution, which is fine, while also making a potential bet on longer term work opportunities supporting the product, which is also fine.
It seems important that we separate out the two aspects of Conflict of Interest:
Conflict of interest of contributors within Index Coop
Conflicts of interest of third parties/methodologists looking to work with Index Coop
On the latter, I do not expect external methodologies to provide disclose when working with Index Coop, for the following reasons:
Normal supplies are never expected to do this. Supermarket suppliers working with Walmart do not need to disclose every other supermarket they supply.
Why are we worried about this now? The community had no issue supporting the Wintermute proposal when Wintermute is also a market maker for other competitor crypto index projects.
What are the gains to having a rigorous third party conflict of interest framework? Exessive disclosure requirements would only make Index Coop a less attractive place for external methodologists and partners.
It is important we recognise and manage internal conflicts of interest which arise for contributors. This is to help ensure IC decisions are made with the best interests of the Coop in mind. Over the next few days, I will share a separate post articulating some next steps for how we might align and move forward on this separate topic of contributor conflicts of interest.
Specifically regarding Llama, to my knowledge the following individuals (4/5 of the core contributors Treasury WG) are actively involved in both Llama and Index Coop:
I am not at all close to the negotiation process with Llama, but I would assume the IC team working on this is more expansive than just the TWG?
There could be an argument that contributors working across both teams should entirely remove themselves from the discussion.
However, I think there are more benefits to having some Llama & IC contributors supporting the discussion. I trust these individuals to act in good faith and I think a better deal could be brokered between individuals who have a more complete understanding of both organizations.
Ultimately for this process to be successful, we just need to make sure the final proposal is fair, mutually beneficial and receives sufficient community buy-in.