Moving MVI in-line With the Fee Split Model

Summary

This post is meant to share our thoughts on moving MVI to a new arrangement that better aligns incentives between the methodologist and Index Coop. It will be formalised into an IIP after a period for feedback. For context on the current Community Methodologist setup and how it was arrived at, please refer to this post.

Abstract

We are proposing that MVI is transitioned to a new structure that sees @verto0912 and I ceasing our FT compensation packages as set out here, and moves MVI to a fee split + bounty model, negotiated with the Coop, in line with all other products.

We would anticipate having to negotiate with a cross-functional team represented by BD, similar to the process for DATA and FLI products recently, to come to an agreement.

The aim, from our side, is to solve for stretched contributions across the entirety of the Coop, and allow for sole focus on the Metaverse Index, where we can double down on making the product a success long term and pursue our vision of other products. From the Coop’s side, we believe this change would better align incentives and make sure our compensation is directly tied to the success of the product, also removing the financial burden of our FT packages from the Coop.

Our initial thinking and expectations are laid out in more detail below, but we are open to discussion based on how the community perceives the change.

Motivation

As community methodologists we’ve been contributing to the Coop while managing MVI since its launch in April. This approach made sense at the time as we wanted to continue working on other projects within the wider community, while minimising conflict of interest and maximising return for IC. Since then, the Coop has scaled and faced increasingly complex challenges, which are hard to keep up with and/or lead while also being responsible for a product. We feel the time has come to focus on doing one thing well, and that is the Metaverse Index.

It became clear over recent months that our contributions are stretched too thin. We have been doing many things sub-optimally rather than one thing really well. This has been tough, and at this point is reducing our enthusiasm to tackle the challenges with the kind of commitment that came easily before. We also see others rising through the community and being capable of taking on greater challenges. We want to create space for these community members to step up and lead the next phase of Coop evolution. This kind of offboarding is fairly new to DAOs, but we believe needs to be a part of the culture for the project to grow (A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play).

As was pointed out on the community methodologist post at the time, the original setup perhaps wasn’t ideal for incentive alignment. Moving to a fee split model facilitates better alignment as it rewards product growth, and introduces a greater level of reputational risk for methodologists. Carrot and Stick. On a more practical level, the MVI growth budget remains unspent, and LM rewards should be coming to an end, in our opinion, with a move to V3 next month. As such the timing seems right.

We acknowledge that the community methodologist setup shielded us from downside (more on this below), but hope that the community equally recognises our contributions to difficult convos/workstreams around funding council, fee negotiations, liquidity mining strategy, hiring and autonomy among others.

Next Steps

  • Feedback on the ideas presented and make any changes (1 week)
  • Reach consensus on rough structure and begin negotiation with BD team
  • Create IIP with any stipulations from negotiation (mid Sept)
  • Create handover plan for DFC to step down from FC and autonomy group
  • Cease full time compensation and move to new model (target end of Sept)

Where does this leave the Community Methodologist Role?

We would hope that the role can continue in some form, perhaps answering the calls for some type of ‘Index Accelerator/Incubator’ where ideas from the community are de-risked by having the methodologist be paid a stipend in INDEX for a period of 3 to 6 months. This way the Coop is able to launch products from within the community, and methodologists are able to grow a brand and, hopefully, reach escape velocity without having to pay the bills from the streaming fee.

We see this being positive for the Coop as the most successful products are transitioned to a fee split model, with methodologists able to leverage their knowledge and reach within specific sectors. Tagging @Monportefeuille as someone who might be interested in this line of discussion.

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I am FOR this @DarkForestCapital and @verto0912.

I would push to do this in your position too.

Good luck… and take $MVI to >$1bn TVL please.

You’ll be missed at the core of the Coop, which we as a community should be mindful of too - we’re losing some real talent here, which I read as partly being due to better incentives (rational), stretch across lots of things (nigh on impossible) and lots of the politics and hard stuff happening in the Coop atm (also rational).

Thank you both for everything you’ve done here as contributors. :owl: :owl:

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I can only reiterate what @DevOnDeFi touched on above. I understand the reasoning for this proposal and it makes sense to have both of you focus 100% on MVI, to make this product an even bigger success than it already is.
You’ll definitely be missed! Your inputs and commitments to this community were invaluable. However, my guess is that we will still see you guys contribute here and there, given the deep context and know-how you have collected since joining (fingers crossed) :wink:

I understand that this post is a first step to discuss the structure of the MVI methodologist internally, as well as where this sits within IC.
We currently have the external methodologist role (like DPF and Titans of Data), we have the community methodologist, and @Monportefeuille is exploring a new way in the form of a WG-like structure. Personally, I find the latter a very interesting idea, and I’d like to see this being explored for the iRobot product (if it passes DG2).
A long the lines of these possibilities, do you guys already have a preference for where you see the MVI methodologist role in the future? Let me know if I’m already jumping the discussion.

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I am FOR this as well.

I think we all can relate to the concept of doing too many things sub-optimally rather than one extremely well… And I also think the Coop only stands to benefit by seeing how far the two of you can take MVI as your sole focus. Considering what you’ve managed to accomplish while juggling massively competing FT commitments, I’m excited to see what this can bring.

Cheers to a new chapter.

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Hey @Lavi,

To clarify, you mean who manages MVI when/if we are not able to? Because our proposal above clearly states that we want to focus solely on MVI under the fee split structure.

In terms of who manages MVI when/if we are not able to, we haven’t thought too much about it as we have no intention of stepping away from MVI in the near future.

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Hey @verto0912, it wasn’t fully clear to me whether you’d be treated like an external methodologist going forward, or if forming a WG-like structure was an option (like Julien is exploring). Now I understand that you’re looking for an agreement as with external methodologists. Thanks for clarifying!

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I am FOR this change.

Fully agree with this sentiment and knowing @DarkForestCapital and @verto0912 are fully committed and going “all in” on MVI, gives me great confidence in the future of the product.

Good luck both and wishing you continued success!

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FOR

Congrats on making MVI such an awesome product and a huge thank you for all the hard work to date on all things Index Coop. On a personal note, another massive thank you for the support you have provided to me since joining IC. Sad to see you go but happy to know this is not goodbye and you will both get to concentrate on the things you enjoy.

Ps. When are the leaving drinks?

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@DarkForestCapital I am very excited and optimistic about the overall direction of this proposal. In my view, this moves Index Cooperative a lot closer to the vision of being a true cooperative of many products and methodologists.

Excited to see this change! My hope and expectation is that by focusing solely on MVI you will make the product much more successful, you will build your own personal monopoly around the Metaverse, and you will make more money from the fee split model than the FT contributor model.

This part was unclear to me - are you planning to use the growth budget or return it to the Index Coop?

I see a lot of potential in the idea of some sort of incubator/accelerator program within Index Coop that spins out subDAOs or product DAOs. Much of the value of Index Cooperative comes from the community. The community is the schelling point that brings passionate people together to build index / structured products that make finance accessible. Kiba and I both met through Index Coop before forming Titans of Data, and I believe it’s how you and Verto met before collaborating on the Metaverse Index?

Ultimately, I can even see Working Groups becoming subDAOs in Index Coop 2.0 with incentives that better align economic interests and foster accountability.

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Hi @Thomas_Hepner, thanks for your feedback.

We haven’t spent the growth budget and will be returning it to the Treasury.

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Thanks to you both for the highly professional approach to your FT contribution, your incredibly hard work and despite this your availability to respond to the numerous sollicitations of an aspiring community methodologist like me for insights or guidance …

Knowing what it’s like to cumulate multiple commitments inside and outside crypto, it’s going to be a big loss for the Coop but a big win for your own balance to be able to focus on the areas and activities you’re most passionate about. And as @Lavi said I’m sure you won’t be too difficult to find anyway ! :wink:

Making the community methodologist role evolve from there is at the same time a flattering but challenging heritage :nerd_face:. If I judge by the first feedback received via different channels about the iRobot Working Group idea, this seems like a first step in the good direction.

Pending the community’s formal approval and obviously a successful DG2 vote for iRobot, the focus will be on launching successfully and making this framework sustainable as quickly as possible. But once it works, why not effectively replicating it for other products !

I also find the concept of sub-DAO quite interesting and something that I would be ready to explore with bloom.fi for example, but once the simplest “legos” are already in place :brick:

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I am in full support of the MVI Methodologist team and believe that this change will benefit MVI’s performance and can therefore be considered as beneficial to the Index Coop as a whole, therefore I am FOR this.

On a more personal note, I think we will be losing two of our most valuable contributors with a great motivation focused on innovating through our products and as a DAO. You have done some amazing work and will be missed! However I fully understand the need to focus on bringing MVI forward as these next months will stay highly relevant for the Metaverse and NFT spaces’ growth. I personally agree with your decision to narrow the focus to the product as I can see more and more conversations within the DAO shift to complex political and leadership focused topics as we scale and I understand well how it can be draining managing several projects and sub-projects at once.

Hoping to keep your mindset alive here in the DAO and am wishing you the very best on your journey growing MVI (one of my favourite tokens). LFG!!

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Quick note to acknowledge we had an initial negotiation with the BD team (as is process currently while we transition to Index 2.0) and wanted to drop the minutes of the meeting here to keep the community up-to-date with the progress.

Meeting minutes - 8th Sept, present: @BigSky7 @Mringz @verto0912 @DarkForestCapital

BS: Want to offer 70/30 + methodologist bounty. Will draw up an IIP to reflect it.
AG/DFC: Ok (that’s where we were aiming, had nothing to add).
AG: Do we need to talk to other WG’s? Is the quorum based on product DG2, or ‘other’. No strong feeling either way.
BS: Think regular IIP quorum requirements. Will circulate the draft with other leads.
DFC: We’ve been thinking about it obviously, will send you some line items around how we justify the agreed split, to feed into that IIP.
MR: We will include a BD response to those thoughts.
BS: Want to make it all as painless as possible.
AG: One other thing, we want to launch with Mint/Redeem fees at 10/20bps. This should go into the IIP, and we need to check when the functionality will be available.
MR: Yep just make sure to stipulate any details that need to go into the IIP.


And that was it, we immediately landed in the same place so there wasn’t much need to go back and forth. Next steps from here are:

  • Build out the IIP.
  • BD to circulate the post around other leads to confirm, submit to forum when happy.
  • Check when mint/redeem fees can be applied.
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Just flagging this and bringing @Cavalier_Eth’s attention from PWG. It might be the best approach to not include in this IIP, and then when this gets prioritized it is an IIP to add m/r fees to specific simple index products?

Just don’t want to complicate this getting moved through given that I think adding the m/r fees isn’t trivial and there are arguments on both sides of that conversation.

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Yep totally agree, just catching up with OA on it, we didn’t realise it had been de-prioritised and won’t be holding up this transition on the basis of mint/redeem.

Having said that, it’s pretty profitable from the numbers we’ve seen (thanks @MrMadila) so would be advocating for it based on the benefit to ourselves and the Coop.

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Yeah, basically, if we have the functionality to add mint/redeem on simple indices, we would like to see those added on MVI. Prioritization is 100% up to PWG and EWG.

Slightly off MVI, but I do believe that mint/redeem fees should be set and decided by the Coop, not individual methodologists. Mainly because I struggle to justify why 1 simple index would need mint/redeem fees and others won’t. Makes more sense to me to settle on a level of mint/redeem and apply to all simple indices once the functionality is developed.

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We proposed the final DATA index IIP with the new fee structure you are proposing for MVI specifically because we thought it would boost revenue substantially and create a better product for index holders.

I got mint/redeem volume data for DPI and MVI back in July from @jdcook to create a revenue model for this exact fee structure. My model implied that this fee structure would increase simple index profits by ~50% over standard 95 bps streaming fee.

I’ll defer here to @Cavalier_Eth and EWG, but we are expecting this to be done for DATA and are awaiting an ETA because EWG is not able to support at launch. I’d imagine that if this work is completed for DATA it could be readily applied to MVI given that they are both simple index products?

Not anything major, but I both agree and disagree with this. I only disagree because mint/redeem is untested for simple index products at Index Cooperative. Do I believe it will be more profitable for DATA? Yes. Do I think it’s an that we want to do before applying to across the board? Absolutely.

I don’t think there is any reason that fee structure for products needs to be decided by the Index Coop (meaning coin voting) instead of by methodologists themselves. Methodologists should be rational, profit-maximizing actors. I cannot imagine that you and @DarkForestCapital as MVI methodologists and DFP as DPI methodologists would not want to convert to this model if it proves profitable for DATA. I’m not sure why we would want to burden tokenholders with these kinds of decisions when methodologists are already incentivized to act in a way that also maximize profits for Index Coop.

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Correct - Mint/Redeem is not available currently, and we do not have a timeline to develop it yet. We are rapidly improving our engineering planning in the coming weeks, and will have an answer on priority (which may be low).

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Woah. Inspiring stuff @DarkForestCapital and @verto0912 :owl:

The idea of the Coop as an infinite game is often on my mind too. Dug up these :point_down: explanations to help put more words around what it means:

Seth Godin

In the infinite game, the point is to keep playing, not to win. In the infinite game, the journey is all there is. And so, players in an infinite game never stop giving so they can take.

Farnam Street

Infinite players, in contrast, look to the future. Because their goal is to keep the game going, they focus less on what happened, and put more effort into figuring out what’s possible

Nat Eliason

The joyfulness of infinite play, its laughter, is in learning to start something we can’t finish.

change is the continuity, only that which can change can continue, this is the infinite player’s priniciple.

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Woah, I’m loving where this is going. I’m seeing some potential for a fractal metaphor here too. The infinite patterns of self-initiated new growth. In nature, in geometry, in algebra, in organizations…
fractals

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