**Poll Closed** - UMA KPI Options for INDEX Holders

Finance Treasury
1

Owners: @Gottlieb / @Mringz / @kiba / @defijesus

Special thanks to @lavi @Matthew_Graham @DarkForestCapital @verto0912 for feedback

Hypothesis:

In order to get more community members involved in achieving our North Star Metrics. We have identified an opportunity to create KPI options with UMA that rewards INDEX holders when we hit our core metrics.

The main goals for this initiative:

  1. Create a measurable target for our north star metrics within a given timeframe
  2. Create a fair and open reward scheme, to attract new index supporters and reward existing community members

Context:

As laid out in the treasury management goal post and treasury working group post, incentivizing the achievement of our north-star goals and creating a reward program have been on the map for a while. @BigSky7 forum post where he highlights some goals for next quarter also plays into this proposal, as we aim to make these goals more tangible.

Why UMA KPI Options?

UMA protocol is a synthetics assets protocol that enables users to mint synthetic tokens based on pre-determined conditions. To date their protocol has attracted $218 million TVL with synthetic assets being minted across 11 unique projects. KPI options are a novel and innovative way to boost protocol growth and adoption. UMA offers the potential to create unique KPI options customized towards the Index Coops needs. In other words, we can create options that only pay out holders with $INDEX tokens, when a specific target is met. In our case, we propose to use our north star metrics total unit supply.

UMA has already started a similar initiative (see here) and so far it seems to develop quite well (see dashboard).

We hope to achieve the following outcomes from this campaign:

  1. Get INDEX holders more involved with helping Index Coop achieve core KPIs
  2. Increase token distribution to INDEX holders and the broader community
  3. Create conditions for rewards that serve the Index Coop as a whole
  4. Build a “unforkable” partnership with a reputable DeFi protocol

In order for this to work, we have to agree on a measurable goal (e.g. increase $DPI supply to 600k until August 2021). As of now, we know what our north star metrics are, but we don’t have a concrete incentives for us to achieve them.

Option 1 Specification

Option Name INDEX Unit Supply Option
Option Type American Call Option
Option Contracts available *3’287 options
Option Price/Collateral 0.1 $INDEX
Strike KPI (Northstar) 1,000,000 To Supply over all products
Total Redeemable Reward *9’861 $INDEX
Vesting Period 1 Month
Expiry Date 30th July 2021

*With the first option, we would distribute 3’287 options. If the north star metric is achieved by the end of July, each option has the right to redeem 3 $INDEX tokens. In the beginning, an option is worth 0.1 $INDEX and the closer we get to achieve our goal, the more value an option will have.

This will be the first KPI option available and will serve as a pilot. We intend to release more KPI options based on other core metrics like unique holders, uTVL, daily revenue etc.

We have been engaging with @Matthew_Graham from the treasury working group and have requested a total budget of 10,000 INDEX for UMA KPI options campaign.

Qualification Criteria:

In order to qualify to mint this option you need to be an INDEX holder from 1st May 2021.

Marketing Requirements:

  • Posts announcing the campaign on both UMA’s and Index Coops social media channels
  • Medium article on how to claim and who is eligible to mint the options

UMA Protocols’ marketing channels:

Twitter: 24K Followers
Discord: 6 295 Members

Risks:

Smart Contract Risk

  • UMA’s smart contracts have been audited by OpenZeppelin. The audit report can be found here.
  • UMA have an active bug bounty program for improved security

Technical Requirements

  • UMA will provide majority of the engineering assistance to create the first option
  • Index Coop will need to generate a whitelist of INDEX holders addresses based on the qualification criteria

Analytics Requirements:

  • KPI Options minted
  • % INDEX holders with KPI options

Campaign Target:

  • 2000 KPI Options minted
  • 80% Index holders with KPI Option

Way forward:

  1. After forum feedback, create poll and IIP to request funds from treasury
  2. Create UMIP to add our unit supply KPI price identifier
  3. Engagement with UMA team to create first version of option

NB: Intial proposal has been updated based on feedback (*)

  • Proceed with the campaign
  • Do not proceed with the campaign

0 voters

14 Likes
2

Yessss! This is great. I know that XIO, and UMA have been doing this already, and I mentioned it in Discord that I would love to get this going. Hope you all had an awesome conversation with Clayton from UMA- he’s a standup dude!

1 Like
3

This looks really interesting. Just to clarify, how exactly are the options being distributed? Are they being distributed to all INDEX holders as of May 1, or to specific community members who are pushing the ball forward on specific items like DPI supply (e.g., the IR team)? If being distributed to specific teams/individuals, would probably be good to break down exactly how that is being determined.

I’m also just curious as to expected costs (for UMA, etc.) associated with the campaign.

Seems like an exciting way to further align incentives, looking forward to see this play out.

4

Does INDEX holders include LP stakers who have unclaimed INDEX?

5

We’re trying to keep it as simple as possible. We will do a snapshot of all eth addresses that held INDEX at the time.
If there is a also a simple way to take a snapshot of unclaimed INDEX rewards, that might work.

6

I figured that. It’s all good if I’m not included in the recipient list. I think this is an awesome proposal and I fully support it! Would I have to have INDEX in my wallet to vote as well or can I vote with unclaimed INDEX?

7

Seems like an interesting activity to boost engagement + reach KPIs. Could anyone provide more details on the options themselves? From what I understood, 2,500 options will be distributed pro-rata to May 1st INDEX holders. Why even price the option contract? I’m assuming the market will price these contracts at close to their intrinsic value ( 2 * INDEX price) as expiration draws to a close and subject to KPI strike condition.

8

UMA does look solid!

9

Why May 1 and not May 10?

10

We picked May 1st because it’s before we even started to think about the current proposal. This eliminates the possibility of gaming the system.

2 Likes
11

Hi everyone! Clayton from UMA here. Excellent and well-considered writeup!

One thing I’m curious about: you mention about “In order to qualify to mint this option…” – But to be clear, Index Coop would mint the the tokens, and you’d want to say “in order to qualify to claim” is what you mean I think?

When you say the campaign target is “2000 KPI Options minted” I think you must mean “claimed”? To be clear, you will mint all of them from the start. Then, you’ll distribute them via a claims portal or as you wish – Then you can always redeem unspent ones.

UMA_KPI_options#2
UMA_KPI_options#2607Ă—1560 121 KB

2 Likes
12

So it sounds like you’d deposit 5000 INDEX into the contract, mint 2,500 options tokens.

I see you have 3,280 tokenholders on etherscan. This would make the max payout about $93, and that’s only if your highest KPI is hit. I suggest that your “reasonable expecation” payout be closer to $250, and the max be much higher (but only if very aspirational KPIs are hit!). Such a low payout wouldn’t justify the gas to claim.

So what you could do is either:

  1. Reduce the target recipient group, e.g., focus on a different criteria than token holding (e.g., historical social contributions)
  2. Increase the payout.

Just my two cents.

Edit: My calculations above didn’t take into account the pro rata design; it would be worth it for larger holders to claim even with this model, although I still don’t know you want to create incentives that way–Only incentivizing whales.

3 Likes
13

I agree with Clayton in this regard.
I would aim for a bigger payout.
Using a minuscule airdrop could lead to contrary effects than we desire.

14

Is the options snapshot technically able to include INDEX held in the INDEX/ETH SLP?

15

There was no announcement before May 10; nobody could game the system

This is unfair to new buyers like me … but I digress

16

As of May 10th there were already some talks about this project, we picked a date well into the past so that no one could take advantage of the timings, not even ourselves.

I hope this answers your concerns.

17

Amazing idea . I really like what UMA is doing with KPI option. It’s a very nice way to reward a community but also work all together toward a given objective

Do you know what it means exactly ? do you numbers or is it just a “random” idea at the moment ?

1 Like
18

Hey Clayton. Thanks for your feedback. We will increase the INDEX reward to 3 INDEX and increase the options available to the number of INDEX holders.

1 Like
19

Hey, @Cryptouf. Just a target we would like to hit with the campaign to label it as a success.

20

I only have a basic idea about options. Are we going to buy the option?

2 Likes