PROPOSED: IIP-134: Index Coop Retrospective Airdrop

Allan raises very valid points. We have been here before in creating perceived segregation when the FT packages were first introduced. Again the sentiment was that the people chosen were deserved but that it left many out with no objective plan or criteria to include them at a later date. The unintended consequences lead to trust and perceptions of fairness being eroded and tarnished which crept into working day life within the community. That was just a handful of people, I expressed concerns at the time of what it would lead to. This time the scale is much much larger and starting from a place of a material dislocation in expectations.

I strongly ask that we do not rush this IIP through and risk prematurely cementing the current confusion, frustration, disappointment, division and feelings of unfairness into the community psyche.


I’ll be voting against this proposal as written.

The main reason I’m opposed to this airdrop is because it doesn’t reward performance over the long term. If the proposal used a longer vesting period (at least 3 years) then I’d have a much easier time supporting it. Even if 100% of the airdrop went to current contributors, I think it would be a mistake to let them keep all their tokens if they, for whatever reason, were no longer highly productive contributors in six months’ time.

I completely agree with everyone who thinks contributors should have a larger ownership percentage. We have to square that up with the fact that we can’t mint any more INDEX tokens. We have to make whatever tokens we have last for the next decade, or longer.

If we combine all the INDEX in our Treasury and Operations wallets, plus the INDEX left in our Treasury vesting contracts, we have about 4M INDEX (40% of supply) at the DAO’s disposal.

Considering that we need to convert INDEX to USDC to pay salaries and expenses, it’s pretty obvious to me that we’ll need to use the majority of the remaining INDEX to raise cash. It takes a lot of capital to grow a company to the kind of scale we all want Index Coop to achieve. The median amount of funding raised by U.S. companies before their IPOs was $167M in 2020. A lot of those companies weren’t even profitable at IPO.

Even in the most generous situation where we only need half of our remaining INDEX to fund operations through our high growth phase, that would leave 2M INDEX for current and future contributors. That’s 20% of total supply. I believe that is the absolute ceiling of what we can spare.

I don’t know exact numbers, but I’d estimate that we’re already set to award about 2-3% of total token supply to contributors this year alone.

As this basic math hits home for me, I’m still hopeful we can find a way to sufficiently fund our growth and for early contributors to gain meaningful ownership. Giving away 1.5% in a short amount of time, largely for past performance, is not how I’d do it. I say this as someone stands to benefit from the airdrop. I also say it as someone who knows none of this will matter much anyway if we don’t launch products with over $20M in AUM soon.

Whatever happens in this vote, I want to say thank you to the early contributors. I hope you all feel rewarded in due time.

P.S. - A number of great perspectives have come out of this discussion. I like the idea of using an incentive structure similar to stock options. @setoshi if your goal is to motivate leaders at Index Coop to act more CEO-like, I’d urge you to think about sourcing a portion of KPI-based options from Set Labs’ allocation.


Hi All,

In response, to the comments made above regarding the Airdrop’s INDEX emissions within the DSM program, a vote was held by the group who compiled this IIP in collaboration with the original founding group and the proposal has been updated to reflect the following:

Specification Amendment

Technical Specification Amendment

With these amendments, it is believed the concerns relating to the methodology presented with this proposal have been addressed.

Looking forward, kindly @sixtykeys, @mel.eth may a IIP number assigned and the Snapshot scheduled for commencing Tuesday 22nd February. I believe this is only 24hrs instead of the normal 48hrs as per the standard process, however we intend to distribute contributor rewards this Friday and would like to action the result of this airdrop as well.

There is a wide range of views and opinions presented throughout this thread. Some fantastic views have been expressed and it has been a very engaging proposal that is for sure. We can now all look forward to a vote and accepting the outcome.

I would like to take this opportunity to thank the team that created this proposal. I would like to recognise their professionalism and ability to move swiftly in response to last weeks leadership call. I thank each contributor for the time and effort in supporting the development of this proposal.


Thanks @edwardk - We will be considering utilizing Set’s allocation towards CEO / executive-level incentives.


gm @Matthew_Graham -

@sixtykeys will be your GovRep for this Proposal; the proposal has been reviewed the status is now PROPOSED. As discussed on the weekly call the 48-hour discussion period will remain, and the vote will commence on 23 February 2022 at 3AM UTC.

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I’ll be voting against this proposal as written and in this timeframe.

I am voting against this proposal primarily based on the short, and IMO incomplete discussion around this topic. I do not want to make, what I would consider to be, a snap decision on the subject and @edwardk 's argument concerning the future runway of the treasury and his experience with startups is a compelling issue in my view.

However, I cannot overstate how similar in feeling I align with @allan.g and @MrMadila in posts above concerning the perception of incomplete implementation of the original Index 2.0 compensation and community ownership effort. To Allan’s point above, one of the goals laid out in the Community Ownership | DSM post was to eliminate an “in” or “out” dynamic but it feels we have simply increased the in element from 5 to 25:

We have seen the tension created by an “in” or “out” dynamic with full time compensation packages as the only real path to contributor ownership. We must look to promote community ownership in a scalable way that does not create further disharmony.

I can’t put my thoughts into a more well written statement than Allan so I will simply lean on his words as well around my thoughts towards the hard work so many have put in and the team that was hired deservingly, while still having an eye towards a successful future.

I second this request:

The reason stated by @Matthew_Graham above for pushing this to IIP quickly is so that rewards can begin in February, however if I understand correctly there will be no $index handed out this month or for the next 5 months that can be sold or moved as it is vested for a 6 month period. If we are able to accomplish a lookback for the airdrop of 21 days to Feb 1st, can we not also do a look back of 45 days?

Pushing forward with the DSM + Airdrop topic from a perspective of only priority hire round #1 vs addressing both issues from a holistic point of view as laid out repeatedly in the Index 2.0 posts seems short sighted. If I am correct the most recent information we have on the DSM is in the Hiring round #1 post. As @mel.eth made fairly obvious in last weeks leadership call, there are still many open questions and uncertainty around the DSM mechanics from a priority hire perspective, with almost no concrete information surrounding the inclusion or mechanics for non-priority hire members of the Coop. Even though I would very likely be a yes-vote on DSM for all > bronze contributors and a no-vote on the airdrop, the most critical thing is clarity and completeness for all the many contributors putting in significant time and commitment to the success of the coop. Ambiguity and confusion breeds dissent.

Regardless of this proposal and its outcome, I hope we collectively can address the following discussions with creative solutions in the near future:

  • A path towards meaningful ownership for the full spectrum of contributor; including those that may need to come behind us and grow to be critical members of IC’s success. This problem needs a creative solution that may or may not be based on holding more $index token with both its financial and governance benefits together.
  • Deciding what is the best use of the treasury we have to accomplish and incentivize the next 18-24 month roadmap that we consider success for IC.

Hey @Matthew_Graham @mel.eth , an IIP number has been assigned (134) with a snapshot vote queued for 23rd February 2022.
Snapshot here


Agree with that and will AGAINST.

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Hi All,

As IIP-134 is now on Snapshot. I would like to share my personal view on this proposal.

Some would have noticed on the Leadership call I pushed back on the need for the airdrop but recognised the general feeling that this was largely baked into the DSM and Core Hire renumeration expectations. @Metfanmike and I took an action as council members to work on the Airdrop proposal. I would like to thank @Metfanmike, @ElliottWatts, @prairiefi and @Hammad1412 for putting aside their personal views when working on this proposal.

I will be voting against this proposal and for the record, I am personally not a fan of the overly complex time sink that is the DSM but accept others wish for it to proceed. For me, if individuals want to build equity in a start up like Index Coop, there are two ways, earning INDEX and buying INDEX.

Contributor ownership can be built over time and any contributor (myself included) who joined post launch should be looking to contribute, earn and buy into a business they believe in. The genesis allocation is an entirely different kettle of fish, which I think should be right sized to reflect what has transpired since launch. I really like how @setoshi responded positively to @edwardk’s suggestion. This was great to see and I think this is definitely a positive that came out of the discussion here. I don’t see the Airdrop as the means for address any concerns relating to the Genesis distribution and I don’t think any construct we design will materially affect how people see their INDEX holding with respect to their own personal finances.

Over time, those contributors who retain their INDEX will build more governance influence. I am sympathetic for the person who needs to sell their INDEX wages for real world expenses. However, we are fortunate as well, because now there is USDC for Core Hires and unlike a traditional startup, people can receive equity which is liquid in the market. For me, community ownership really becomes a reflections of an individuals personal financial situation. The DAO will always help to make its community members rich, however I think this really only happens when we all work together to make the business a success. There will always be a traded off between real world assets/experiences and holding a fat bag of INDEX, so any INDEX distribution will always face this retention trade-off. Salary + Equity is the means for contributors to build their INDEX holding and joining post launch means it is harder but still doable.

I really like the cultural change we are undergoing and I really like the inclusivity approach/values we have imbedded in our culture. However, I think we all do need to think that about the business model a bit more than we do. As it stands, we have a lot of opportunities for improvement and I think the time has come for this Core Team that was just hire to really rally and lead the way forward. We need to be more TVL, profit margin and expanding our market surface area focused than we currently are right now. We may just need to park these incentive structures, a bit less focus on internal community stuff and focus more on the business goals. We should set heavy expectations on this Core Hire team to deliver and with that pivot to focussing on growing the business more aggressively. Otherwise we are ngmi.

*Conflict of interest disclaimer - I am a beneficiary of this airdrop.


Hi all,

I would like to take this opportunity to express my own views now that the call for snapshot has been made. As part of Finance Nest, I have a commitment to serve the community and deliver irrespective of my own personal views. I feel I have been able to present the above airdrop model in the spirit as proposed within this original post. Of which was part of the INDEX 2.0 initiative led by community nest. I’d like to also thank the other members who helped in creating this model and pushing it forward in the best interest of the community @Hammad1412 @Metfanmike @Matthew_Graham and @prairiefi.

I will be voting against this proposal, I do not think that a retrospective airdrop truly incentivises people in the long run and does not achieve the ultimate goal of increasing community ownership we see monthly a large proportion of $INDEX distributed to contributors sold with retention rate being low I think the same would come of an airdrop. If we want to reward people for growing the organisation into what we all hope it can be then we need to incentivise a successful future state and not the past.

I also agree with @edwardk and hold many of the same views regarding runway and the utilisation of the Index treasury. We should be focused on creating a profitable business that is laser-focused on launching profitable products that have a great market fit. Over the last 4-5 months I feel as though the community at large has been somewhat distracted by the amount of change we have gone through, some good some unnecessary at this point in our growth cycle. I am therefore hoping that season 1 brings about a cultural change within the organisation with the realisation that if we do not create a successful business then an airdrop or future incentive model really won’t matter when INDEX is worthless and we have nothing left in the treasury.

I do not mean for this to sound all doom and gloom because it’s not. We have a fantastic team that is capable of driving us forward through the next decade, we just need to all start rowing in the same direction with less internal disagreement and red tape. 100 visions and opinions on every decision that is made just bogs us down in a sector that is so fast-paced and fast-moving. We need direction and imho we cannot achieve that as a DAO it just does not work. It is therefore welcoming to hear comments from @setoshi regarding a CEO model whilst we navigate difficult times.

I would like to hear more regarding your thoughts on how this can be achieved. And would also be keen to hear your thoughts around what our KPI’s and north stars should be for the next year and beyond.

Conflict of interest disclaimer - I am a beneficiary of this airdrop, but I would rather set aside personal financial gain to grow a business I am proud to work in for years to come.


Hey @sixtykeys,

Thanks for queuing the vote.

Would it be possible to include and an abstain option?

Apologies I am getting this request in the forums so late today. I was wicked sick today.

Speaking with a few different community members last night, I was trying to answer the following question, “How will the airdrop affect what is in the treasury in 12 or 18 month and the long term health of the organization?”
I ask this as a very non-finance background person. But I feel like I am being asked to vote on this question without the answer. I recognize that Finance Nest has done a ton of work on modeling and answering this question but when asking several folks across the Coop no one has a great answer for this.
@Finance.Nest would it be possible to either point me to where I can try to answer this in plain english or take a short bit of time tomorrow on the leadership call to help answer this in layman’s terms? I recognize the material is probably there but after reading the airdrop posts and treasury reports I don’t have a simple answer to what will be sitting in the treasury a year from now if we do the airdrop vs not.

Will let f.nest provide full details but over the very long term as there is a fixed supply of index I think it’s likely we will see the treasury buy back index (very highly dependant on things like excess revenue after expenses for instance) rebuild reserves and then maybe sell again as and when needing to raise capital for future growth etc. So providing a precise forecast could be difficult.

It is also worth noting that the treasury is currently a significant LP in the market meaning that it is likely the largest passive buyer of index. So any continued sell pressure would essentially result in a higher % of supply ending up back In the treasury.

Another technical point worth the community observing: index is paired against eth and so the $ value changes of eth influence the $ value of index
(top tip, search INDEXWETH on trading view for a more accurate representation of trading conditions)


Hi @StepvhenH Just drawing your attention to this part of the proposal.

Current treasury balances $INDEX

Treasury Wallet - 1,805,169 $INDEX
Operations Account - 202,294 $INDEX (this is to fund expenses to the end of March)
Year 2 Community Vesting contract - 1,089,633 $INDEX
Year 3 Community Vesting contract - 950,000 $INDEX

Total Index that the community will own - 4,047,096 $INDEX or 40.5% of total supply

The airdrop represents 7.5% of the current value of the treasury (Treasury Wallet + ops) or 3.7% of the total INDEX the Community is entitled to (Treasury Wallet + Ops + year 2 and 3 vesting)

You can find a write-up of the monthly financial report on medium the latest is referenced here. This has been published monthly since February with each iteration detailing the current state of the treasury at that point in time.

In answer to this question the airdrop although it is 1.5% of the total supply will cost the Coop 7.5% of the current treasury balance and 3.5% of the overall treasury balance of which all vested contracts will have concluded by ~ October 2023. Do note that these numbers assume zero operational costs.

At a high level and using an average of the last 3-month INDEX emissions (super crude estimate as our token emissions are highly sensitive to token price) 171,326 $INDEX giving the treasury a runway of ~ 24 months of current spend before we are left with 0 INDEX in the bank (4,047,096/171,326). The runway, however, is realistically likely to be significantly longer as token price is currently <$8 so I see this estimate as a worst-case scenario. However, that is the current outlook if the market conditions do not improve.

Detailed below is an estimate for what the treasury balance will look like in 12 months is (assuming linear distribution of vesting contracts for ease of calculation and no change in INDEX emissions monthly)

Disclaimer The information contained within this post is purely for illustrative purposes and I nor F.Nest will be responsible for any inaccuracies, given the significant number of assumptions and unknowns that feed into such a calculation. We are however working to develop a 12-month outlook that will be published in due course. The above calculations are estimates and should be treated as such. The main area of uncertainties are:

  • $INDEX price a year from now (this has huge impact on the INDEX emissions over the nest 12 months)
  • Revenue generated is not factored into the assumptions nor is any potential INDEX buyback or tokenomics which may be built in over the nest 12 months
  • Spending is assumed to remain constant at 171,326 $INDEX per month
  • This also does not take into account committed spend in USDC which could require us to sell $INDEX for stables or do further capital raises

Hey @Pepperoni_Joe , an abstain option will be included in future votes along with a number of other improvements to our current governance process.
Adding this option with such short notice and without properly educating the community on its usage would lead to confusion in what is already a seemingly divisive vote.

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Any updates on this? As the voting has started.

Thank you.

Lively debate here, and I’m glad to see it, but it risks vibing badly.

Handing out tokens to people from the treasury is scary, especially when the value is depressed already. I’m instinctively against it. But …there is a huge but. One that I find hard to articulate appropriately as someone who stands to benefit, as I do. There is much talk beyond the forum though, and perhaps this can capture some sentiment.

Many Coop members have supported and voted FOR changes to the Coop’s structure and hiring process with the idea that they would later be part of an airdrop along with a staking mechanism.

That notion was clear:

[IIP-118: Priority Hiring Guidelines and directional commitment to the DSM & Airdrop](IIP-118: Priority Hiring Guidelines and directional commitment to the DSM & Airdrop included a show of 87% support from 54 votes and passed snapshot 100% FOR with 115k INDEX and 61 votes,

in Compensation & Community Ownership - Next Steps @jdcook noted the intent to ‘reward contributors who have helped build the Coop to current day’)

…and its repeated in many other places.

Now, it looks like the draw bridge is being raised. ‘Our Priority Hiring process has already provided generous compensation to the core team’ as @Pepperoni_Joe points out, and here, it seems, some are saying they will vote against.

As @mel.eth wrote ‘there are too many open ended questions for this to be considered a proposal that is close to being something I’d vote for’ which makes it look bad that, as a proposer, @Matthew_Graham says he’s voting AGAINST. I have the utmost respect for the work Matthew does in the Coop, I like it when our paths cross, and I truly believe him a solid part of Coop successes. I value his honesty here, but it whiffs a bit - how can you craft a fit proposal when you’re going to vote against it?

The core team, the best compensated people, who likely can afford not to sell to cover expenses, who will be able to stake the most, if they vote this down, then it is the worse off, those who sold to cover expenses, those without the capital or the owl level to really benefit from a DSM without an airdrop, who will be left cold. A vote against from those who arrived in their position in part thanks to the votes of many others seems, well, rich.

I agree with a lot of the reasons for not doing the airdrop and I don’t mean badly with what I have written. I almost didn’t post. But, thoughts are often common to many, so maybe my writing is not without warrant.


We will be providing this tomorrow. In line with the expected timeline of the 24th

With the vote underway I’d just like to thank those who have worked hard on the proposal, refined it etc and contributed to the positive and respectful debate both for and against. Well reasoned arguments and perspectives have been shared on a complex topic on which there was no perfect outcome. It’s clear we have a lot of work to do in all areas of the co-operative.

I will respect the outcome of the vote and look forward to continuing working on solutions to the problems we face together.


@ElliottWatts Huge thank you for this. This is a chunky bit of writing and well laid out reply; it goes a long way to helping me digest the numbers on this proposal.