I have to respectfully disagree with limiting community involvement in the management of this proposed fund. While it’s true darknodes are directly financing this fund (as currently proposed), they are also earning de facto monthly dividends through darknode ownership, something unavailable to smaller investors (at present). Is this significant? I think so.
In fact, you can argue that the total dividend paid each epoch reduces the total REN market capitalization (which impacts all holders) by the same amount, meaning smaller REN holders who cannot afford a node are penalized through reduced capital gains (similar to how dividends work in TradFi). In effect all REN token holders are therefore financing this fund either directly (reduced fees per epoch), or indirectly (missing out on capital gains because cash is released from the protocol to darknode operators).
In addition, darknode operators already own a significant number of REN tokens on average (a minimum of 100k tokens per darknode, with many operators holding multiple nodes), and therefore should already have a disproportionate percentage of voting power, should community governance depend on 1 REN = 1 vote (although I realize this is yet to be determined). Why increase this gap even further?
As we move towards community governance, there is a very real concern that we’ll see a split between darknode operators and regular REN holders, and limiting community involvement into funds of this type will only exacerbate that divide. I think we need to be doing more to encourage REN ownership, and any attempts to limit community governance would be a step in the wrong direction.
I think this is a fantastic proposal, a very necessary and important step on the road to decentralization, and I support it as written.
Interesting. In that case, I hope we have pooling options available soon for smaller holders, as otherwise we will definitely have (already have) two classes of ownership, one which includes a regular dividend and voting rights, the other which does not.
Doesn’t that have wider implications for community governance? In effect we would enact darknode governance, not community governance. And smaller REN token holders would need to come to terms with something akin to “Class B” shares in the protocol. Which would imply a lower price (non voting token, unable to earn dividends), although that penalty would have to be split across all REN tokens as there is no legal separation.
I suppose that should encourage those with over 100k REN tokens to bond and participate in the safety of the protocol. But for those who have little chance to finance such a large purchase, I really hope pooling options provide a realistic alternative.
I disagree.
According to etherscan, there are 555 accounts with more than 100,000 ren. Out of 1 billion ren, only 177.5 million have been committed to running darknodes. They are not poor, under privileged, or somehow disenfranchised. They made a concious decision not to support the network. They should not have a vote. Besides, Binance would have a controlling vote. Seeing the price manipulation coming from Binance, do you really want them determining the future of ren?
They don’t have any “skin” in the game. Their goals are different from the long term goals of ren. They should not determine its future.
You said, “In fact, you can argue that the total dividend paid each epoch reduces the total REN market capitalization”. Darknode income is paid in BTC or other coin, not in ren. There is no inflation in ren.
I don’t want to derail this thread, which is to discuss a community fund, which I definitely support. Regarding the type of community we hope to build here, I suppose that’s for another thread.
Doesn’t matter what it’s paid in (dollars, Euros, REN, BTC, DOGE), distributing income from the protocol to token holders (or in this case, a small subset of token holders) should, in theory, reduce the total market cap by an equivalent amount.
But definitely my last post in this thread that is not directly related to the actual topic of an Ecosystem Fund!
The amount of btc held by darknodes makes zero effect on the market capitalization of ren. Otherwise you would see a huge dip in the price of ren at the end of each epoch. It does not happen. Now, if ren were inflationary, you would have a point. But it is not.
And this is relevant. I doubt anyone would support it if they knew Binance was going to be in control.
I wouldn’t call it derail anything, you have valid concerns and the more discussion the better!
With that said, I do agree with @FanaticalFishing that there are so many issues around the voting if everyone is allowed to vote. Would love to see everyone vote but just gotta be sure REN holders have renVM’s best interest at heart.
Just to give an example, node operators have their tokens locked for minimum 1 month while others don’t. There is significant more risk taken by node operators and thus very strong incentive to make sure it benefits renVM.
A normal token holder can just make a random vote and then dump the token and move on while node operators take the hit…
Sounds good to me.
However, I would like that to be voted via darknode command centre. The funds should not be a pourcentage of volume of a period but a fix amount. Ideally converted into a stable coin so we avoid the “winners” to bet on doubling their funds because BTC is going up. Besides, we have no control over the volume transiting via renvm. So a fix amount is more logical to me. For example if it is not distributed in 6 months because there is no winners then we are sure it has not lost its value. It is not dependent on market trends.
Then darknodes can delegate their vote for a quarter if they don’t want to vote each epoch.
If they don’t vote they don’t get rewards. It goes back into darknode rewards to be shared following period.
That’s should be quite incentive for participation.
This fund is an opportunity to create a viral loop. Attract awareness, developers and probably more. If it could become the engine that fuel think tank group for the protocol it will become a viral loop, that’s pretty much the issue of sustainability sorted.
Very much in favour of this proposal. I think it’s a big step towards decentralisation and will allow the community to fund some much needed projects.
Also in favour of using a ready made solution for the multi sig and voting platforms (which could be funded from the first grant) so as not to take up more of the team’s time when it could be better spent on other things.
Very excited by this though. Good proposal Max and the team!
So what then is the value of the REN token to people who do not - and for financial reasons cannot - operate a darknode? They cannot earn income, they cannot vote (or darknode operators can just ignore them). That would make the REN token purely speculative, with zero benefits: ownership stake, community impact, etc. You are buying REN to sell REN. And what impact will that have long term on the community?
I suppose this won’t be an issue if there are ways for smaller REN token holders to bond their tokens, e.g. pooling assets, etc. I believe this is critical. Then the decision is up to each individual REN token holder whether he chooses to bond, knowing his refusal to do so will forfeit his rights to a share in regular income, and his ability to vote on key measures. But without pooling options, without giving all investors the choice to participate fully in the Ren community, I have a hard time understanding why anyone unable to set up a darknode would want to invest in Ren long term, other than for purely speculative reasons. Don’t get me wrong, making money is great, I’m not against speculation! It’s more about the inclusiveness of the community that will form around a project with those specific tokenomics: two classes of investors, separate but not equal.
Yes, I totally agree with that, but not a fixed percentage of our income even if we can change it later. Here are the reasons:
1- Wasting time in discussions in What percentage is suitable in each stage.
2- Unused funds will be always available with the community/team searching for something to spend on.
3- Darknode operators will get less income in case of no spends for several months.
I agree if it could be case by case like the following example:
1- Darknode operator ID {0x6f9…3a2} submit a proposal along with the required BTC amount to the community.
2- Darknode operators approve or not based on the proposal + Darknode ID reputation (it will be based on the previous success proposals from the same Darknode ID + num of active DNs for that ID + For How long these DNs are active)
3- if it gets approved, the exact required amount moves to the Darknode ID at the beginning of the next epoch.
Currently, we are paying 10% of our income to ETH miners, this is a totally separate issue, we can not merge it here with the community ecosystem fund.
Since the team has a solution to avoid such a fee, this will be great. we all need this 10% in full.
For token holders and not operating a darknode should not have the right to vote as they are not supporting the network. You have people with enough ren in wallets but decide not to run a darknode by choice. Some do half and half and other to not run at all. So they can sell asap in case of black swan event. For people who cannot afford a full darknode that is part of the token economic nothing wrong with that. There are only 10k darknodes possible it is bond to happen not everyone can run a darknode. In my opinion, only the one supporting the network should be involved in the fund gestion so darknodes holders. They are the ones that have to wait 2 epochs to deregister to get their bond back. Or maybe for all token holders not running a darknode could be up to 30% influencing the fund gestion if they manage to agree between each others.
The fact they don’t have to bond their ren they are free to sell whenever they want and that is not supporting the network.maybe if somehow they could bond for voting that would change my opinion as it shows commitment and actually influence the numbers of darknodes. They might not be able to get reward from running full darknodes but still taking some ren out of circulating supply to decrease the number of darknodes potentially running which increase the rewards of current operators but also push ren price valuation up. So they benefit too
It’s been incredibly exciting to read people’s ideas and feedback! Below I’ve summarized some of the main points that have been raised so far, to more easily be able to track them:
Summary
Only Darknode operators should get to have a say about how funds in the Community treasury could be spent
All REN holders should get to have a say, even if they aren’t running darknodes
A different percentage of the rewards should go to the treasury than 5%, either more or less
The Ren team should provide funding to it
Alameda’s role in governance and fund expenditure should be clearer prior to proceeding
– Comment from the Ren team: Alameda will have no control or involvement in this Community treasury and the core Ren team will have no control over it either
The name of the treasury should reflect who governs it
A committee to run the Fund should be nominated
More thorough governance processes needs to be developed prior to proceeding
A framework for how the deploy assets in the Fund need to be developed prior to proceeding
Many of these points likely warrant individual discussions/proposals, as they carry heavy implications.
Importantly though, we think that the community can come to an agreement about whether a Community Fund should be created or not, before every detail has to be worked out, as it otherwise will be difficult to proceed in a timely manner.
We’d also like to highlight that one way to avoid the logistic hassle of setting up a committee and avoid centralized control and disagreements between the community and the imagined committee, would be to distribut grants in a Gitcoin-like approach, where grant proposals are listed in larger rounds made up of many proposals, where the community comes to an agreement about how to distribute funds through having everyone vote for which proposals they prefer, creating an overall weighting of how the funds should be distributed.
In the mean time, I’d like to poll the community on whether people think we should have a more robust signaling system for RFCs/RIPs, and that potentially could be used for voting on e.g. the percentage of the rewards that should go to the Community Fund. It’s possible to use a poll on the forum, like I will do here, but these are gameable and each user only gets one vote even if they have a larger stake in RenVM. Something like Snapshot would work well, as one could make 1 darknode = 1 vote, and it does not cost any gas fees to vote. If people have any other suggestions please suggest them as well. And just to be clear, we are talking about a signaling system, not something that can force RenVM to change on a protocol level:
Should we set up a Snapshot Page?
Yes - 1 darknode 1 vote
Yes - 1 REN 1 vote
No - another system
No - I never want to vote/signal at all
0voters
(If you are unable to vote on the above poll because you have trust level 0 in the forum, DM me and we can fix that)
Nicely summarized. Excited for the additional discussions on how to structure governance + how to structure budget.
One last thought from me - let’s push forward on the gas saving initiative. I think most will agree that we would want to save gas over having all these details laid out. For example, the team can make the contract configurable to edit from 0% to 5% revenue pull and adjustable in the future. (Like 1inch’s revenue sharing governance)
My initial impression before reading through the comments is generally opposed. I like concept of rewards not needing to be claimed but i thought that was a likely implementation regardless. I do think taking profits from darknode holders is not good at this stage. Imagine if youve been running a darknode and to avoid selling you are using some of the income for living expenses, those people cant really afford 5%. I do think this would lead to some people selling.
I am feeling similarly here but also i think its worth mentioning the fund adds a friction to the marketplace. Should a darknode be required to pay a fee in order to bring freedom to the whole reserve banking world? It is very important to keep the renVM operating and in my opinion that means without too much friction such as DAOing (read: taxing) the rewards
Like you, I think part of what the money should be used for is for profit generating assets to help further finance the Community fund going forwards.
Two examples off the top of my head:
Setting up a community darknode staking protocol with entry, exit and performance fees from stakers all being paid back to the community fund (or we subsidise the development of the one already being built for a share of earnings)
Creating arb bots On Keeperdao designed to use RenVM and return it’s profits to the community fund
Additionally many of the other investments made should be able to provide an increase in volume being transacted through RenVM.
This should not be seen as us losing a share of our profits but rather - like any early stage start up - its more a case of us reinvesting for increased earnings.
Why not case by case I mentioned before? I think this will fix everything, please let me know Why not?
1- Only good reputation darknode IDs who will get the funds which mean only RenVM loyal investors will receive the community funds, no specific address/multisig/team…etc (I believe that ren team has an active DNs and can use them to get funds at the current stage)
2- We will Fund proposals only When it is submitted to the community and get approved by DN operators that mean no deduct from our income before we know Who will take it, for What exactly and How much.
3- Some proposals could request a monthly specific amount for a specific num or months (it works for salaries or long term campaigns…etc)
4- This could be a long-term update which means no more updates on the community funds system and wasting more time.
5- Easy to integrate into the smart contract.
I request a comment from the Ren team and community.
Here is How it works again:
1- Darknode operator ID {0x6f9…3a2} submit a proposal along with the required BTC amount to the community.
2- Darknode operators approve or not based on the proposal + Darknode ID reputation (it will be based on the previous success proposals from the same Darknode ID + num of active DNs for that ID + For How long these DNs are active)
3- if it gets approved, the exact required amount moves to the Darknode ID at the beginning of the next epoch.
