Name: Transitioning to Ren 2.0
Scope: Outline how to fund the transition to and continued development of Ren 2.0 through setting up a Ren Foundation and minting new REN tokens
In this proposal we outline how the Ren ecosystem can transition to and ensure the continued development of Ren 2.0 despite the Alameda bankruptcy, through setting up a Swiss not-for-profit foundation (“Ren Foundation”), and minting new REN tokens which are allocated to the Ren Foundation, to be used for funding developer grants and ecosystem growth.
Earlier this year, Ren 2.0 was announced, with the intention that the Ren ecosystem would begin smoothly transitioning to Ren 2.0 over the coming months. On November 11th 2022, the “FTX Group”, which Alameda is a part of, commenced bankruptcy proceedings, affecting Ren. In short, due to Alameda being the responsible party for the Ren 1.0 network, and is no longer paying for its operating and development costs, the Ren 1.0 network is being sunset. The transition to Ren 2.0 can still take place despite the unexpected event of the Alameda collapse, although it is not possible to do this transition smoothly anymore.
This proposal outlines how the Ren ecosystem can transition to a fully community-owned Ren 2.0 network from here. It touches on points brought up and discussed in RFC-000-037 and RFC-000-045 and ideas discussed in the Ren Discord server.
We propose that the Ren DAO set up a Swiss not-for-profit foundation, with members from the DAO on the Board. The Ren Foundation would then receive some amount of REN tokens, which could be made possible through a REN token contract redeployment. The amount of tokens made available to the Foundation could be either a fixed amount, or open-ended inflation, or any combination in between, to be used as funding for the development of the network and its ecosystem. These steps would ensure that the Ren ecosystem can transition to a fully community-owned Ren 2.0 network
Setting up a Ren Foundation
As mentioned in RFC-000-037, the scope of a foundation for the Ren DAO should be simple. As a legal real world entity, it should:
- Maximize public value for all network participants.
- Provide a stable environment for developers around the world to contribute to the protocol.
- Create an organizational framework that is responsive to the DAO’s governance apparatus, providing transparency, autonomy, redundancy, and flexibility regardless of macroeconomic events.
The Ren team has previously explored setting up a not-for-profit foundation for the Ren DAO. While a Swiss structure is more challenging in that it requires more work to set up and maintain, and is generally more expensive, we concluded that the legal clarity, accountability and legitimacy of the Swiss structure would benefit the Ren DAO the most in the long-term. We also have contact with Swiss lawyers who would be able to help set up the entity.
REN token contract redeployment and inflation
To ensure that Ren ecosystem can transition to the new 2.0 architecture as soon as possible, and to ensure that there is funding to see the transition and continued development through, we propose that a new token contract for REN is created and deployed with new features such as inflation and deflation. A redeployment would give the Ren DAO the option to mint new tokens if needed, which could be used to allocate tokens to the Ren Foundation directly, such that it could be used for providing developer and ecosystem grants. This is not possible without a token contract redeployment, because the current REN token contract can not be changed or upgraded at all.
The reason why direct minting of new tokens is proposed, instead of raising money based on future revenue as proposed in RFC-000-045, is that minting new tokens is a much more simpler and flexible approach, that also sets the incentives correctly from the start, as grants would be REN-based. And while there are negative side-effects of inflation, these are much easier to reason about and easier to limit their effects of, rather than attempting a new risky fundraising mechanism based on the revenue of a blockchain network that is not live at the moment.
Minting new REN to the Ren Foundation also simultaneously accomplishes our goal of creating a funded independent entity, governed by the Ren DAO, which would provide a stable environment for developers around the world to contribute to the protocol and ecosystem in a legally compliant manner.
We initially propose that roughly a 125M (12.5%) increase of the total supply of REN would be sufficient to achieve the goals of the Ren community, which is to bring about a thriving Ren ecosystem on top of a Ren 2.0 network. 50M of those 125M could be initially set aside for deployment and continued development of Ren 2.0, while the rest (75M) could be open for the Ren Foundation to decide how those would be used to grow the Ren ecosystem. The vesting schedule for the tokens could include an early portion unlocking immediately, while the rest is unlocked over time, to ensure long-term commitment and minimizing market impact from large supply changes.
- We will hold a period of open discussion to collect feedback, improvements and new ideas.
- If the community is in favor of the proposal or a modified version of the proposal, we will publish a formal RIP.
- If the potential RIP is approved, the Ren DAO would need to formally start the process of setting up a Ren Foundation.
- If the potential RIP is approved, the Ren DAO would also deploy the new token contract for REN.