Name: Ren 2.0 funding and Ren Foundation
Category: Governance, funding
Scope: Set up a Ren Foundation and mint new Ren tokens to it, such that the Foundation can fund Ren 2.0 development and its ecosystem growth
After discussions within the Ren community held in RFC 37, 45, 46 and 47, and the Ren Discord server, there is currently a rough consensus on how to move forward with funding and transitioning to Ren 2.0, and providing a way to incentivize Ren ecosystem growth. In this proposal, a vote is put up to decide whether to set up a Ren Foundation and mint new REN tokens to it. To maintain the 10,000 darknode limit, the darknode bond would need to be increased in line with how much REN is minted, and a portion of the minted REN would then go to current registered darknodes to allow those bonds to be carried over to the Ren 2.0 network. After the Foundation is set up and the token contract is redeployed with tokens allocated to the Foundation, the DAO and the Foundation would need to allocate a portion of the tokens to continue funding Ren 2.0 development.
For information on the need to transition to Ren 2.0, please review the announcement regarding Moving on from Alameda. For background on early discussions on the topic of incentivizing Ren ecosystem growth, please review RFC-000-037.
For background on the three recent funding proposals:
- Revenue-Based Fundraising: RFC-000-045
- Transitioning to Ren 2.0: RFC-000-046
- Spinning out RenBridge: RFC-000-047
The proposal is that the Ren DAO will vote on whether to mint new REN tokens to the Ren Foundation, and decide how much to be minted in that case, to be used for funding development and ecosystem growth. To avoid introducing changes to the current darknode limit of 10,000 nodes, the darknode bond would need to be increased in line with the new total supply. Therefore it is also proposed that current registered darknodes (roughly 2,000 at the time of this proposal) are not diluted, by receiving the amount of REN needed to roll over their current node bonds to the new network.
For the vote, five options are presented for how much new REN would be minted to the Ren Foundation, to cover current and future funding needs:
The darknode portion of these numbers are included, meaning that if for example 100M REN is the final result, each darknode would receive 10,000 REN (100M / 10,000 node limit), and the total amount going to the Ren Foundation would be 100M - (2,000 nodes * 10,000) = 80M.
The weighted average of the voting power allocated towards options A) to D) will be the final amount to be minted to the Ren Foundation, meaning that each vote influences the final decision, and that the amount can be a non-round number such as 123.45M. If more than 50% of the voting power select option E), the proposal is rejected.
It is proposed that the tokens minted to the Ren Foundation are not locked, to give the Foundation the flexibility to impose lockups when it is doing fundraising or grant payouts with the community’s best interest in mind. It is, however, recommended that the Foundation imposes lockup conditions on all allocations, whether to darknodes, investors, or the development team.
The safest way for the Ren community to switch to a new REN contract is for there to be a one-way token swap contract deployed at the same time as the new REN contract is deployed, that could be used at any time by anyone to swap current REN tokens to the new REN token, without any time limits. This ensures that users as well as exchanges and DeFi projects which have integrated the REN token are not being rushed to migrate to the new token, so that there are no risks of funds being lost.
Setting up the Ren Foundation
Given that setting up the Foundation is an “off-chain” event, members of the DAO who wish to partake and potentially be part of the Ren Foundation would need to come forward and begin organizing as to who and how the Foundation should be set up. It is suggested that the community forms a working group or something similar to be able to accomplish this task in a timely manner. The DAO can get support from the development team as to how to get started on the practicalities.
The rough cost for setting up a Swiss Foundation is 100,000 CHF in total, which is roughly $107,000 at current rates.
Funding Ren 2.0 development
Following the legal set up of the Ren Foundation, it would likely need to conduct a raise to fund continued development of Ren 2.0. This could involve a portion of the inflated tokens being sold at a discount to investors. The Foundation and the DAO will be the only entities that decide how much and when to fund Ren 2.0 development, not the development team. Funding and budgetary considerations would need to be discussed and negotiated at the earliest opportunity.
- Vote here: Link
- If approved, the DAO would formally start the process for setting up the Foundation
- REN token contract redeployed
- Foundation to fund continued development of Ren 2.0