The gargantuan thread from d-man appears to have been deleted, but I promised people in the Dojo that I would reply to it. So here’s my post. If the thread comes back, I’ll post it under there directly. *
Update the thread is back but I kept this one here so it doesn’t appear anything is being deleted
BCW has contributed some super-gem individuals to the community and I appreciate the few of you who have been active in good-faith communication over the past year. I also hope many of you others will become more active in our community, independent of whether d-man posts and tells you to comment or not. This will help us break the lines between being exclusively BCW or Sovryn.
Here are a few critiques of the proposal:
UI/UX: Saying UI/UX needs to be fixed is not a proposal, it’s a demand with no substance that doesn’t assist the team at all. For context:
- We recently hired a third party branding agency to refine the Sovryn brand, identity and look. This is estimated to take 12-16 weeks and should include a revamping of the website (but not yet the DAPP). We’re probably in week 2-3, so a ways to go. We don’t yet know what this will look like but it could have material change to our identity, logo, colors, images etc. Can we really re-design a new UI/UX if it risks being incongruent to this work and missing this newly created material?
- Perhaps we could start a new UX in parallel to this branding? I agree that would be great! But we have severely limited resources internally and are looking to hire as much good talent as we can already.
- Alternatively, what if BCW team asks in their 250K person community for some tangible UI/UX proposals? It would be great if you submitted some actual design-boards, or mock-ups or wire-frames or actual experienced talent. If you don’t have talent internally, it would be amazing if you spend a little bit of money and hire a third party agency to create a sample UI/UX then bring the images to us for inspiration or a proposal for Exchequer to fund? Sovryn can take on the bulk of this but having it kick-started for us would be really helpful!
- UI/UX is also subject to technical limitations. Many of which we may not be able to fix until we get to roll-ups which likely won’t be until EOY at earliest.
- Understand fixing UI/UX isn’t simply saying ‘see how simple Google’s search page is! We need it like this!’
Staking: This proposal is lacking adversarial thinking and appears to be modeled to best suit early investors (not founding members) opposed to the long term protocol itself. A few considerations:
- If we remove the lock-up & penalty, how do we prevent against flash-loan attacks where in the future someone could borrow large amounts of $SOV, vote, then repay the loan all in a single block to manipulate a proposal. This is a real attack and has occurred before. If you can freely un-stake it allows these flash loans attacks to ensue and is a major governance risk.
- Perhaps instead we could go with a model discussed here where there is no penalty to un-stake, but it’s time weighted so the longer you’ve held the more VP you have. For one thing, this doesn’t eliminate the risk of flash-loan attacks, but it could possibly hedge against it. Regardless, another problem exists. In this model how do you prevent OG mega-whales from gaining insurmountable power with no future commitment to the protocol? On-top of that, since most of the team shares are not even unlocked yet (meaning they are still on a vesting locked contract), it means they are not liquid and would not be able to generate this early VP under this model to gain ground on the early BCW investors. The real beneficiaries of this proposal are the early whales who would possibly have even more power than the founding members. It could grant people who don’t really have understanding of the protocol mechanics un-touched power over voting and revenue and is another governance attack vector.
- The next proposal on staking is to allow holders to share in revenue. Unfortunately, this would obliterate the token price floor on $SOV as it drastically reduces the ‘value investing’ aspect that currently exists. At the moment the revenues being generated by the platform are very low. But the token price is so low as well that you can buy $SOV today, max stake it for 3 years and make a pretty reasonable yield in rBTC paid weekly, plus you get SIP24 rewards paid in liquid $SOV. Those of us that have run the numbers are doing this and essentially bolstering the floor on the SOV token. And so even if the token price drops further, it theoretically will have a soft floor because of the yield in rBTC that can be earned by stakers. This is as opposed to a memecoin which can literally go to zero with no value backing it up. So, if we add holders to the revenue share it massively dilutes the yield any given person could earn on $SOV because it’s shared across a far, far larger pool. This basically eliminates the incentive to buy $SOV when the price has fully capitulated as it has now. This is how we truly run the token into $0.
Token Burn or Lock-Up: This is one part of the proposal that I am open to digging into more. Tokenomics have been a recurring issue since inception. But there are some other things to consider:
- A burn is likely a bad idea. Most burns work because they are buying the token off the circulating supply, then burning it. So, you’re increasing the price first and foremost by reducing circulating supply, then burning to indicate it cannot re-enter the market. In order to execute this strategy we need excess balance sheet capacity or a ton of fees; neither of which we have at the moment. Instead, the burn being proposed here is just to burn tokens on our future balance sheet, which are not in the circulating market. So, the impact would be primarily for people that read Tokenomics and see the change between the old and new. This probably isn’t a huge amount of people. However, I do agree this could be a signal and a psychological cue to buy more $SOV for those that do, ultimately this strategy in it of itself it won’t directly increase $SOV price as other burns have. So people need to temper expectations on how impactful this strategy would be.
- Additionally, doing a burn increases the centralization risk. You give more power to VC’s, which would subject us to Jack Dorsey’s meme that ‘Web3 is owned by VC’s’. This is a delicate balance. VC’s do play a role and are necessary to boot-strap protocols with early funding, but if you swing too far on one of the pendulum and raise too much money or burn too many tokens, you risk falling victim to this legitimate issue. Right now we’re comfortable with doing another fundraising round with new partners. But adding a significant burn of our future balance sheet token does absolutely run the risk of adding centralization attack vector.
- Regarding the teams 25% token allocation, since Day 1 Yago has been very clear and transparent that protocols which typically have found success are those which are shepherded by a core team of founders. I personally have no issue with the founders having a large stake and frankly 25% compared to many other projects is actually quite a small allocation to founding team member. While I agree that no single party or small elite group should control votes, to some extent we are investing in them and they are by far the most qualified and in the know to make more weighted decisions on voting. I would be deeply disturbed if the founding and core team members didn’t have a sizable vesting interest.
- Next point, you say we’ve raised all this money and can pay for everything directly off our balance sheet. Sorry, but this really isn’t true. We’re not brimming with money on our balance sheet. We have a lot of expenses and are looking to invest a lot of the next few years. Yes, we’re in a safe secure position at the moment but frankly a multi-year extended bear market would stretch our balance sheet extremely thin and put the protocol at risk of bankrupting itself. So proposing that we just pay for everything out of pocket is just not the reality of the situation.
- Ultimately, I’d be open to lengthening the vesting contracts on things like Founding members tokens and to some extent on the Adoption and Development funds (but definitely not 10 years on Adoption and Dev). All things considered a burn seems like the wrong call to me, but a vesting extension may be reasonable.
Ultimately, while people claim that this proposal and conversations in the Dojo were meant to help, the reality is it was a complete cluster-f*** and I’m disappointed by all sides. On the Sovryn side I think there probably is some pride and ego that is coming out when we get attacked and I’m part of that problem. But on the BCW side there are honestly a lot of un-educated takes which are missing tons of information, while bombarding us with bot-like shit-posts that make it extremely difficult to even reply.