In response to some of the above questions:
Fragmentation Of the Community - Or Scalability of the Community
@Martin_Adriaan asks if this will create community fragmentation.
This does represent a way to create new Sovryn communities and that does entail some “fragmentation”. I see this as a feature, not a bug. Why?
One of the biggest problems any community faces is the tension between having a large community (strength in numbers) and a small community (strength of the individual). Larger communities are stronger and together can accomplish more ambitious goals. However, as communities get bigger the voice of each individual gets diluted and diversity of values and opinions become harder to express.
How can we build ‘social scalability’? There is the Bitcoin way, where the rules are simple and few and they do not change. Fewer rules and less change means that they can work for almost anyone. However, the system as a whole becomes far more limited.
There is the Ethereum way, where every project is its own thing and unity of purpose disappears.
With sub-DAOs I think we have a better way of achieving social scalability - through layers. Sovryn is built on Bitcoin Layer 2. Origins will be Bitocracy Layer 2.
Why not just do this with the SOV token? Why create a new token?
@KCoin, @rundll, @jonnypickles and @Bitcoin-Thunderfury ask why create a ew token at all?
There are three reasons:
First - Representation of Specific Interests
Tokens are an abstraction layer - they wrap together abstract functionality and become a tool to give these abstract functionalities a ‘physical’ representation. This is a powerful concept, since you can create different tokens that wrap together different ideas and functions. You can get quite specific with this - and empower token holders to have more specific interests.
For example, some people will be mostly interested in Origins, and much less interested in the other aspects of the Sovryn ecosystem. Their ability to hold and stake OG, without having to consider the broader implications for SOV means they can express their views much more cleanly.
Second - subDAO incentives
Each subDAO needs to be able to attract talent and a community, fund its development and manage its own governance. The incentives to allow for this need to be in place. We know, just by looking at the entire crypto space, that tokenizing a DAO and its revenue stream can accomplish this.
If we wanted to do this through SOV, this create near term inflation in SOV. SOV would need to be granted to th subDAO to sell in order to fund its operations and SOV in sufficient measure would need to be granted to the community and the developers to incentivize their future efforts.
But it’s even worse than that - the incentive structure would still be misaligned. The subDAO community would be able to sit on their SOV, doing nothing of value, and simply benefit from the hard work of the rest of the Sovryn community.
By having a separate token - tied to SOV via the bonding curve, the subDAO can be properly incentivized and raise funding. At the same time, the Sovryn community benefits from the value created by the subDAO, because as the price of the subDAO token rises, there is greater and greater demand for SOV in the bonding curve. That is to say, people will acquire SOV, in order to acquire OG from the bonding curve contract.
Third - Ecosystem Growth and Sovryn DeFi
Finance, done right, is a system to fund innovation and provide market feedback to Entrepreneurs in the form of asset prices (stocks, debt or tokens). Having a separate token, which can be traded, can exist for margin trading or futures trading - allows for the Sovryn financial system to provide ongoing funding and feedback loops for subDAOs. This is how we fund the future we want.
It is also how we bootstrap an economy around Sovryn. Each of these assets adds to TVL, to trading fees, to lending opportunities, to liquidity mining. The model is powerful and it bootstrapped altcoin economies. There is an opportunity to do this also for Sovryn and Bitcoin - without the same fragmentation, systemic risk and creation of infinite “altcoins” that we have seen elsewhere.
@magicmike and @TM1 ask about how SOV/Sovryn capture value from Origins - if Origins becomes a subDAO?
Q. Doesn’t Origins belong to Sovryn? Why shouldn’t the OG tokens be initially owned by Sovryn?
Sovryn is not an entity. It is not a company. So the question becomes, who should receive these OG tokens? The treasury? The Stakers? All SOV holders? I don’t think any of these is the correct answer. They all create unfair distortions of one kind or another.
Instead, by having the bonding curve and the revenue share, the value accruing to Origins accrues both directly and indirectly to Sovryn. Origins will remain part of the Sovryn protocol and you can participate in the value created by the Sovryn protocol in many ways. You can hold SOV, you can stake SOV, you can be an LP, you can lend. OG just adds one more mechanism - which is specific, like LPing or Staking, to its particular use case.
From the perspective of SOV holders - this now becomes a new source of demand for SOV. From the perspective of users, OG token generation becomes just one more thing you can do with SOV.
Does having more tokens add complexity?
@KCoin is concerned about more tokens adding complexity.
No. Additional tokens do not add complexity. The Sovryn protocol growing and adding functionality, adds complexity. The token wraps that additional complexity into a token and makes it simpler to participate in Origins or whatever subDAO most interests the specific user. I view more tokens as part of a solution to additional complexity.