So we are moving closer to Genesis 1.0. It’s both exciting, and sort of nerve racking. One of the most important topics we need to discuss as a community is how the Reputation will be diluted over time and distributed to GEN holders.
Below are some notes explaining this process again:
People will lock GEN, and receive Reputation over time.
Every month, a fixed amount of Rep will be created and distributed to GEN token lockers (this likely includes YOU if you have GEN :P). Currently, the total amount of Rep increases only when proposals get passed: this will now change. After the GEN locking scheme gets passed, the total amount of Rep will increase both when proposals are passed, as well as via monthly minting to GEN lockers. Every month, Rep will be diluted by a fixed (and constant) amount of Rep.
After 12 months, the target is a ~45% dilution such that existing Reputation holders remain with 55% Rep. Existing Rep holders are still welcome to keep accumulating Rep via proposals too, which would increase this percentage beyond 55%.
In order to achieve the target of 45% Rep for GEN lockers after 1 year, we must select a monthly amount of Reputation that will be minted in order to achieve that goal. Assuming we have 100K Rep today, the monthly amount of Rep dilution to achieve that end result would be approximately 5,500 Rep per month (calculations were done in this google sheet, happy to explain in more depth!), which is approximately 5.5% of the starting amount of Rep. It is suggested we go for a monthly minting rate close to or equal to this value.
As an example to help explain this (which excludes new Rep given to proposers), assume there is 100 Rep (total) and that Alice has 2% of this Rep, and we go with a 5.5% initial dilution rate (ie new rep for month 1 will be 5.5). Assuming we deploy the Rep locking scheme at t=0, after 1 month, Alice’s Rep would be decreased from 2% (2/100) to 1.8957% (2/105.5). After 2 months, this 1.538% Rep would decrease to 1.8018% Rep (2/111), and so on. After 1 year, assuming Alice doesn’t lock any GEN, and doesn’t perform any work for Rep, she would have 1.2048% Rep - which is a dilution of ~40% (1-1.2048/2.000) from the original 2%.
Do the dilution mechanics make sense? What do you guys think about the numbers? What is not clear? Any and all questions are welcome, there are no stupid questions!
The most important thing to keep in mind is that this is an experiment in governance! If it fails (ie, decisions made are worse, community is less aligned, etc), we will have learned something incredibly valuable in the process, and will have the opportunity to re-adjust as DAOstack is likely not interested in funding a DAO which can’t make good decisions. The ultimate aim is to discover how we can collectively make better decisions. I, for one, am quite interested to see how the dynamics in the DAO change - what the next wave of participants will look like, how we make decisions moving forward, etc.
A proposal is in the making, please share your thoughts + ask questions!
Unless the mechanics have changed since I saw the spec, it’s actually pretty misleading to say there is a flat monthly rate. If it still works as I wrote here, the monthly amount actually goes down every month until it’s basically 0. The parameters of the scheme control how fast it goes down and the starting amount for the first month (period).
Good question. I’ll try to elaborate based on the example above (note this is a fictional example!):
“Assuming we have 100K Rep today, the monthly amount of Rep dilution to achieve that end result would be approximately 5,500 Rep per month” : What does this mean for GEN lockers?
The answer to this question depends on how many GEN lockers there are. Every month, 5,500 Rep would be issued to these lockers.
If you are the only one locking GEN, you would receive 5.5% Rep every month
If you own 10% of the locked GEN, you will receive 0.55% Rep every month
If you own 1% of the locked GEN, you will receive 0.055% Rep every month
And so on. So the answer to your question is “it depends”.
I think that GEN-locking for Reputation is extremely important for allowing individuals to become active members of the GenesisDAO…but I also have an issue with the dilution of those who perform actual work to the DAO vs. those who simply lock GEN.
Is there a cap to how much GEN one individual can lock for the issuance of Reputation? If not, do we not think that this structure could undermine the intent of this process (allowing more individuals to participate and have a ‘voice’ within GenDAO)?
From my perspective, there should be a distinction between the methods of Reputation distribution.
The Reputation distributed to those who contribute to the progress of the DAO will be indistinguishable in power to those who simply lock GEN.
I’m not sure how equitable it is to allow a GEN whale to accumulate Reputation, diluting the Reputation of those who have contributed ‘work’ towards the progression of GenDAO.
The ideal situation in my opinion, would be to have a separate Reputation system for the GEN locking scheme; one which is limited in terms of the types of proposals it can use that Rep for, and possibly ‘down-weighted’ for other types of proposals. I understand this would introduce more complexity, but IMHO, I think that not being able to distinguish the two types of Reputation acquired by any member is more of a problem than the actual dilution.
How can I tell exactly how much GEN is locked so that I can swoop in in the last minute of the locking window and be sure to get at least 90% of the first REP distribution?
Also, why utilize minimum time periods for locking GEN?
I ask this because it seems to be a deliberate method by which we increase the utility of the GEN Token (and therefore its value).
This is fine, but does the GEN Token not hold the same utility if we were to simply have a Reputation system that minted/burned Reputation in response to the locking/withdrawal of GEN?
If the utility of GEN is the same, whether it is locked for 12 months or for 12 hours, then why limit the accessibility of DAO Voting Rights to those who commit funds for minimum periods of time in exchange for permanent Reputation?
If I want to vote on a specific proposal at a specific time, should I not be able to lock my GEN for temporary Reputation and unlock my GEN when the vote is over? (Which would allow me to utilize GEN in other ways > staking, funding proposals, etc.)
Yes, there should be limits and caps to the amount of Reputation distributed this way, but enabling the use of temporarily minted Reputation would allow for DAO Accessibility to become more dynamic and enable proposals to be voted on by voices that have direct interest in the passing/failure of any particular decision the DAO makes. (You could also tax these).
I also understand that not all DAO’s want the same thing, and that my view of Reputation is a matter of how ‘accessible’ I think DAO’s should be.
If I’m misunderstanding anything, please let me know!
If the utility of GEN is the same, whether it is locked for 12 months or for 12 hours, then why limit the accessibility of DAO Voting Rights to those who commit funds for minimum periods of time in exchange for permanent Reputation?
If I want to vote on a specific proposal at a specific time, should I not be able to lock my GEN for temporary Reputation and unlock my GEN when the vote is over? (Which would allow me to utilize GEN in other ways > staking, funding proposals, etc.)
This is a great point which I think needs a bit more brainstorming, the immediate fear I get is gaming the system to vote on your proposal, and the option to create “Mercenaries”
I see the GEN locking scheme as an Alpha version of the scheme, let’s get this going and see what needs to be changed and improved