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!