Omen Guild: Governance, Distribution, & Liquidity Incentives [UPDATED]

Background

Since introducing Omen Guild and OMN Token in January, the DXdao team has been building Omen Guild’s governance structure, token distribution plan, and liquidity incentives program. The goal being to create decentralized, community-driven governance for Omen.

We’re excited to share what we’ve come up so far and hope to spark discussion to improve Omen Guild and OMN.

This post was prepared by me, @corkus, and @pulpmachina in coordination with the OMN Token working group and DXdao contributors.

Governance

OMN token incentivizes efficient governance by enabling and rewarding Omen Guild members (“OMN Members”) to maintain and improve Omen. With OMN token, OMN Members can use their voting power to:

  1. Verify and curate prediction markets;
  2. Allocate Omen Guild liquidity rewards to popular markets;
  3. Modify Omen Guild governance capabilities;
  4. Improve the Omen protocol;
  5. Deploy the Omen Guild and Omen prediction market platform on additional networks; and
  6. Engage in new partnerships with oracle providers, arbitrators, trading protocols, and network bridges; and
  7. Establish a fee structure generated from Omen that is allocated to various stakeholders.

As the Omen Guild develops over time, OMN Members will be able to act as governors to curate markets for Omen and be rewarded for their efforts. The Omen Guild will also eventually manage a treasury.

Locking Process & Voting

The Omen Guild uses the OMN ERC20 token for governance. In order to participate in governance, OMN Members lock their tokens for a minimum of 2 months and maximum of 2 years in the Omen Guild governance contract. Voting weight is based on the number of tokens locked in the contract.

Market Verification

Currently, DXdao verifies which markets are valid with Kleros curate, based on the Omen Market Rules. In contested markets with high liquidity and trading, such as the 2020 Presidential Election Market, the question of market validity has been challenged in Kleros court. Though the outcome of Case 532 for the 2020 Election resolved favorably for Omen, the arbitration process was long and drawn out. The uncertainty of the outcome undermined the confidence that users had in trading and providing liquidity on Omen for that market.

Now with OMN Market Verification, OMN members can quickly flag and invalidate markets and earn OMN for their service. Markets the Omen Guild verifies to be valid are, thus, perceived with much higher confidence by traders and liquidity providers.

Here’s how Omen Market Verification works: When a user creates a market on Omen, a 2-day flag period begins, during which any OMN Member can flag an invalid market. A flagged market calls the Omen Guild to vote on market validity for a 1-week vote period.

If a market is invalid, the flagger earns the market creator’s deposit; if the market is valid, the creator’s deposit is returned. OMN Members that voted on market validity earn OMN. Those that voted on the winning side, earn more OMN than those that voted on the losing side. For more details on the technical specs for the Market Verification process see this diagram.

Passing the question of market validity to the Omen Guild brings a new form of collective wisdom to Omen through decentralized governance, giving confidence to Omen traders and LPs that objectively valid markets are tradeable.

Liquidity Rewards

At launch, in order to promote liquidity on the most interesting and contentious markets, OMN Members can vote for markets that will receive liquidity rewards.

When a market is created, a Liquidy Rewards vote automatically begins to ask the Omen Guild whether the market should have liquidity rewards. OMN Members then have 3 days to vote. The Omen Guild can vote to ‘top up’ markets with additional liquidity rewards over time.

Guild Governance Upgrades

The Omen Guild is a lightweight, flexible governance system that is able to not only implement protocol upgrades, but change predefined governance processes, like Market Verification and Liquidity Rewards.

Token Distribution

Fixed Total Supply: 100,000,000 OMN

  • DXdao: 70%
  • Liquidity Incentives: 12%
    • Omen Liquidity Providers
    • AMM OMN liquidity (Swapr)
  • Airdrop: 8%
    • DXD Holders
    • Omen Users
    • Omen LPs
    • Friendly Airdrop
  • Governance Rewards: 1%
    • Market Creators
    • Market Voters
  • Contributors: 4%
    • OMN Squad
    • DXdao Contributors
  • GnosisDAO: 1% for past contributions
  • Mesa Sale: 4% sold for DXD

DXdao: 70% [70,000,000 OMN] will go to the DXdao treasury.

Omen is a product of DXdao. Its operations and development are supported through DXD holder funds, which make up the DXdao treasury.

70% of OMN tokens are held in the DXdao treasury for two purposes:

  1. to act as a symbolic commitment to allocate portions of any fee from Omen to DXD through a buyback program; and
  2. for DXdao to determine, through its established governance, how to allocate OMN tokens for such purposes as future liquidity incentives, other governance decentralization initiatives, and to intervene in any malicious attack of the Omen Guild…

DXdao does not intend to use OMN tokens to directly participate in Omen Guild governance. This is the job of the Omen Guild.

Liquidity Incentives: 12% [12,000,000 OMN] for liquidity incentives in the first year, with the following breakdown:

  • 7M OMN to Omen Prediction Market Liquidity Providers through Omen Liquidity Rewards
  • 5M OMN to liquidity mining on Swapr

OMN Token liquidity incentives improves the value proposition for liquidity providers on Omen, which in turn attracts traders. Liquidity incentives also decentralize Omen’s voting power and user base.

12% of OMN token is currently allocated to liquidity incentives. Though 12% of total supply is already a large portion, DXdao may assign some of its 70% OMN allocation to additional liquidity incentives in the future.

Airdrop: 8% [8,000,000]

DXD Holders: 4.2% [4,200,000 OMN] more than half of the total airdrop allocation will be claimable by addresses holding DXD. The DXD holder airdrop is weighted, based at time of Snapshot. A Snapshot of DXD holders will take place fifteen (15) days before the date of the OMN token genesis.

Omen Users: 2% [2,000,000 OMN] claimable by any address that has traded on Omen mainnet or xDai before May 1st, 2021, as long as that user’s predictions have totalled at least $25. The Omen user airdrop is not weighted.

Omen LPs: 0.7% [700,000 OMN] claimable by market creators and liquidity providers on Omen before May 1st, 2021. The Omen LP airdrop is not weighted.

Friendly Airdrop: 1.1% [1,100,000 OMN] reserved for future airdrops on communities of interest in the DeFi ecosystem.

The following bar graph shows the distribution of the OMN airdrop to community members on a per address basis.

Contributors: 4% [4,000,000 OMN] to DXdao contributors.

  • 2% [2,000,000 OMN] to Omen Squad. This is the core group of contributors working on Omen. Vested quarterly over 1 year.
  • 2% [2,000,000 OMN] to other DXdao contributors. This is split amongst all DXdao contributors who are not directly part of the Omen squad. Vested quarterly over 1 year.
  • The contributor allocation is weighted based on the number of months worked for DXdao and experience level at time of Snapshot. Date to be determined.

GnosisDAO: 1% [1,000,000 OMN] for past contributions.

Gnosis worked with DAOstack to launch DXdao and build the Conditional Token Framework used in Omen. Their focus has since shifted away from prediction markets.

However, there is renewed communication between both DAOs to collaborate both on liquidity incentives and longer-term protocol upgrades. An agreement for future collaboration between DXdao and GnosisDAO could lead to changes in this allocation.

Mesa: 4% [4,000,000 OMN] exchanged for DXD.

The occurance of using Mesa to allocated OMN token in exchange for DXD is dependent on a Mesa MVP at the time of OMN Token genesis. If the DXdao community determines that that there is no viable MVP at the time of the OMN token genesis, this allocation of 4% OMN token will be moved to the community allocation, specifically directed at airdrops.

15 Likes

has snapshot for DXD holders already been taken?

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Hello, [theRFnoob here]

Great news!

Following a private chat with @geronimo, I would like to apply to join the Omen Squad. :call_me_hand: :clap:

Keep up the good work!

4 Likes

A snapshot for DXD holders has not been proposed yet.

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@Tammy @pulpmachina @corkus Great work guys! This is very clear and articulate. Can’t wait to see how it unfolds :smiley:

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After posting the Omen Guild: Governance, Distribution, & Liquidity Incentives signal proposal and waiting for signal from the DXdao community on the proposal, we will now move the proposal to an on-chain vote in approximately 2 days.

The proposal has also been updated to reflect the following details:

  1. Snapshot timeframe for the DXD holder allocation will occur 15 days prior to the OMN token initial genesis.
  1. A clarification that if there is not a Mesa MVP at the time of the OMN token genesis, the Mesa allocation will be moved to the community allocation, specifically airdrops.
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I realize I am one month late to this discussion, but can you explain the rationale of why DXdao should retain 70% of the token supply in more detail?

In my experience, this will be a huge deterrent to any outside investors and therefore also to the success of the protocol as a whole.

Reintroducing this level of centralization seems somewhat uncalled for. There are company builders (basically doing the same and more than what DXdao does) in the traditional world that take usually between 15% and 30% of equity. The worst example (in terms of equity ownership) in crypto of an incubation deal is 50% with far longer time and resource commitments than what DXdao has done so far for Omen. If we would translate that into the token world it would result in 5-18% ownership (equity ownership usually converts into 33-50% of a token network).

I would encourage everyone to rethink these 70%. I understand that DXdao played a vital role in getting Omen (and DXdao) of the ground and should be compensated fairly, but DXdao will get nothing out of this relationship if no outside investors are willing to fight for the remaining scraps.

And ultimately I cannot stress this enough: The success of DXdao does not depend on receiving fees from a couple of protocols, but on being recognized as a powerhouse in incubation. If we signal to founders and the wider community that we will take quasi full ownership of the protocol in return, no founder or outside contributor will want to go the DXdao route.

If we can, I would delay this upcoming vote by a week and make a case for a more incentive-aligned distribution of tokens.

5 Likes

Not that I disagree… but could you expand a bit?
How, concretely, being recognised as a “powerhouse in incubation” brings money to the table:

  1. to pay DXdao contributors, developers, etc,

  2. to increase the value of DXD.

?

Thank you, I should’ve phrased this more clearly.

Success is a very subjective metric of course, but for me, success for DXdao means that we will be able to attract the best contributors and help them bring their products to market. If we are too aggressive with our fee share from protocols, we are sending the wrong signal to the best contributors.

In my opinion, we want DXdao to be the least possible value extractive while still making sure it is attractive enough for DXD holders. I think a 10-20% token ownership, depending on our level of involvement, is what we should strive for, maybe even less over time when more competition comes to market.

I am personally very open to having further discussion on the merit of allocating 70% OMN to DXdao. You’re not th first person that’s raised this question, which indicates that it should be addressed more completely on the forum.

The points that have been raised against this high of an allocation include:

  1. Whether a token is even truly decentralized when it is mostly held by one entity (though a technically decentralized one);

  2. questions on the likelihood of success for any liquidity rewards campaign where a comparatively low amount of liquidity rewards would be distributed to the community compared to other recently successful token geneses, e.g., Uniswap (60% to community, though most of that percentage has not yet been distributed); and

  3. whether OMN token holders will have confidence in the decentralized governance process over Omen when DXdao holds a super majority of the tokens.

I think that these are good points that need to be fully considered in determining the OMN token initial distribution. However, DXdao community members have historically been concerned with how DXD holders can participate in and benefit from Omen, which they helped to build and sustain.

I would like to hear from other DXD holders if they believe that the Proposed DXD Token Model resolves these concerns ? With this model, DXdao would not necessarily need to hold so many OMN tokens.

2 Likes