[RR-2][Draft] Rarible DAO Structure: Community Treasury, Staking for Voting power

The purpose of this thread is to share and collect feedback on the core concepts of a possible upcoming proposal for further decentralizing Rarible community governance by introducing RARI staking, rewarding governance participation and changing the RARI distribution plan to fund the Rarible DAO with a governance-controlled RARI treasury to be used in the interests of the Rarible community.

This is a draft proposal to be reviewed by the community. Feedback is very welcome!

TL;DR, here is the proposal we are currently considering:

  • RARI would be “activated” through staking RARI in a governance smart contract (“Activated RARI”)
  • stakers would be able to use their Activated RARI to vote on governance proposals or delegate voting power to eligible community participants;
  • the RARI distribution plan would be adjusted so that:
    • 25% of the marketplace mining fund (i.e.,15% of the RARI TotalSupply) would be reallocated away from the marketplace mining fund and into a smart contract Community Treasury governed by Activated RARI for developer and creator grants and other purposes beneficial to the Rarible community;
    • 25% of the marketplace mining fund (i.e., 15% of the RARI TotalSupply) would be reallocated away from the marketplace mining fund and into a governance mining fund used to reward holders of Activated RARI who actively participate in governance;
    • community treasury and Activated RARI holder rewards maintain the same weekly distribution schedule.
  • (thus, in total, the distribution plan would be changed for 50% of the marketplace mining fund (i.e., 30% of the RARI TotalSupply, while the other aspects of the RARI distribution plan would remain the same);
  • whereas currently all RARI votes are “non-binding advisory votes,” votes of Activated RARI on proposals relating to use of the Community Treasury would be binding votes, bringing us one step closer to creating a fully decentralized Rarible DAO;
  • un-staked RARI would remain eligible to participate in signaling votes through snapshot, but, to mitigate the potential for governance attacks, would not be eligible to participate in binding votes such as votes on uses of the Community Treasury;

Please share your comments and reasoned improvement suggestions below.

P.S. we’re running a contest for the best name for Activated RARI :wink:

1) RARI activation process (staking/unstaking)

Activating RARI would require staking your RARI in the governance smart contract for a specific, pre-committed period of time. Un-staking your RARI before expiration of the selected time period would not be possible. By staking RARI for a specific period of time, RARI holders commit to keep holding RARI after the results of a vote are implemented—ensuring that, when they vote, stakers have “skin in the game” with respect to the relevant proposal. Requiring a staking commitment to be eligible for voting should mitigate the potential for opportunistic governance attacks by short-term RARI holders whose incentives are not aligned with those of the broader Rarible community.

Flexible locking period

Users will be able to choose any lockup period between 1 month and 2 years. The number of locked RARI which are deemed “Activated RARI’ for each user will depend on the length of the lockup period that user has committed to, with the ratio of RARI to Activated RARI being 1:1 at the start of the Maximum Lockup Period (2 years) and 1:0.1 at the start of the Minimum Lockup Period (2 months). For example, a user locking up 100 RARI for a two-year period will have 100 Activated RARI at the start of the two-year period, while a user locking up 100 RARI for a one-year period will have 50 Activated RARI at the start of the one-year period.

The longer the locking period — the more Activated RARI received.

Unstaking/unlocking RARI

Your voting power (Activated RARI) will be decreasing linearly over the course of the chosen staking period. Upon the completion of the lock-up, your Activated RARI balance will be zero, and you will then be free to withdraw your RARI.

UX suggestions are welcome!

Questions

  • Should Activated RARI allocation grow linearly or exponentially depending on the staking period?
  • What should the Maximum Lockup Period and Minimum Lockup Period be?

2) Voting power and delegation

With staking, one of our primary goals is to kickstart a governance process that does not depend on the team’s ability to execute it. Activated RARI holders will form the Governance Committee that will have the power to introduce and vote on certain proposals.

Activated RARI (and only Activated RARI) will have binding voting power. This is an important step in transitioning from the “Signaling Era” in which votes of RARI holders are advisory, and the “Autonomous Era” in which there is a true Rarible DAO with binding votes.

Additionally, a holder of Activated RARI may delegate their voting power to eligible Rarible community participants. We will initially establish certain terms and conditions of delegation to determine eligibility—for example, we may reserve the right to disregard votes delegated to evidently hostile actors. In order to delegate, you would choose the address that would receive your voting power. After delegation, each voting decision would be done by the chosen party on your behalf, until you decide to un-delegate or re-delegate to another person.

3) RARI Community Treasury

25% of the current RARI marketplace mining fund (i.e.,15% of the RARI TotalSupply) would be reallocated away from marketplace mining and into a Community Treasury controlled by a smart contract that is governed by Activated RARI. The purpose of the Community Treasury would be to fund initiatives beneficial to the Rarible community. For example, RARI could be provided to third-party development teams to incentivize or reward the creation or improvement of smart contracts to be integrated into the Rarible Protocol or for creation of additional apps, front-ends or user tools to enhance interaction with the Rarible Protocol. Or, as another example, Activated RARI could be voted to provide RARI to artists to incentivize the creation of special NFTs, or to acquire NFTs to be held in a virtual Rarible Community Museum of NFTs.

Below are some examples of activities that the Governance Committee is expected to fund:

  • Distributed development (e.g. open-source, gitcoin)
  • Community Hires (regular payments to the performing teams)
  • Content creation
    • Newsletter
    • Podcast
    • How-to guides
  • Conferences/hackathons sponsorship
  • New artists funding
  • Artists onboarding grants (20$ to 100 new artists to cover gas prices)
  • Ambassador Compensation
  • Valuable actions on the platform (moderation, verification, making some sales, being active in the community)

Although Activated RARI votes will be binding and control the Community Treasury through the smart contract, we believe the Community Treasury should be used for long-term value-creating purposes decided by the community—and that it should not be liquidated, issued as dividends or distributed to RARI holders as a financial reward. Although, in the final version of the governance smart contract system, we will not be able to prevent the passage of such proposals, we intend to propose to the community a Rarible DAO Charter that reflects this and other values, and we would pre-commit to voting Rarible’s RARI against proposals that violate the Rarible DAO Charter. Also, during the temporary period that the Community Treasury’s security is managed by the Multisig (see below), the Multisig key holders may refuse to implement such proposals even if they are passed.

4) Governance Participation Rewards


25% of the marketplace mining fund (i.e., 15% of the RARI TotalSupply) would be reallocated away from the marketplace mining fund and into a governance mining fund used to reward holders of Activated RARI who actively participate in governance. In order to be eligible to receive a portion of such rewards, users must both: (a) stake RARI to make it Activated RARI; and (b) either: (1) use the Activated RARI in proposal-making or proposal voting; or (2) delegate to another Rarible community member who uses the Activated RARI in proposal-making or proposal voting. We expect that about 18,750 RARI (i.e,. 25% of the current marketplace mining weekly distribution) would be distributed on a weekly basis, based on such participation.

As pet3rpan_ (Twitter) nicely put it,

Rather than thinking of token distribution plans as a static path to follow, I like to better think of it as a rolling re-allocation of the network to the most valuable participants.

Token distributions should be thoughtful and adapt to the current/future context of a DAO.

Questions

  • How to measure a minimum level of governance activity to receive rewards?
  • Is it a good idea to add successful proposal rewards? i.e. If the proposal for $X is accepted, its creator receives X0.5

Please share suggestions and edits in the thread below! We expect the community to spend 1 full week finalizing the proposal starting from the date of this post. Then RR-2 will be put up for a final vote by the team or a community member.

P.S.: Volunteer needed to help to draft this into the “final” proposal version including comments from the forum.

12 Likes

@rarible @pet3rpan @Coopahtroopa

Hello Alex

I am a huge fan of your platform and the whole idea behind it. I would like to participate in the DAO, however, this is currently only possible through the tokens that have taken place through purchases and sales on the platform. Do I now understand correctly that your proposal also takes into account the activation of tokens that are purchased directly through an exchange and these can also be activated?
I think that an exponential reward will bring a greater commitment and therefore better stability.

I look forward to hearing from you again and wish you and the whole team continued success.

Greetings Pascal

Translated with www.DeepL.com/Translator (free version)

4 Likes

Any tokens regardless the way they got to you are eligible to be activated.

+1 Glad to see this happening

  • How to measure a minimum level of governance activity to receive rewards?

I think it makes sense to reward stakers who have:

  • Voted on proposals and…
  • Their voting power delegated… (rewards here maybe shared between delegator and delegate)

Voting rewards for proposals distributed pro-rata to the governance proposals per month?

An ideal/optimal solution might also be to enable users to delegate to governance participants + then allow for delegated users to also vote (in the case that they vote, their delegation will be used to vote but if there is no-action of a delegated user then it would default to the governance participant that the user originally delegated to) - the thinking here is that so you

  • Is it a good idea to add successful proposal rewards i.e. If the proposal for $X is accepted, its creator receives X0.5

What if there was a $RARI token bonus based on the voting turn out for a proposal that is accepted? The caveat here would be to only reward proposals that pass with 70%+ voting for and not pay out a reward for highly contentious proposals. (you get rewarded for doing a proposal that everyone loves + getting more governance participation and the incentive to create governance dissonance for proposals is nullified)

Some questions:

  • What is the minimum amount of tokens required to make a proposal?
  • Thoughts on the timeline for the rollout of the DAO?

===

For anyone looking to make proposals:
Happy to provide feedback on proposals to governance before they are posted to the forums, I am available via twitter here to chat to chat ~

3 Likes

TOP ! <3 C’est une bonne chose d’écouter la communauté !

I really like this, it changes the economic landscape of Rari massively and incentivises holding the RARI token greatly.

I’m Cryptosi and I worked with PIVX for the past 4 years, PIVX is a DAO, and during my time there I’ve learnt quite a lot about the practical workings of a DAO and how to encourage participation, here is a link to some of my proposals which passed on PIVX, there were quite a few more, but these are a random selection ; https://forum.pivx.org/threads/zenzo-alliance-year-2.766/

I feel that the system you have decided upon is already very good, I would also suggest that many of the things you want to solve need to be done at a social layer, it’s probably not a good idea to have people rewarded for voting as it can be easily gamed and it doesnt incentivise engagement, it only incentivises the vote (so people will just vote yes to everything so they get more rewards or vice versa)

I would like to echo the words of Pet3rpan, in that delegating votes is a VERY good way to go, and possibly incentivise people to collect delegated votes by giving them an additional reward, this should be quadratic so that it doesnt become a popularity contest and economies of scale are not found with regards to gathering delegated votes. These governance delegates can work together to produce content which helps to inform the community of current governance proposals, and help the proposal owners to improve upon their proposals, preferably BEFORE they actually submit them.

Also Pet3rpan raises a great question with regards to the costs of launching a proposal, I believe this should be more of a spam filter than anything else, and arguable Ethereum has a great spam filter already, called GAS. So having to transfer even 1 RARI to launch a proposal should mitigate spam massively.

The lock in period and associated vote weight is a great addition, so thankyou for that, it will make things better.

Finally I want to suggest the 2 most important things we should be aiming to achieve within this DAO,
Firstly, broad cognitive diversity, we need to have proposals and voting from as many different people as possible, so that we are getting a wide range of ideas and a wide range of solutions and suggestions to improve those ideas.

Secondly, engagement, which means we need to inform the community of proposals and also actively as a community have processes for assisting people with developing their proposals.

I am also availble to support anyone who needs help on this topic (i’m in the Rarible discord as Cryptosi - Spock avatar) and look forward to watching this DAO grow. It’s nice to meet you all.

my twitter

4 Likes

Hi there, wonderful project!!

I try to make my suggestions (I am not an expert in this world) on the questions raised about the RARI DAO structure:

  • Should Activated RARI allocation grow linearly or exponentially depending on the staking period?

What about a smoothstep function? A 9-th order equation (70t^9-315t^8+540t^7-420t^6+126*t^5) would be perfect for me as you penalize more very short term stakers while boost long term stakers, see picture attached.

  • What should the Maximum Lockup Period and Minimum Lockup Period be?

I would say the maximum lockup period could be ranging from 1.5 years to 2.5 years, I think more than that it will be hard to find many stakers willing to block funds for such periods. Minimum, I would say 1 or 2 months.

  • How to measure a minimum level of governance activity to receive rewards?

That’s a hard question. You should define a list of weighted metrics to measure activity: how often is a person/entity participating, in what form is participating and what impact has his activity on Rarible ecosystem, then you define a threshold which tells you that the combination of such weighted metrics is below or above such threshold. It is not precise but at the moment I don’t know how to quantify it better.

  • Is it a good idea to add successful proposal rewards i.e. If the proposal for $X is accepted, its creator receives X0.5

I have no opinion about that. It seems to me a little bit too high but I could be wrong.

Keep doing the great job,
greetings,
Michele

My name suggestion for “Activated Rari” would be: gRari (Governance Rari)

and for improvement proposal name: Rarible Improvement Proposal (R.I.P for short)

– On minimum/maximum lockup period, I would suggest 2 weeks being the lowest and indeed, 2 year being the highest.

Incentives for staking would be shifted towards longer staking users having the highest gRari number instead locked RARI amount, users would be more keen to lock for longer period of time to entitle more reward from governance incentives.

To keep things simple, once a user locks their RARI for an X period of time exchange of receiving gRari(whether it be 2 weeks for 1 RARI:0.1 gRari or 2 years 1 RARI:1gRari) instead gRari number dynamically changing over time, it would stay fixed from the minted block till the final block number that their RARI will be unlocked.

Another thing I would like to point out is the user’s journey from purchasing RARI or getting rewards from participating at the platform as a creator or collector. This will have big effect on users decision to lock their RARI at governance for incentives.

As for the platform participants who acquired RARI through Rarible incentive program, locking some portion for 2 years is not a big concern as since their way to acquire is through exchanging their time for their art works, thus their acquired RARI does not a have initial monetary backing.

The opposite goes for users who acquired RARI by exchanging another value something other than time, which is actual fiat. Speculation being the main reason of purchase as since utilizing RARI will be only possible by staking at DAO, only locking motivation will be the possible return they can get from this.

Another way to think about all this could be since the new breakdown of weekly reward will be this way;

Old breakdown: 75.000 RARI > 37.500 for creators / 37.500 for collectors

New breakdown:

(%25) 18.750 > Governance Incentives
(%25) 18.750 > Governance Treasury

(%25) 18.750 > Creators
(%25) 18.750 > Collectors

From the %25+%25 that is going to be distributed (%20 of %25+%25 set for creators which is 3750 of 18750) can be locked for max amount(2 years) on behalf of users at DAO to start generating revenue for them and by design incentive system includes both creators&collectors to Rarible DAO.

This way a new dynamic could be introduced to platform as well.

2 Likes

R.I.P. doesn’t sound that good :grinning:

1 Like

Very excited to see this happening and great to see the existing commentary on the proposal.

Leaving a few comments and thoughts below:

Participatory Reward Schedule

The proposal suggests a fixed weekly distribution schedule of 18,750 RARI in available rewards for active DAO participants, which is re-allocated from the existing marketplace mining fund.

Straight-line rewards distribution is simple solution but it is inflexible. Based on my calculations, approximately approx. 1M RARI tokens would be distributed per calendar year to achieve full distribution in just over 3.8 years.

Today, the Rarible ecosystem operates with two critical incentive structures - RARI as a native asset incentiving participation in the platform and ETH the basis for collected service fees.

Question:

  • What is the current and future role of the collected services fees?
  • Should these service fees serve as fundamental basis for treasury and incentive related activities to allow for effective and holistic re-allocation of the network to the most valuable participants and activities?

Participatory Reward Mechanisms

How to measure a minimum level of governance activity to receive rewards?

As an active governance participant, your share of the rewards received after an epoch could be determined by your participatory RARI stake i.e. the amount of RARI you have staked during the epoch multiplied by the number of active proposals you voted on during the epoch, in proportion to the total participatory votes of all RARI stakers.

For example, a DAO participant who votes on 2/2 proposals in a given month receives 100% of the rewards while another who only votes on 1 out of the 2 outstanding proposal receives a 50% of the proportional rewards.

This would incentivize responsible and incentive aligned participation by both direct voters and as a performance metric for those operating as delegated voting entities on behalf of others.

In line with the previous section, a future iteration of the DAO incentive structure could be adapted dynamically to the ongoing growth and development of the platform. For example:

  • Available rewards = (converted service fees + RARI DAO incentive allocation) * ratio allocated to rewards
  • Individual voting power = Activated RARI * Ratio of proposals voted on
  • Individual Share = Individual voting power / voting power of all DAO participants
  • Individual Rewards = individual share * Available rewards

Staking Periods and Incentives

Should Activated RARI allocation grow linearly or exponentially depending on the staking period?

I’m aligned with an exponential or as @chromospace’s proposal on the smoothstep function. It creates an added incentive to drive participation up the next lockup threshold. Personally I think 1 month, 6 month and 12 month options are a viable path forwards.

Delegated Governance Entities

Delegate work entities serve as a great means to drive broader participation. One thing that is important with this is ensuring that representation is broad and representative of all stakeholders of the platform i.e. creators, curators, developers and buyers.

One way potential way to achieve is thinking about working with an initial set of key partners or forming ‘representative group’ sub-committees for the DAO that ensure all stakeholder groups are represented and to avoid initial centralization.

Naming Suggestion
pRARI short for “Participatory or Participating RARI”

3 Likes

Hello all

My Naming Suggestion:

VoRARI

The Vo stands for both:

Voice over RARI
Vote on RARI

Br Pascal

here we go…

Super excited to see Rarible pursue on chain governance! A few thoughts from my first read through the proposal:

I’m assuming “activated RARI” would be non transferable until unlocked. But what prevents someone from making a wrapper contract for depositing and locking RARI in governance? Would Rarible need to use smart contract whitelisting like CurveDAO?

The yveCRV yearn vault is an interesting test case of engineering around governance incentive design (I don’t think Curve originally intended for there to be a transferable veCRV token option).

There should be an “abstain” option for all governance votes, to ensure that people aren’t forced into arbitrary decisions to claim rewards. If certain voters are indifferent to a proposal’s outcome, it’s healthy for governance to allow them to abstain and let more opinionated community members take the lead.

Binance Staking’s participation in KyberDAO is an example of the pitfalls of incentivized voting - their block makes up roughly 50% of voting power, and is forced into dominating governance votes to be able to claim rewards.

1 Like

Unsure about the abstain option but on Mara’s proposal on how governance participation should be measured;

Forcing down such behaviour on DAO participants is unfortunately creating the case of KyberDAO and the outcome is leading to very inefficient governance participation by it’s members also mentioned by the monet-supply;

Which before I mentioned this, @monet-supply mentioned it. Full stop.


On a second thought I think before deep diving into how DAO should be structured, taking how Rarible entered the market, how it moved to it’s current state, what is the current state of Rarible, NFT space and in general, the market itself into consideration plays a key role to proposing much efficient economic & governance mechanism for the future of Rarible and preventing delayed & long-stretching inefficient discussion around key subjects of the discussion.

So, I would like to one more time push a different perspective and with this proposal, I will ask comments from well-grounded members up-to-date with Rarible & NFT space.


Currently platform is using single incentive mechanism in exchange for creator and/or collector role assumed addresses to actively engage in platform and in exchange of engagement incentive mechanism bi-weekly rewarding those users.

At Rarible’s initial stage when this mechanism kicked-off in summer, this cycle has proven to be a working model but from a long-term perspective, I think team is taking an amazing initiative to take a step forward at giving a better shape to the existing cycle with DAO through community input.

As a long time lurking peasant around here, I believe giving not completely different but a fresh shape to existing cycle to still continue incentivizing current behaviour at the platform but altering the reward amount at substantial rate to create a funnel to channel the users to DAO will hold the key as Rarible makes a transition to the second stage.

75K amount and weekly distribution taken as it is without any altering;

This mechanism is based on capturing both collector and creator role bearing addresses to DAO by taking %20 of the allocated number for those addresses and locking for smallest period of time on behalf of them.

This will capture users to DAO, on top of that at DAO incentives such as fees and active governance participation will be two utilization point for the locked amount latter being preferred to be, by the users.

With this model, you are not just rewarding users to create/collect on the platform, but now create/collect, participate in DAO, and help Rarible grow bigger > full cycle of community, crowd collabration dedicated to Rarible is turning the cycle around.

Treasury gets biggest allocation and should get the biggest allocation as we enter more competitive, striving phase of NFT space, growing treasury at a pace and building up sizable amount if utilized well through crowd intelligence and DAO participation, can benefit Rarible growth.

Use case for treasury is to have well-informed NFT oriented members at DAO, incentivizing the right proposal creation for the treasury allocation and directing the certain amount of treasury funds to incentivize bringing emerging NFT collection(s) liquidity, user base & trade to Rarible.

Example: Assuming existing Hashmasks, Glpyhs, Punks haven’t emerged yet in NFT market yet, Certain DAO member early on realizing the potential of such NFT collections that has trade potential, can raise a proposal to DAO, and be incentivized to raise such proposal early on before this collections haven’t emerged yet, DAO members through crowd intelligence either agreeing or disagreeing on such potential, if common agreement is reached and finalized at proposal, passing to allocating certain amount of treasury funds to incentivize a certain NFT collection trade to take place on Rarible, such example would be Hashmasks Collections and Hashmasks NFT’s are incentivized with extra amount from treasury on top of existing 18.75K + 18.75K allocated to creators&collectors on the platform.

So, instead of creating a mechanism to reward users to vote on X amount of proposals, voting on proposals initially with their locked amount from the reward they have got on the platform, and if the proposal is successfully passed by overwhelming majority at DAO, and if such proposals resulting in visible growth, improvement of rarible(such as proposals strictly about treasury, key protocol features, etc.) rewarding such participants that casted their vote in “specific” proposals(+the proposal creator), will give the most and best efficient yielding DAO.

1 Like