This is probably one of the more important updates I’ve had to write, as SAIAdao is at a bit of a crossroads. There is a LOT going on right now, and I’ll try to provide a summary on the major points instead of going far into depths on each one. Some of this has been discussed ad nauseum in the Discord, but given that it’s members-only still, I still need provide some details to those who are not part of our wonderful dao yet.
REBASING PROPOSAL
First off, it has become apparent that the current process of rewarding Daohaus shares and loot is completely unfair to new members, who are basically diluting their exit value in favor of older members. So last week, I drafted a proposal to break the claim that shares have on the net asset value (NAV, which I have been mistakenly referring to as TVL for some time now,) and make loot the only claims that have any real value. That didn’t go over too well with a couple of our oldest and largest share holders, who would have seen their claims cut by a significant portion.
So my next step was to rebase the holdings of shares and loot among all members, preserving each members proportional claims on the bank, while allowing us to make shares valueless governance tokens. This would effectively increase the distribution of voting power to newer members. This however, was not deemed sufficient to correct the financial cut that they were taking.
I was a bit fazed by the pushback to the rebase proposal, I thought it was a simple way to fix the situation and move us forward to a two-token system. It seems, however, that I have not done a very good job of explaining the reasoning for it, and why I think the governance tokens, now deemed $SAIA, will have more long term value than the NAV tokens, which we are calling $DUST for now. I’ll get to that in a moment.
So I worked with stakeholders on each side, the OGs and the newcomers, to figure out a compromise proposal. In a nutshell, dao members who joined after the GAO launch will have their loot distributions boosted to bring their exit value closer to par. While the numbers are still being worked out, the current figures that we have worked out will dilute the exit value of all pre-GAO members by 25%, and will see that redistributed equitably among everyone that joined after. One caveat though, while true equal distribution would factor in the NAV at the time that each member joined, we’re probably going to aim for a broader across the board adjustment based on whether a member joined at the GAOr1 or GAOr2 rate. Due to post-GAO drop in the Rebirth NFTs, GAOr1 would likely be further underwater than GAOr2 members who joined in the last week or two. That said, the current figures gives both groups a similar exit value, and frankly, doing it on a case by case basis would require more emotional energy than I can muster at this point in time. If anyone else wants to take up the challenge, then I am all for it. Otherwise, I will aim to have an official voting proposal up later today or tomorrow. If it’s voted down, then I’ll be forced back to the drawing board.
GOVERNANCE
Once the question of loot has been settled, I’d like turn efforts to our Solana migration. Before that happens though, I want to touch on the idea behind the valueless SAIA governance tokens.
My experience with daos stems mainly from what I’ve seen as a member of BadgerDao, and to a lesser extent what I know about other successful ones like Yearn and Curve, Index Coop and so forth. It is my strong belief that the successful governance of these protocols is dependent on the separation of governance tokens from the underlying financial interest in the underlying products that each protocol manages. Simply put, using one of these products (Curve pools, Yearn vaults, Badger ibBTC) does not grant you governance rights to the protocol. They can be earned with liquidity staking and so forth, but we’ll leave that aside for the moment.
Removing value from the governance token allows for a very important mechanism, the distribution of said tokens contributors, whether this be to a formal core dev team, or through freelance bounty rewards. Doing so in a way that does not dilute the value of the underlying NAV is crucial.
It’s important that a dao does not attach value to governance tokens directly, save perhaps at launch when bootstrapping liquidity. It does do this indirectly by the fact that dao governance directly manages the underlying products. In the case of SAIAdao, the product here is a treasury of assets. Members are taking a bet on the long term prospects of Star Atlas, and the broader Solana ecosystem, to an extent. By staking capital with the dao, they are betting on a long-term increase in the value of unique NFT assets, the ability of treasury managers to gain an additional return through yield-farming and deployment of assets, and any additional revenue that may be generated via other means, such as our work on the DEX or other useful programs that we might develop.
That’s the broad philosophy that is guiding my actions as “dao launch controller”, which is my way of saying “temporary benevolent dictator”. As the DLC or TBD, I feel that I have a fiduciary duty to dao members, and it’s important that dao governance participants do so as well. How we encode that in a “code is law” manner will be an important goal for us to work out.
GOVERNANCE MINING / SOURCECRED
There’s an interesting article that I’d like everyone to read, called Governance Mining — liquidity mining for human capital . The TL;DR of it is that daos have traditionally done a poor job of incentivising governance participation, not just from a proposal voting standpoint, but from an actual roll up your sleeves and do some work one. Basically it suggests that daos need to take efforts to allow contributors to see the same kind of return on their human capital as they offer on their financial one. Basically, community leaders, core developers, proposal writers and others, should be incentivised in the same way that capital is incentivised with high APRs for staking LP.
To that end I spent some time Friday rolling up our own SourceCred instance, which I hooked up to our Discord. Basically, Discord activity generates cred. Different weightings can be configured, but basically it uses emojis as signalling to allow people to give cred to the message author. There’s also ways to give props to people as well. Each week, a certain amount of instance tokens, called grain is distributed among participants, based on their cred score. The distribution can be based on a mix between weekly and all-time rankings.
My understanding of how SourceCred itself work is this: all grain is redeemable for 1 USDC. Each month, 100,000 grain is distributed. As of last check, the top performers for the month earned the equivalent of fourteen thousand dollars, and their TBD had about three hundred thousand still banked. Obviously, with that sort of incentive, you would imagine that the SourceCred dao is a bustle of activity. It seems so.
The appeal for such a system within SAIAdao should be obvious, so I’m going to continue rolling it out over the next few weeks and tweak the parameters while we come up with our plan. For now, just know that you can signal cred to people by reacting to their messages with emojis.
SOLANA MIGRATION
The details are being worked out, but here’s the broad strokes:
#. Once all Daohaus proposals have been completed, a final csv export of all member shares and loot will be exported and Dauhaus will be retired.
#. The number of SAIA (shares) and DUST (loot) tokens will be minted and allocated to members through a series of Solana vesting programs. The percent per period parameters are still being decided, but each member will be able to claim a proportional amount of each token.
#. The dao will mint a similar proportional amount of tokens each period. DUST will be placed on a USDC orderbook, at NAV, to facilitate new or existing participants to stake funds with the treasury. SAIA tokens will be rewarded to governance participants based on their Cred score.
#. Additional order books and AMMs will be created for the SAIA/USDC and SAIA/DUST markets. I do not current intend for the dao to provide SAIA exit liquidity, but had originally planned on seeding the SAIA/DUST AMM in order to provide LP tokens to members. I’m not sure that is possible without the original share redistribution though. I’ll continue researching.
The general idea behind this setup is to provide liquidity for USDC to be converted to DUST without the need for governance proposals or minting new tokens. Granted, this will be needed for any strategic partnerships. We also provide a way for this new DUST to be converted to SAIA. SAIA may also be earned via governance participation or perhaps staking SAIA/DUST LP. Members receiving their liquidity may either continue to stake it or sell it. The three pools may also generate arbitrage opportunities, incentivising bots and providing trading fees.
My priority for the coming weeks is to continue focusing on Solana program development and building out our core development team to provide the frontend for these vesting and issuance contracts.
THE NUMBERS
TRADE ACTIVITY
No NFT trades this week.
Farms: $1200 worth of ATLAS (approx. 13,000 tokens) was purchased via DEX post order and staked in Orca along with $180 worth of rewards. POLIS order is currently open and waiting to be filled at $7.437.
MEMBERSHIP
As of Today, Oct 18, 8:34 AM EST, DaoHaus shows 140 active members, 362,959 shares and 263,210 loot. We have four pending membership proposals with an additional 500 shares, 2500 loot giving us a total of 629169 total claims an increase of 0.38% over last week.
Due to the current rebasing proposal, we will not be taking any additional members. Voting will take nine days to complete, and adjusting Daohaus loot for each member will take separate proposals, about 40 in all, which will require creation, sponsoring, voting and processing. Rather than spend the resources needed to do this so that we may continue accepting and recording members shares via Daohaus, it makes more sense to focus our efforts fully on the Solana migration. Once that is done, membership will be based simply on token ownership, and rates will be determined solely by market supply and demand.
TVL
- $97,855.93 in token balances and USDC open orders.
- $24,521.19 in Tulip (SolFarm) Yield Aggregation Vaults and Orca Pools
- $241825.8548 in NFTs
…for a total of 364202.9748, or a 0.168176% decrease from last week.
Reversing last week’s note, we will stick to the total claim valuation of NAV / (SHARES + LOOT). This weeks estimated exit value for all Daohaus claims is 0.578863509, a 0.54899% decrease over last week.
END NOTE
There’s a final word about the NFT valuations that I’d like to make. Step.Finance lists the value of our NFTS at over $487,000, and that’s not even including the GAMMA wallet, which they have at over $46,000. I’m not quite sure where they get their numbers, some of the high value ones that I looked at did not reflect the current Serum markets at all. That said, it is likely that our current model has it’s own flaws. We use an average, which dampens the volatility in some markets. And for those markets without current price data, however, we’re simply going off of the last sale price. If we looked at the actual bid prices, our valuations would be much lower for this week.
Furthermore, the official StarAtlas website has their own valuation model as well. They list the ALPHA wallet value at almost $141,000 (number nine on the leaderboard w00t), which is actually $80,000 less than my calculation, even after removing the GAMMA multisig, which Atlas Co. does not recognize. It’s likely they are using a static MSRP calculation.
I wanted to bring this up in light of the discussion around NAV calculations and claims, that any numbers that I’ve been coming up with here these last six or eight weeks are merely estimates, and that we are a long ways from having an accurate and automatic valuation. Hence the risk, and hopefully, the reward.
That’s it for this week. I’m not expecting much out of Star Atlas this week. Wagner’s response to my questioning about release schedules at Friday’s town hall was “a couple of weeks” (still) for the minigame. So I’ve got nothing else to focus on for now other than building. I look forward to your questions and comments.
Long live the IA!
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