[DAO Discussion] Avalanche Liquid Staking Proposal đŸ”ș

Governance DAO Discussion
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Any frogs out there still feeling uneasy about this, I recommend you go take a look at the success of Lido Finance.

I read that and welped over here to say lesssgoo! This proposal is a bet that we can accomplish the same or better than Lido. Always gotta bet on yourself. :frog:

I share the common desire here for a little more transparency on the Human Resources front. But let’s get real y’all
if you’re truly worried Dani and Sifu are going to fuck with anyone not worth their time then you shouldn’t be in Wonderand.

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Who is this team? Who is j_rana? Great investment idea, but why give away 25% to these people we know nothing about?

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Great idea. Love the team. Absolutely in favor.

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  1. The cross-chain function is implementing by Ava labs without this project anyway right?

  2. 25% share is for manual operation while the function is implementing?

  3. For me the price is too high for risk and return Wonderland get

  4. Should we publish this treasury investment requirement and we will have other proposals to compare

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I think the numbers need to be tweaked a bit. 25% revenue share for 4 years / $6mm MIM team reward is steep.

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Agree with the overall proposal at the condition we tweak the team’s remuneration. Seems way too high, especially as we have no clue who and how many they are.

We are talking millions here, a minimum is for the team to present themselves and show their background.

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Questions:

  1. Why are these devs coming to Wonderland for funding?
  2. Why will they not go down the traditional VC route and raise money that way?
  3. Lido seed fund round was $2 million 
 why do they need $6 million?

I think I’d feel more comfortable in this proposal if I knew exactly WHY they needed Wonderland for this project because this is something VCs will absolutely throw money at (Lido recently raised $73 million).

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My understanding is that they are selling a product that they’ve built for $6 million, and charging 25% of revenue to maintain the platform going forward. They need $6 million for exactly what you said
VCs would easily throw money at this. $6 million is nothing.

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$6 million treasury investment. The risk seems pretty low considering this is less than 1% of our treasury and could easily make it back in a week.

With a 5% of staking market share, we would potentially make $12.5 million in gross revenue. $9 million after revenue share. May be other basic expenses keep the platform running like web hosting.
If we capture more of the market, more revenue. $50 million with 20% market share.

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gm!

We read through all the replies here, thanks for such an engaging discussion. We saw a few themes in the topics raised that we think are worthwhile addressing a little further:

“25% is too high”

Thanks to @CryptoKeeper, @0xWicked, @dronezilla and many others for raising and discussing this.

When modelling compensation, we took two things into account:

1. What would be our potential earnings from different monetisation methods?

Different monetisation methods might include launching our own native token as a standalone product. Obviously, this has a very high financial upside for founders.

Working, legitimate products have market caps of hundreds of millions of dollars, and founder tokens can be worth a lot of money. We could be very aggressive with token rewards to attract TVL (launching a new token for liquid staking products is an advantage that existing token projects can’t deploy as easily) and thus create a high valuation.

We could even raise money from suits if we wanted, since they’re dying to put money into any projects right now.

However, we believe an over-dilution of token projects is not always a good thing for ecosystems and we’d instead prefer to contribute to create value in an existing community-owned ecosystem. We already are personal holders of both $TIME and $SPELL and believe accruing value to an existing DAO through a new liquid staking product is a better use of our time overall :frog: :muscle:

2. What would be our potential earnings from the same monetisation method but with a different DAO?

The other big liquid staking DAO we could contribute to is Lido. Lido’s existing precedent for revenue share is 20% – but they have larger token grants too. For example, Lido and Shard Labs agreed at a token grant of $12M at the time of posting, with a 20% revenue share for the building team that lasted indefinitely/forever – basically until they ceased to work on it.

We think front-loading a higher fee that drops to a lower fee after 4 years makes us almost in-line with the Lido compensation. We take less of an initial fee/token grant and a more front-loaded revenue share. We’re happy to do it either way, but thought this one seemed fairer.

If governance prefers a flat 20% indefinitely, that’s okay with us, but we thought reducing it over time was actually preferable since crypto assets generally increase in price over time and AVAX could be much more valuable in 4-5 years.

Using Lido’s historic examples of compensation was a pretty useful way to propose, since instead of just suggesting numbers, we can see what would be market-level realistic comp at another DAO.

Why do we want to work with Wonderland over Lido? We basically believe that Wonderland is more Avalanche-native, and is more likely to succeed as being the best liquid staking solution on Avalanche. We’re already investors and we’d love to help contribute to an ecosystem we’re already personally part of.

“2-4 years is too long”

Thanks to @NalX, @astropip, @g_bcn and others for the discussion around this.

We’ve noticed some comments suggesting 4 years is too long a period to pay the team for their work. We actually think the opposite!

Here’s how we think about it: it aligns our incentives to help grow, maintain and improve our contributions to Wonderland. If our product manages to make $0 for Wonderland, then our revenue share is 25% of zero! We want to make revenue, so we’re economically incentivised long-term to keep growing the marketshare of Wonderland’s liquid staking.

We see ourselves as an additional external team contributing to Wonderland core. We believe that our ongoing revenue should only increase if the economic value we provide to Wonderland also increases.

We could accept a larger up-front payment, but we think it’s better to be paid more gradually over time in a way that is more dependent on our performance.

Some commenters have suggested 1 year contracts – incentives for this are misaligned. We’d be incentivised to ship code, not caring about scalability, code quality or future performance knowing that in 1 year we’re potentially kicked out anyway. We think being long-term partners is superior for Wonderland.

Into the future, important infrastructure needs to be maintained, and we’ve spoken to Ava Labs core team about changes that might come in the future to Avalanche that would allow us to do things in slightly different ways. We’d love to continue building those even after we’ve shipped v1 in order to make Wonderland’s liquid staking the best choice for users.

One thing that I do think was not clear in our initial proposal – we agree and believe we should only receive this ongoing revenue if we are actively working to contribute to Wonderland. If we ship it and disappear, the DAO should be able to remove future revenue accruing to our team (and instead could assign it to a new external team, or to pay an internal team).

So, we should word the break clause in a way that protects both our team and Wonderland. We don’t want to get rugged by building something and immediately being kicked out of sharing that created value – and similarly Wonderland doesn’t want us leeching on them while doing zero work.

We think long-term alignment is important. If we can get rugged after 1 or 2 years, it might be better for us to go to a DAO that is happier to have a more long-term relationship. But we absolutely agree that there needs to be a way to stop paying us if we’re not doing anything.

“Who is the team?”

Thanks to @cryptosteak, @sniperhoef, @0xWicked and many more for their thoughts on this.

We’d prefer to stay anons, as we live in countries with uncertain regulatory climates, but we’re doxxed to both Dani and @Sifu. There’s 5 of us, and we’ve been in crypto for between 2 and 8 years depending on which team member you’re asking. Most of us quit our real jobs a while ago to go full-time crypto.

Between us we’ve launched billion-dollar startups, built fintechs, and managed financial infrastructure at scale. We’ve designed, built, and operated secure core banking and cryptocurrency exchange systems. We’re experts in secure application design, cryptographic key management, smart contracts and blockchain integrations. We’ve worked with auditors to attest the security of our systems and our products are trusted by millions of people every day. We’re extremely proud of the things we’ve built, and we’re excited by the opportunity to build for Wonderland.

Part of the reason we think it’s important to align incentives in compensation is so that we don’t need to be trusted too much up-front: we want to build trust over time by adding value.

In the worst case scenario where we tried to rug Wonderland, we could only rug half payment of the initial grant from Wonderland by not delivering any product. We could steal $3M and try to run, risking being doxxed to Dani and Sifu.

Similarly, in the worst case scenario where Wonderland governance rugged us, we’d still get half the initial grant paid for our work and then Wonderland would have to learn the codebase and then maintain it themselves.

Structuring compensation this way reduces up-front risk and aligns incentives to work together long-term. That’s the relationship we want to build with Wonderland :green_heart:

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Awesome. Thanks @j_rana

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Fully support this fren

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Im 100% behind you sir

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Totally agree with you

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After reading this my concerns definitely faded away. As you provided a deeper insight in your thinking/ perspective, I now can fully stand behind your proposal and say lets fucking do it!

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Wonderland is bringing more to the table than the Devs:

  • Liquidity worth millions of $
  • The biggest DAO community on the Planet
  • Part of the most promising DeFi ecosystem

I don’t know if any other project can offer this much.

However, programming & coding skills are nothing unique anymore. Thus not worth 25%

Business ice cold.

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Lol. I mean actual data showing how much devs should be paid for such work. How much similar projects cost. Etc.

Not this “we’re the best DAO in the world so they should be honored” nonsense. Business is cold, but you’re far from making a business argument.

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So every business argument needs to include a Balance Sheet and Cash Flow Statement?

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But yea you’re right. Since they built Billion Dollar projects, let’s see the Data. Where is it?

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I’m comfortable with the team if they’re doxxed to Dani and Sifu and those two are comfortable with them.

The biggest risk is that we don’t actually capture as much market share as proposed above. $12.5 million is based on capturing 5% of the market which could be easier said than done. My suggestion is to change the incentive structure.

Instead of $3 million up front and $3 million when product is delivered, I think it should be a certain amount up front and then milestone payments once we hit certain market cap thresholds. For example

$2 million up front and for delivery
$1 million once 1% of market cap is reached
$1 million once 2.5% market cap is reached
$1 million once 5% market cap is reached

And maybe $1 million once FTM is delivered. And of course the 25% revenue share for first 4 years.

This is just an example and number can be played around with.

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