Draft SIP: SNX Community Fund Allocation Through Inflation

[synthetixio]

Draft SIP: SNX Community Fund Allocation Through Inflation

[CryptoToit]

Some interesting discussions will come from this SIP.

As far as I understand, there is already a Foundation with funds to support the Team and 'pay' for certain things. Before a new Treasury is founded I would like to see some kind of high level audit on the current funds available and how it is allocated to a) operations, b) development and c) incentives.

Should a separate / new Treasury be set up or should the current one not maybe be converted / upgraded to a more decentralise style?

I like the idea, but personally I don't want to rush this as the Team is doing a good job and we should not implement something that could negatively affect the momentum that has been build up to date. There are still a lot to be done before we really hit version 1 of the entire new system.

But good to start the discussion and get some high IQ input from the community and the Team.

[FrameworkVance]

Before a new Treasury is founded I would like to see some kind of high level audit on the current funds available and how it is allocated to a) operations, b) development and c) incentives.

Resolving this is a reasonable first step and is imperative to making an informed decision.

[grantferowich]

Thank you Mike and Vance, for this very well-thought out Draft SIP!

To the SNX Community:

TL;DR:

I am FOR experimenting with a Council of a dozen individuals voted on by the community with an allocation on the modest end of the spectrum (5-10%).

I am FOR specifying a limited scope for the Council to execute on: Growth Initiatives.

It seems pretty clear that the focus of the council outlined here is growth initiatives. Tasking the Council with executing critical protocol initiatives is such a wide-open goal, how we could know the council had achieved its raison d'être, at least in a minimally abstract sense? Wen $6 dolla perhaps?

The Arb Pool resolved a specific need for a healthier peg; the Uniswap Pool Rewards resolved a specific need for on/off-ramp liquidity. A more specific definition of the council’s goal might be to accelerate growth in the # of users participating with the network. Once the network has reached some self-evident point where user growth has adequately accelerated, the council might then evolve to tackling broader agenda items?

I am inclined to support a trial phase experiment to observe how the council works in practice before establishing the council as an ingrained mechanism of the protocol. Then there is time to generate data on how this form of governance looks and acts in practice.

While it’s not aesthetically pleasing to run with an undefined governance model, part of me wonders if we should stick with the mantra that if something isn’t broke, don’t fix it. It's a small part of me, though.

“If all you have is a hammer, everything looks like a nail.” One concern about institutionalizing SNX governance is the Council will find projects that are more 'wants' than 'needs', because the Council has funds and the Council exists in part to distribute funds. That said, I appreciate the Council’s raison d'être is being dynamic in relation to a fast-evolving DeFi environment. Keeping the Council’s aims specific also quells my concern on this front.

The team has no shortage of protocol initiatives in the works, so I think it’s worth asking Kain and members of the team how much should realistically be expected of them in terms of their contribution?

Tactically:

IF the Council is activated, I propose the Council reach consensus on appropriation initiatives with 3/4 majority vote (9 of 12).

IF the Council is activated, I propose a quorum of 9 members, with 6 votes being required to appropriate funds toward an initiative.

IF the Council is activated, I propose one of the Council members role for a secretary to take minutes at Council meetings that can be shared with the community, to encourage transparency. Alternatively, the meetings can be streamed, recorded, and posted on YouTube by the secretary.

IF the Council is activated, I propose community votes for Council members be held on the SNX Discord within a 24-hour period of a governance call.

IF the Council is activated, I propose allowing for self-nomination as well as allowing community-nominations of candidates for Council member positions.

IF the Council is activated, I propose evaluating the composition, existential status, and performance of the Council with a set of metrics that the community agrees on as being a valid benchmarks to measure how well the Council is achieving its intended purpose.

IF the Council is activated, I propose a wider community referendum be held in 6 or 12 months after activation on Discord to decide whether to keep or modify the Council.

Open Question: If there is agreement that Growth is the proper scope of the Council, how will we make this specific goal concrete, i.e. what metrics/KPIs should we focus on when thinking about growth?

[meanderson]

Following the governance call today, I want to provide a quick review of the discussion and then the next steps.

One of the guiding questions that has come up in the comments, as well as the discord, is the need for clarity on the desired purpose for the Foundation SNX funds. This answer will dictate the best path towards funding a Community Fund, either through these pre-allocated funds or as a % of ongoing inflation. @kaiynne confirmed that the Foundation SNX funds are to be thought of as "belonging to the network". In this regard, we think it's redundant to take a % of inflation to dedicate to a fund seeing as they already exist. Therefore let's consider that part of this discussion settled.

The second part of this WIP SIP has to do with the management and distribution of the allocated funds. This section is still relevant as we discussed, a few times throughout the call, the benefits of furthering the level of decentralization throughout the platform, both technical and non-technical. From a governance perspective, we discussed the negative perspective of on-chain governance and some of the potential virtues of a pseudo-representative-democracy model (potentially even a council). There are a ton of open questions that come with any model (a few mentioned above), and even small differences between each model could cause major tradeoffs when implemented. It's clear that this is not something that will be solved 1) soon, and 2) without experimentation, but it seems that there was a general agreement on a desire to get the ball rolling for trying these governance models at a small scale.

As the next steps, @FrameworkVance and I can do further research on a few different models for governance and come back with our findings. We'll leave this WIP SIP here as a starting spot and open forum for others' opinions on potential decentralized governance models. By the next governance call, our goal will be to have a better idea of potential governance models, examples in use today, and potential trade-offs between different implementations. At that point, we can decide if we want to move forward drafting a different SIP to potentially test a model.