Funding Allocation for Winter

So, we’re getting $200,000 from Protocol Labs, and that needs to get allocated.

Or, more accurately: we’re getting $450k from PL, $250k of which is going to back Grain as it currently stands and $200k of which is unallocated. This post comes out of conversations from yesterday’s Town Hall.

We’ve all been feeling the pressure of the continual drop of the Grain-to-USDC peg. Let’s figure out how to use this $200k to relieve that pressure. I believe we will be best off if we focus on the period of time between mid-December (the start of winter break) and mid-February. I’m aiming for short-term solutions here that can be implemented before break and only last 2-3 months, especially since we’re aiming to get Grain on-chain around February/March.

:world_map: What are our options? :world_map:

Here are the options I’ve found people proposing on the Discord. Let me know if I’ve misattributed, misunderstood, or just fully missed something.

A. Instance cloning :dancing_men:

@blueridger proposed this on the discord and at the Town Hall.

From what I understand, this would mean fully cloning existing Cred scores (so no one’s Cred score would change, even inactive users) but not carrying over earned Grain. Thena also proposed paying out directly in USDC, which I understand to mean pegging Grain in the new instance back to USDC 1:1. The old instance would still exist; it would simply be frozen, so neither Cred nor Grain would increase there. Currently we give out 25,000 Grain every week; this amount would be different in the new instance, and we’d need to decide how much we’d pay out weekly.

Example:

Fictional Contributor Frodo currently has an over-all Cred score of 2,000 and has accumulated 10,000 Grain. Frodo was receiving 100 Cred per week and 700 Grain per week (aka 2.8% of Grain paid out from a pool of 25,000 Grain every week), for the past month.

When we clone the instance, Frodo’s cred score in the new instance (let’s call the score Cred2) will be 2,000 and their grain in the new instance (let’s call it Grain2) will be 0. Frodo will accumulate Grain2 according to their Cred2 score. Since Cred = Cred2 at the start, they will still be receiving 100 Cred2 per week. The amount of Grain2 we distribute weekly will be different from the original instance, but people will still receive the same percentage of the pool according to their Cred2 score. Since the Cred2 = Cred at the start, Frodo is still getting 2.8% of all Grain2 payouts each week. If that pool is 20,000 Grain2 total paid out weekly, Frodo gets 560 Grain2 (and thus 560 USDC) every week.

Frodo will still have their old Cred and Grain, and they will still be able to take out their old Grain, but Grain2 will be pegged to USDC 1:1 and the old Grain won’t be. (Will old Grain keep dropping, or will we keep it where it is now?)

:heavy_plus_sign: Pros:

  • Inactive contributors can still redeem their old Grain and will still be making some amount of new Grain (EDIT: if they opt in)
  • If an inactive grain whale wants to take out a bunch of old Grain, that won’t screw over active contributors who depend on SourceCred for their livelihoods. Old grain will be backed by the $250k mentioned above.
  • Active contributors will get a big bump in what they’re being paid thanks to the re-peg.

:heavy_minus_sign: Cons:

  • Old Grain will continue to depreciate (or stay low in price)
  • Creates a new system to deal with, which could create complications. We’ll need to have an exit strategy in place so we don’t have to juggle a bunch of different systems in perpetuity. @blueridger has suggested that we might do a 2 month redemption window for old Grain, at the end of which we reabsorb the remaining backing funds and say any Grain left is only redeemable for on-chain $GRAIN.

B. Re-pegging Grain :round_pushpin:

We re-peg Grain to USDC at a ratio of our choosing. @Jolie_Ze has proposed this previously. At least for the short-term, I propose existing Grain will be worth the new price, but we won’t be retroactively paying people back for when Grain was pegged lower. (I’m open to doing that in the future, but that’s contentious and we need to make a decision quickly.)

:heavy_plus_sign: Pros:

  • Simple, easy to implement and change
  • Active and inactive contributors alike will get a bump to our pay

:heavy_minus_sign: Cons:

  • Inactive grain whales might be able to empty us out unless we set a redemption cap.

C. Setting Salaries :bar_chart:

We give people salaries. @blueridger has suggested this previously, as well as others in the Product Circle (@magwalk? @saintmedusa?)

:heavy_plus_sign: Pros:

  • Easy calculations for allocation, once we decide who makes how much.

:heavy_minus_sign: Cons:

  • Deciding who makes how much could be contentious and complicated, especially since we haven’t done it manually before
  • Would mean we aren’t dogfooding anymore, at least for a time

:earth_africa: What other options do you see? :earth_asia:

What would you like to see in a short-term allocation plan? What do you like and dislike about these options? What other possibilities can you think of?

5 Likes

I made a visual aid for Option A: http://cred2.sourcecred.io/ I included a demo-only $80k break payout with an 8-week immediate policy.

3 Likes

New summary per conversations on Discord:

The instance here http://cred2.sourcecred.io/ demonstrates a 1 month payout per member with a 1 time distribution total of 80k to reflect that. The payout is at a 1:1 peg using USDC and is being funded from a the 450k PL funding, my guess is from the 200k allocation that we are ideating on for our emerging distribution strategy (as opposed to the 250k that we’ve been historically allocating to our current grain instance). Also as @blueridger put it in Discord:

We could use this instance as the real one with some tweaks, and then add the freezing

With regards to our Winter Break one-time allocation.

Additionally, we could use this new clone as the kick off for our funding upon our return from break, setting the 1:1 precedent, and continuing to distribute from the remaining 120k + additional grants and funding that we choose to liquidate (or whatever is matched* from PL, etc). All for conversations (ideally set in advance) per our return.

1 Like

In reply to the following, I realize that this is more of a future conversation. These are ideas and questions pertaining specifically to the fate of the Grain instance, Grain holders, and the future of onchain Grain, minting, and liquidity potential.

I am in agreement, pending other creative ideas, regarding our current instance. However, the question of what Grain goes onchain still remains.

As of now, many have been pulling Grain to pay bills, with others holding Grain, which is both taking a huge risk for this potential asset & helping out others that need to redeem for immediate liquidation.

How do we incentivize onchain Grain minting as fairly as we can, while also allowing for further liquidation of Grain assets for those who need it, regardless of the new USDC-skinned clone?

Ok here’s an off-the-cuff idea:

All Grain on the ledger gets minted when we do onchain Grain.

All Grain amounts that were “lost” due to the unpegging gets redeemed.

if there is interest in this i will do the math to determine the amounts due per contributor and total airdrop amount in $GRAIN proposed at the time of launch

But what about the $250k from PL? Should we freeze the Grain instance and slap it on the new USDC-instance clone? Should we continue to pay out for the 2-months? Should we add it or some part thereof to our onchain $GRAIN liquidity pool? Meanwhile, can we allow those who need to to continue to request grain at it’s depreciating amount - even with a new instance in place - with the promise that lost redemptions (the amount less than 1:1) be redeemed in minting?

I think it is a dependency for (some) Grain holders to know what the fate of onchain Grain looks like in order to make decisions about holding vs selling at a certain point. Prioritizing our contributors past and present in this way (redeeming unpegged Grain amounts upon minting) feels like both an honoring of past promises and incentive to hold Grain. Not because we have to, but because we can and maybe it’s a good idea.

2 Likes

I did the thing: Untitled spreadsheet - Google Sheets

Looking for review on the above dataset. Here for syncing on it to clear anything up that may be confusing. Should be an accurate and up-to-date assessment of sum differences of grain requests since the unpegging.

For clarity, this is intended as a minting strategy for onchain $GRAIN in addition to ledger amounts and not a USDC airdrop as originally proposed for discussion.

3 Likes

Our $GRAIN minting strategy is an important discussion, though I don’t see it as something we have to figure out before the break as apart of the immediate policy. We can stop distributions in the current instance and not change the redemption offerings for it nor make a closing window until later.

2 Likes

I like the instance cloning option the best. I think that we should come up with clear boundaries around payouts, especially since this would create two different systems. @blueridger has also stated that we might be able to use the claim UI for claiming USDC… so that might reduce the work for the new instance.

I wonder about boundaries around old-grain payouts like this (and communicating them all over Discord with lots of @ mentions):

  • A general pause on payouts during the break
  • Deadline for requesting old-grain payouts is Dec 13th
  • Pick a few-day window in the middle of break (like Jan 3-5 or something, that a treasury person is willing and able) for payouts
  • Resume regular payout schedule (i.e. once a week) once we return the 16th.
3 Likes

My proposed execution for the new instance:

  1. end grain diistributions in the old instance
  2. deactivate everyone & set USDC as the integration currency in the ledger in the new instance
  3. use this bot to enable self-serve activation and payout address setting GitHub - blueridger/sc-address-bot
  4. use the CSV integration for USDC payouts (and then the merkle integration when its ready).

Implications:

  • No one will continue to receive grain.
  • No one will receive USDC unless they re-opt-in via the bot.
  • People who opt-in via the bot will receive USDC automatically (until the merkle integration is complete, then there will be a redeem step)
2 Likes

That bot looks super cool!

I love the ability to opt-in to automatic payments. I don’t feel great about not letting inactive contributors automatically start receiving nuGrain in the new instance. One of the draws of SourceCred is that work you do now will be rewarded for its value down the line, not just one month out but a year out, 5 years, more.

1 Like

Here is my official proposal for the break. Commenting is enabled, so mark it up if you have thoughts. Miro | Online Whiteboard for Visual Collaboration

1 Like

First, thanks for opening up the discussion on the forums as I am not involved on Discord.

“Inactive grain whale” chiming in here. To be frank, I’m feeling a little thrown under the bus here. Plus I’m worried the proposals are very short-term, with risks to have long-term negatives.

After the Cred scores have been biased towards recency in the past:

Now at least one of the proposals is to prioritize recent Grain vs “Old Grain” and make old grain a 3rd rate citizen. (* understanding it’s still a proposal, but it signals a sentiment)

And I find some of the wording rather harsh. For example: “If an inactive grain whale wants to take out a bunch of old Grain, that won’t screw over active contributors who depend on SourceCred for their livelihoods.” Note: I’m fully supportive of safeguards for people’s financials (actively reached out about this before starting to redeem)! This just reads to me as sympathetic towards active contributors, and borderline contemptuous towards inactive people as though they’re a mere financial liability.

I just so happen to quote @ezraU because you happened to write the summary opening post. Please reset assured I’m not taking this personally, I feel like it’s a trend and I’ve seen this sort of wording before in the community.

And benefit of the doubt, I’m assuming this is genuine oversight for what my situation is like as an old dev. By definition “inactive” probably means very few are around to push back or share their thoughts. From my end, out of principle I didn’t want “cash out” immediately to cover just my own interests. Now being talked about in this kind of way while burning tens of thousands of $s worth by the time I’ve completed the redeeming process… I signed up for that risk, but the treatment stings.

To further add to that, I feel like I didn’t fully have a choice in leaving. Or in not coming back. Or in redeeming Grain. I had different views on implementations (including financial responsibility or caution in the ledger design, wasn’t that foreshadowing!) I was swimming against the current there and had a burnout. Not prepared to come back full-time when I feel I constantly have to advocate for things again (like I’m doing right now) and risk another burnout. As for the redeeming I already dove into, on-chain grain will incur insane bookkeeping burdens due to tax law here.

So when Cred biases towards recency, and Grain is proposed to make old Grain a 3rd rate citizen, and the tone is harsh towards “inactive whales”. It looks like a matter of structural policy to devalue people in my position. Hopefully it makes sense why I feel thrown under the bus.


On to proposal feedback.

Proposal A (full disclosure, probably most detrimental for me personally)

The way I interpret this, it has some implications that I feel should be clearly communicated and discussed.

In essence, I see this as declaring bankruptcy for the old Grain ledger and simultaneously restarting with a new one. Because it means it puts the final nail in the coffin for the old ledger, never going back towards 1:1 backing for it and attempting to absolve the new ledger from previous “creditors”.

In “the real world” this would drag your reputation through the mud and put you on all kinds of blacklists. With the main difference I think being people understanding and opting in to SourceCred as an experiment.

Still I think there’s a real possibility, with enough scrutiny this becomes a black page for SourceCred that will be hard to undo in hindsight. As opposed to adjusting Grain distribution policies and redemption ratios to overcome this period.

My suggestion is to discuss this broadly, (I have my biases after all) and see if the community is comfortable with this.


Proposal B.

Is this different from the status quo? My understanding was the current redemption ration depends on the available backing funds. So if more backing funds comes in, wouldn’t the ratio be adjusted up? As per Proposed Change to Grain Redemption

Or is the proposal here to let go of the “depends on available backing” formula and choose an arbitrary ratio? If so, what would it be based on instead?


Proposal C.

“Would mean we aren’t dogfooding anymore, at least for a time”

Do you mean exclusively going to salaries? As in putting Grain on hold entirely? What about Cred?

If it’s on hold while paying salaries, how does that not increase the financial gap to fill?

:eyes:


What I dislike about these proposals is that they are short-term plans. The predicament is not new. The writing was on the wall, the emergency brakes have been pressed months ago. So why are we still picking between short-term bandaids? For all 3 options I fear it could cause even more problems down the line. So I’d say the even appear like short-term at the expense of the long-term!

If I read between the lines of these proposals, I get the impression the community learned the hard way, being a long term financial custodian for many people’s accounts (especially with a fractional reserve) is H.A.R.D.

And I will predict, without a sound plan, on-chain Grain is going to make this worse. Less manual work, but also less control. No more ability to simply have meetings to implement emergency measures.

Edit: my off the cuff short term suggestion would be, to continue with the previous measures, of unpegged Grain and letting the additional fund recover some of the ratio closer to 1:1, and adjusting the redemption cap as needed to protect people immediately dependent on liquidity. In my view these still cover the emergency basics, and long-term solutions should be invested into rather than going from one emergency fix to a different one.

Edit2: just a final addendum on why I feel the devaluation of older contributors is hurtful from my POV. And that’s in what it symbolizes. Recalling earlier design talks about Grain, one way to think about it is as a “proof of contribution”. Which would make sense whether you’ve sponsored by buying Grain from others or done work to contribute and got it based on Cred. Having older “proof of contribution” depreciated just because it’s older, just signals that the community is willing to forget I’ve at one point contributed to earn such “proofs” in favor of whoever is active today. This pains me more than even thinking about the $-value involved.

2 Likes

[Comment moved to Finalized Proposal: Dec/Jan Break 2021 for focused ratification]

2 Likes

I like this too and see it as having potential upon our return from break as a proposal to consider. For now, based on contributor availability on-the-ground, burnout, and lack of capacity to make make big pivots (imho) I see us jumping to one more bandaid, so to speak, for the time being, since we anticipate our break beginning next week (Wednesday) and our governance structure is not quick enough to ratify something that doesn’t have the details hammered out yet.

When we return, I see us potentially making more bandaids along our way to better long term stability, which is helpful to know that we can always use stopgaps and not have the perfect distribution established to move forward, but I appreciate and really crave solutions that center longevity that not only value veteran contributions as proof-of-work but also lend themselves to lineage transparency, integrity, and healthy relations across the contributor pool and greater sourcecred ecosystem. I personally think we still have a chance to redeem ourselves with how we handle our token launch, but we need to consider concerns and viewpoints such as these along the way.

On a more personal note, I appreciate the perspective in this post because with the change in the algorithm away from CredRank, and lots of other ground-breaking changes with the product, I know I have personally been losing track of the value of past contributions to what feels a lot like “the old product” or “the old ideas” that did not feel as value aligned for me or that caused me personal distress in my stumbling to understand what I was coming into when I arrived at SC. This response re-aligned me with a more broad perspective for those who came before, irrespective of where we’re going, and I am humbled by it.

Dude, right? I see you seeing us here and I appreciate the nod. Even with your absence in our communications hub (Discord) it is touching that you can witness us in this hardship, which I will add has overwhelmed individual workloads and put a lot of stress on relationships within the community; in a lot of ways leading to our inability to see solutions that center longevity or another way of saying it would be our hyper-focus on meeting-immediate-needs approach that we probably feel we need to repair our closest relations with regards to the custodial financial inheritance as opposed to the whole that makes us who we are as an organization.

Looking forward to collaborative, creative, and more holistic solutions after much needed rest.

Thank you @Beanow for your participation, your perspective, your witness, and for all that you have done to make this possible for us today - by the way. See you in the next discourse post :wink:

2 Likes