To provide an alternative to and argument against markets, here are some thoughts.
Anticipating to solve a problem we don’t yet have.
Markets seem to me a solution for a problem at a later trust level. Reducing friction for sponsors / investors.
It’s certainly a lot easier to buy a couple of tokens on an open market to play the speculation game, than it is to make a hard commitment to a community and requiring a mutual trust level. But I think that’s exactly why we’re staying with Protocol Labs in this stage. And in my opinion it would be healthy to keep such friction in place for any additional potential sponsors in the foreseeable future.
So, not yet deciding to go to a fully open market but expecting we will, and therefore choosing something in-between that looks like a market. I think is preemptive, so I think there could be completely different options for the current stage.
Problems to solve right now.
Design goals (I think):
- Reducing friction for contributors to claim benefits (governance, financial, etc.).
- Have Cred distribution reflect community values in terms of incentives and value of contributions.
- Using Grain as an incentive system through boosting / staking.
- Using Grain as a redeemable / sell-able token for currency.
Immediate problems:
- Fixed rate Grain issuing and redeeming, decouples it from progress made in the project.
- How to deal with the risk of the Grain redeeming budget going insolvent, vs the inefficiency of reserves not being used for anything.
Alternative
Considering that the people most impacted by Grain going insolvent are the people who have Cred. Seconded by the parties that bought Grain. And having a high trust relationship with sponsors makes sense for the current stage.
Why not a (cred weighted? 
) stakeholder meeting to set the financial policy as the community, including PL. This would be to address and monitor both problems.
For example, the meeting could decide on:
- Keeping a fixed redeem rate for Grain, but peg issuance to an absolute Cred target. For instance 200 Grain per Cred (probably way off mark).
- Have a threshold of no less than 15% reserves, before which a meeting should be called.
Examples of what the meeting could decide to remedy a low reserve:
- Issue Grain slower or not at all.
- Lower redeem value.
- See if the sponsor will increase budget.
- Ignore and change to 8% of reserves as the observation is still 1%.
And so on.
The key thing here is that by having the meeting, the community can decide on their own risks and possible consequences they’re comfortable with. I think PL should have a say as, while they’re not at risk of overspending, are at risk of not seeing enough progress for their funding if mismanaged. As a side-effect it’s a great opportunity for useful debate, and to increase inclusion of the community into governance.