SourceCred Finances

Hi everyone,

I want to deliver on the communication I promised in the general channel a week ago. This is a post for which there were three intentions - accuracy, clarity, and comprehensiveness. Over the last couple of weeks, I’ve worked with many different perspectives in effort to best have this post reflect these intentions. In this post I will outline our financial health, trajectory, and options.

1. What is our current deficit?

In truth it’s about -900k, but you’ve likely seen or heard the -500k number.

This is, as you may have heard, because we’ve been issuing 1.3M grain/yr with only $1M/yr in funding coming in.

Why two different deficits?

The difference is DL, they are planning on not redeeming any of their entire 398k balance into the new on-chain grain to give the rest of the community priority in redeeming grain. But we’re nearing the point where even that’s not going to be enough, considering we have about 500k left, which is barely enough to cover the outstanding grain under the assumption that DL doesn’t redeem a single dollar.

Here’s a summary:

We have a 988k grain issued but unredeemed, and only 132k in the treasury which gives us the deficit of $855k. And subtracting DL’s balance, we arrive at a deficit of $458k (as of Jun 26).

2. Why did the deficit form? Why didn’t we just match funding to grain issuance?

There were many ways out of racking up the deficit, but first some background.

Most tech projects/companies rack up deficit through early stages of growth using investor capital but with the mutual expectation that the project/product/tech/startup has a positive growth trajectory in:

  • Technology

  • Market share

  • Revenue

In such a scenario, capital is used to accelerate growth of all three things. With Protocol Labs (PL), the expected use of capital was more specific to accelerating development of the technology.

Now for a little SourceCred history:

In the beginning, we were distributing exactly the funding, but SourceCred was mostly techies who didn’t need the money. So that meant that most of the budget just stayed in our treasury, while the few people who needed the $ weren’t getting enough. We upped the Grain distribution rate to better reflect the needs of the community, but this assumed that SourceCred’s technology would continue to grow and become more successful in the future.

However, over time, our focus shifted away from this initial vision and toward initiatives unrelated to technology development. And per the current trajectory, the assumption that SourceCred’s technology would continue to grow and become more successful in the future is less certain than it was at the inception.

If funding is to continue, PL wants to see clear accountability and roadmaps. And this funding will be contingent on the success of a reapplication. Further details on PL’s expectations and reapplication see (PL sync discourse post / announcement)

3. What about Dandelion? Wasn’t this grain issuance policy their decision?

In effort to take accountability for their decision and to aid this transition by giving other community members a chance to redeem their grain balance at $1, Dandelion will NOT be redeeming their ~398,000 Grain for the $1 peg. Regardless of the current community sentiment on Dandelion, from a financial perspective this is crucial in buying us actual options for the transition.

4. How fast is the deficit growing?

Considering the financial analysis was done with the assumption that if we decided to let everyone redeem their grain, the funding through the end of 2021 would be given all at once, our deficit against expected funding currently grows at almost the entire 25k per week (23k-ish to be more exact, after accounting for recurring tithing revenue).

What does this mean?

UPDATE (7/17): William, one of the co-founders of SourceCred has expressed that he may consider using part of his ~63,000 Grain balance to help SourceCred through this transition, but this is not something to be relied on in planning.

5. What are the options?

There are time sensitive decisions and longer term strategic decisions we need to make. I will focus only on the former decisions, specifically, the options we have for the decision which must be made in 2 weeks. The key problem for which we need to find a solution is : How do we handle grain issuance after grain is no longer backed in 2 weeks.

In order to foster more open discussion, I’ve laid out the barebones details of the options.

In 2 weeks, we can:

A) Stop grain issuance - at least until funding is secured, at which point grain can be turned back on in accord with the funding.

B) Switch to issuing on-chain, unpegged grain - with this option, all grain past two weeks from now will no longer be able to be redeemed for $1, but rather at whatever price the market dictates. This was a plan that has been discussed as ‘always the eventual end goal’. It does however come with some risks and material changes to how the grain is currently used.

C) Keep issuing grain with zero changes - this would accrue a deficit at ~100k/month, currently there are no plans to account for this deficit.

D) Reduce grain issuance rate - surprisingly, without further secured funding, this option is little different from option ‘c’ this option also accrues a deficit with no plan for accounting for it.

E) Other - definitely open to other plans as the community ideates, the 4 mentioned are just the ones I’ve been able to identify.

More details and clarification will be provided at the Finances Q&A part II as desired by the community.

6. Do I need to cash out before others if I want to not have my grain be worthless?

No, If we can finalize a plan within two weeks, everyone can safely redeem the full value of their grain.

Given our current financial health, we are in danger of causing harm to the community members who’ve worked hard, as reflected in part by their grain balances. We need to make a decision within the next 2 weeks in order give SourceCred’s vision the best chance to survive, the same vision that drew most of us to the project in the first place.

If you have any questions, I, along with a panel to be finalized, will be holding a second Q&A at 330pm PT - 530pm PT on Tuesday July 20, 2021.

Sincerely,

-scrabbleboy

LINK to finances spreadsheet:

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I have speculated in private conversations that I am considering doing this, but this is not a commitment of any kind, and I encourage not relying on it.

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Apologies William, it has since been corrected. I will also make sure to surface the correction during the Q&A.

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I think that reducing the grain distributions is imperative but don’t think it needs to be exclusive of other financial plans. I hope that this change can happen immediately to at least 20k for now until further proposals are made.

Additionally I’d like to personally thank DL for their financial contribution to the community and believe it is no small thing that they have, with what seems like little fight or second thought, handed over their grain to the deficit.

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Hey Jojo,

I wrote this post with explicit effort to filter out feelings on the situation, and want to encourage everyone to do the same, at least for asynchronous discussion on this forum. I’ve provided what I believe is a solid foundation on which to have discussion during the Q&A today, July 20 at 330pm PT and following conversations involving the broader community.

Oh! Do you mean that you didn’t want me to weigh in my opinions on how to move forward? I’m trying to decipher your ask. Didn’t get clarity in the Q&A from you either, but I’m still unclear on what you mean by “filtering out feelings”.

I think we come from a different set of values, you and I, and I operate from the foundational belief that being objective is a misogynist and colonialist lie. I think that this foundational belief may make it harder for us to understand each other in this context.

I’m writing this to be transparent: I don’t want to be afraid to ask questions, respond to forum posts, and generally speak my mind because you or anyone else may respond with aggression (I’m referring to the discord where you have since apologized and received Cred and acceptance by me for your apology) or tone policing (which I believe you to be doing here). I need this to stop before it becomes more distracting and harmful.

I will note that I am not activated while writing this and I didn’t want to “take up space” in a thread for finances, but in light of this thread being continued in real time in discussions on discord I’m taking the opportunity to respond here. I am not asking for a response but ask that you sit with my words and reach out to me or trusted contributors to understand me better before potentially responding in anger, objectivism, or otherwise just blatant and possibly harmful or alarming misunderstanding of my words.

I will also note that I’m available to talk with you in real time - and I feel no urgency around it - to sort out these thoughts and feelings we’ve been having and/or displaying in private or public. We both know we do better on calls rather than text, and if at this point it feels good to have a third person with us I nominate @saintmedusa

I did surface this during the Q&A because I wanted to make sure everyone felt empowered to weigh in opinions on how to move forward, but you were absent from the room when I surfaced it, so I’d like to provide my perspective.

I believe objectivity is an ideal toward which one can strive but never actually reach, because we all have our biases, and to that end the best one can do is research and consult the perspectives of others on the topic at hand and factor in what different scope exists on its interpretation. This is why I wrote that I made the explicit effort to be objective in this post, rather than declaring it as categorically objective. This being said, I would also like to learn about the framing of objectivity as a colonialist and misogynist lie to expand my understanding of the scope of objectivity.

The initial draft of this post I wrote by myself after analyzing numbers I dug up. Knowing it was a single perspective, I knew this was going to be heavily laden with my own interpretations and written with the connotations such that someone reading it may reach similar conclusions I did more often than not. But other interpretations exist, and deserve as fair a shot at being reached by the reader as any others. So I consulted many others for different interpretations, and in revising the draft after draft, I made best effort to take out language which favors one interpretation over another, especially in what options exist. This is what I meant by ‘filtering out feelings’. In retrospect I could have been more specific and clear here.

For the entire time I’ve been happily involved as a contributor here, I’ve also been healing from my corporate days - trying to reinsert humanity and empathy back into numbers, operations, and analysis, whereas before my job entailed taking them out in pursuit of dystopian capitalist ideals. I know that my taking on this task of looking through the numbers has been met by many with fear that I may resort to what I used to do as a job, but I’ve completed this task in a way I can confidently say is as close to objective as I could get, and in that I feel proud.

As for talking with you on a call, I would like that, I agree that we communicate better through that method.

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Thank you for this regulated and sincere response. It’s very refreshing to “hear” your voice here. I look forward to continuing to engage with you, to continue our trajectory of learning from each other’s very different backgrounds and perspectives, to really get to know each other (which we’ve both already have done a great job prioritizing in the short amount of time we’ve interacted and under pretty intense circumstances w/r/t SourceCred) and to working through conflict together with sincerity, empathy, and transparency. And I will be sure to listen to your full Q&A Part II once it is all set to fully hear you in your responses there.

[[Sidenote: The download for the Q&A Part II has been going for 90 mins or so and has only reached 23% completion, ugh!]]

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I just finished reading - audiobook style - Sand Talk by Dr. Tyson Yunkaporta and I recommend it as a good text to elaborate on colonialist underpinnings to objective truths, as per our previous discussion.

I hope you’ll consider getting through it! This will undoubtedly be a book I listen to on repeat many times throughout my life. I’m actually recommending it to everyone I know, but it also happens to address these truths quite well I think and from many angles.