The hic et nunc DAO implementation discussion

[Xanderhizome]

https://discord.com/channels/908672304236625970/908724855095062559/909967490669486130

Copying some of my thoughts from discord in the discussion which ensued following this comment [the image posted above] between myself @tezexplorer and @ChrisC to avoid it potentially being snowed under.

Briefly ‘wash trading’ and ‘hdao minting gaming’ were brought up, as was needing to provide funds to pay developers to develop and implement anything ultimately decided on. Conversations around a new token have been going on quite a lot, pros and cons thereof, a lot of people have different views. - I am against a new token for some reasons, but can see the utility of one for other reasons.

My comments in the conversation are:

“I think we’re far enough on from the ‘heavily gamed’ token minting that those still holding from then are invested enough in the platform itself for it to be relevant. I think a new token is akin to central banking money printing and something in my veiw to be shied away from.
I understand the points about keeping reserve in treasury, but I think there’s value in taking systemic development slowly, I’m not absolutely against a new token, but I think doing so would have to be done extremely carefully”

“I think the best way to go about avoiding these issues [a 1:1 conversion between hdao and a new token wouldn’t avaoid potential issues with hdao itself, and deciding to discontinue hdao could lead to ‘insider trading’ from knowledge of conversations about the topic which I beleive to be worse than potential issues with hdao itself] could be a combination of hdao and a new token as a component in governance. I don’t know about the smart contract side, but maybe there could be some way of combinging the tokens in some kind of staked pool as in an LP for governance tokens”

“As in we keep hdao as is, and implement some further utility on the platform with it: alternative currency, curation mechanics, other things maybe I don’t know. And issue another token that retroactively rewards utilising the protocol itself potentially, while holding reserves + initial sale to raise funds. Some combinatric mechanism giving governance power”

I think the actual conversation is worthwhile reading and summarising better, but I’m not great at that, a record of conversations is important, and I hope this serves that in some limited regard without just copying the entire thing

[TaoZao]

One example of a circular hDAO economy – donations and potential HEN baker fees can also be pictured as feeding into the treasury: !

[FLX]

DAO Funding by @tezexplorer, pasted from Discord Discord

Here is a revised version of possible options for funding that people have mentioned in the chat here over the past ~3 days to fund a treasury controlled by the DAO. You will need to click ‘open original’ if you want to read all the text. Please keep the following in mind when you read this:

1. It’s not done yet, I still need to add ‘funded token raise’ in the bottom right hand corner (empty space currently).

2. The diagram is meant to show people what the range of options could be. It is possible that several of these options could be used together

3. The diagram is an overview and simple explainer of the various options. it is not a long list of the details for implementing any options

4. The purpose of the diagram is not to recommend any one particular option

5. The purpose of the diagram is not to discuss the advantages/disadvantages of each option

[TaoZao]

yes, the good thing about this model is it’s more or less is similar to some of the thoughts that we have had in the past week. If anything, we are just adding some other small features onto this model, e.g. the staking element that feeds into the circular economy diagram, etc.

[mZapZ]

I love this visual aid! makes it easy to understand alot of the discussion thanks for sharing Could we end up doing a similar one to what @TaoZao did above for hdao only, to replace hdao with a new token etc? showing the various ways it could work and showing the advantages / disadvantages as we see it for it? This could form part of the proposals (each of these visual graphs) showing a way it could work proceeding either with A) hdao only B) a new $HeN token.

[TaoZao]

yes, in theory that circular economy design could be applied with any DAO token. I just used hdao as an example!

[TaoZao]

(Responding with some thoughts to the general idea that a DAO might be possible without a tokenomics/monetary incentive structure, or that it somehow flies in the face of a platform that is supposed to be “art first”):

I think most understand that its “about the art”. However, these are crypto economies, so they are inextricably intertwined in complex and interesting ways with monetary incentive structures. So, perhaps “hdao” doesn’t make it into the rebranding phase, but there needs to be a sensible tokenomics that gets implemented, otherrwise the DAO will be inefficient.

There is wide-spread agreement that, with respect to voting weight, there would be a quadratic voting system in which DAO tokens that carry market valuation, would be diminished, though it would still be a component. Other metrics could carry weight, such as amount of NFTs sold/purchased, the amount of time that a DAO token is held (as opposed to the mere amount in terms of $), spending the DAO token as native currency to buy pieces, redistributing it, etc.

Plus, monetary incentives built into the DAO make it efficent in the sense that it helps to create a circular economy wherein participants can achieve equity in the platform, and reinvestment leads to funding, which leads to spending, which leads back to reinvestment.

[FLX]

Thesis: in light of rebranding, new platform needs a NEW governance token with 1:1 swap from $HDAO

Reasoning for New Token:

1. Rebranding of HEN: There is a high probably for a complete rebranding of HicEtNunc (Hicetnunc.art) into something new as Rafael wants it to discontinue.

2. Hic Et Nunc DAO: After the rebrand, it doesn’t make sense to use $HDAO, Hic Et Nunc DAO token, to govern the new platform.

3. 1:1 swap of $HDAO: There are 6,000+ investors of $HDAO who are die hard supporters of HicEtNunc, and many of them are collectors and artists around the globe. We would like to carry the same support and be the backbone of the new platform. $HDAO will be swapped one-way into the new governance token.

4. DAO Reserve: For long term success, the new token needs to incentivize the future team working on the platform, and give them token that vests for 3 years. This is essential for core team, Hicathon WG, representatives, and volunteers. The new token also needs to set aside certain amount for potential retroactive airdrops, events and user growth campaigns.

5. Stakeholders’ Voice to Be Heard: HicEtNunc was built to represent digital artists from around the globe, especially the ones in hemisphere south. Many of them don’t have token, so they cannot vote. The new token needs to be distribute to platform stakeholders.

Example of Token Distribution

Please note all numbers are subject to community vote to decide, this is just an example.

Total amount of new token: 1 million, this means ~30% dilutive for current $hdao holders. The new token consists of following parts:

• $HDAO Swap: 650,000 new token will be 1:1 swap from $HDAO. Once swapped, the user’s $HDAO will be burnt and new token can be claimed. The new token cannot be swapped back into $HDAO and represents the governance for the new platform ONLY.
• Dev Share: 200,000 new token for devs, marketing team & representatives who develop features, fix bugs, and maintain the platform. This part of tokens will be vested for 3 years, and controlled by the DAO.
• Retroactive Airdrop: 100,000 goes to retroactive airdrop to HicEtNunc users - artists, collectors who has been active since the last $HDAO airdrop until now. With the new token, their voice can be heard.
• Growth Reserve: 50,000 goes for DAO reserve for marketing, campaigns, events etc.

Pros and Cons for a New Token
Pros

• Fresh Start: Have a fresh start with the rebrand, legacy Hic Et Nunc DAO does not govern the new platform.
• Talent, Talent and Talent! Incentivize the people who contribute to the platform in long term, and attract more talents. Platform fee is somewhat enough to pay servers but the best devs will work harder if they have some ownership and voting rights for the platform.
• Flexibility: reserve token can be used to plan for events, campaigns etc.

Cons

• Dilutive for Existing $HDAO: as the total number of new token will increase, $HDAO can be dilutive and investor may lose some value. But I do think it is better for long term success.
• Parameters are Hard to Set: there are many moving parts for the new token, so the discussion will be long and somewhat tiring.

Other Governance Mechanism
In this post, I did not mention about governance protocol. But I am supportive to @TaoZao and @tezexplorer visuals of DAO governance.
In terms of voting power, I am supportive to Quadratic Voting which curbs whales.

[FLX]

How do we swap $HDAO into the new token?

The swap of $HDAO into new token is NOT automatic. $HDAO holders will have to claim “new token” on their own.

Landing page: We need a landing page for $HDAO holders to connect Tezos wallet, and it shows the wallet’s $HDAO balance

• Step1 Convert: There should be a “Convert” button, user click it, and he / she will send $HDAO into a smart contract.

• Step2 Claim: Once the smart contract receive the user’s $HDAO token, user can click on “Claim” button, and receive “new token” The whole conversion is now complete.

One way swap: The $HDAO in the smart contract will be burnt, and new token cannot be converted back to $HDAO.

Limited time: This landing page will exist for say 6 months, if you don’t convert and claim your new token in 6 months, you can’t do it anymore.

[TaoZao]

I wonder if there would be a way to program the new contract such that it would mint an additional number of tokens based on the amount of hdao not redeemed. So, say, that 100,000 hdao never were converted and claimed, the new contract should then mint those 100,000 and add them to the growth reserve pool.

[Jovi]

I look forward to the emergence of new tokens and unite again under the new economic model.

[mZapZ]

Great work @FLX ! Very clean write up. Looking forward to voting on this