100M DAO compromise

Discussions
1

I decided to bring an important upcoming issue to the community’s attention. The Lisk team completely overhauled the tokenomics during the migration, and without going into details, let’s set aside the fact that holders received half the proportion they had in the network before the migration. Now, we will discuss the upcoming vote on whether to keep or burn the 100M DAO tokens, which could ultimately increase the dilution to around 62%. Currently, it is almost 50%, to be precise, 49%. You can read my discussion with Dominic here and with Shuse2 here and draw your own conclusions. Let me briefly describe my idea.

Remember Elon Musk and Tesla? He received his compensation in the form of shares based on the stock price they achieved. We can do the same for the DAO. If the price reaches $5 and it holds for 1 month, 10 million tokens out of the 100 million will be unlocked and transferred to the DAO account. If the price reaches $7.5 and holds for 1 month, another 10 million tokens will be transferred to the DAO. This will continue in increments of $2.5 up to $27.5 per token. This way, token holders will be assured that they will get the token price; those who want to sell at that level can do so, or earlier, but everyone will have incentives.

New investors will be motivated to invest in the token, and the team will be driven to develop the product so that the token price increases over time, rather than just printing new tokens. Only then, and only under such conditions, will I believe in the sincerity of the Onchain Foundation regarding these DAO tokens. This is one compromise option for retaining these 100M tokens.

We should have a vote like this:

What should be done with the 100M DAO tokens?
1. Burn the tokens
2. Keep the tokens with unlocking linked to the price**

Price to unlock next 10M DAO tokens, USD Time to unlock tokens not early than, even if price was reached
5 01 Jan 2027
7.5 01 Jul 2027
10 01 Jan 2028
12.5 01 Jul 2028
15 01 Jan 2029
17.5 01 Jul 2029
20 01 Jan 2030
22.5 01 Jul 2030
25 01 Jan 2031
27.5 01 Jul 2031

** If the price is reached and then drops, the tokens at that price will be unlocked when the time is reached.

Example 1: If the token price is currently $4, the current date is July 10, 2030, and the price increases to $22.5 and holds there for a month, then 80 million tokens will be unlocked immediately.
Example 2: If the token price is currently $30, and the current date is October 10, 2026, tokens will be unlocked over time.

4 Likes
2

Sounds reasonable, I would support that. This would create a long-term motivation for the community to support the ecosystem and to research and create new tools to increase ecosystem internal value. Especially considering the alternative as burning or simple vesting.

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Good idea. A release schedule tied to unlocking helps to align incentives and avoid situations like Polkadot recently spending almost $100 million in 6 months on marketing.

Since you mentioned Elon Musk, remember that his his compensation was blocked / delayed. If option 2 was agreed upon how would be funds be escrowed?

Not sure how safe a contract connected to an oracle service would be. Maybe Redstone has the solution but if not?

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4

I think it’s not a problem; they are escrowed now somehow, and will be escrowed later. It’s not an issue. Everything can be solved, maybe not easily, but it can be done. That’s why we need to focus on how we want it to be now.

Regarding compensation blocking, my idea gives investors a chance to sell the tokens, and it’s honest (those who want to sell can do so) because the price must be at that level for at least one month. Don’t worry now about how it will be written in the contract; it’s possible to do with oracles as you noticed. For example, every day you can set the price in this contract or get it from the local DEX.

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5

Hey @grumlin ,

thank you, imho it is an interesting suggestion to unlock the tokens linked to the price!
But if we include it, there would be actually three options for the community to decide:

  1. Burn the tokens
  2. Keep tokens and do not lock them
  3. Keep the tokens and lock them, with unlocking linked to the price

This means we cannot do it in one proposal, as every proposal can only be approved or rejected by the community. Instead, I would suggest that you do a second proposal, following the 100M proposal.

If the community decides to keep the tokens in the first proposal, you can create a new proposal directly afterwards, that proposes to lock the 100M linked to a specific price, which the community can accept or reject. And if the community decides to burn the tokens, there would be no need for the second proposal anyway.

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6

Hi, Mona,

We need to conduct a vote with three options at once. Alternatively, we can have two options but immediately decide between linking or burning. If the team refuses this option, I propose holding a preliminary vote to clarify the final question, which would be fairer. For example, we would first conduct a vote: “Should the token retention be linked to the price, as proposed by Grumlin, or without price linkage, as proposed by the team?”

Why is this fairer? Because those who want to retain tokens with a price linkage will have the opportunity to ensure it will be linked to the price; otherwise, they will vote for burning. For all other options, the sequence does not matter.

And it should not be the team determining the voting sequence, to be honest, but the DAO, i.e., the community.

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7

We need to conduct a vote with three options at once.

I don’t think this is currently possible.

And it should not be the team determining the voting sequence, to be honest, but the DAO, i.e., the community.

Sure, you are right, there is also no way the team could determine it, in the end the community is free to make any kind of proposals already before the 100M proposal.

Why is this fairer? Because those who want to retain tokens with a price linkage will have the opportunity to ensure it will be linked to the price; otherwise, they will vote for burning. For all other options, the sequence does not matter.

Good point, and actually it might help when we have a few “smaller” proposals before the big 100M proposal in September, so people can get familiar with the voting system.

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You don’t have to use oracle, having DEX on Lisk L2 is enough, then you could write a contract that would be linked to a liquidity pool and only allow tokens to be claimed if the token price was above a certain mark within a certain timeframe. Yes, it would require someone to call a public function once a day and store the current price in the counter, but I think when it comes to big value, this wouldn’t be a problem

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9

Exactly my thoughts
So the decision of burning or not has to be come first. If community votes to burn, then the idea of gradual unlock becomes unnecessary

10

Lisk is highly volatile asset, historical chart proves that and there is no question about that. Then what if price reaches $5 dollars holds for 1 month and then drop to $1 dollar? 10M tokens will already be unlocked and transferred to DAO account which will create even higher pressure to sell lsk token. You will have more worthless lsk tokens in DAO and that’s not what we want.

New investors won’t be motivated to invest in the token because DAO doesn’t need to hold even more tokens to keep going with project. New investors will be motivated to invest when they will see 50% or bigger pump after burning 100M tokens. I see this idea as pointless because it won’t positively affect token price and will reduce investor’s trust even more. As team, you have to make major changes to regain it. Giving 5% cap max voting power to single lsk user will be a good change to start with. I remember when you were proud of new marketing plans for 2022 at AmpliFire event and Monica Tartau. She awfully failed with project marketing it was literally disaster. Whole event turned out to be one big failure and straight after this “bullish” event as you thought it would be token price went down badly. This even more keeps me convinced that lisk DAO don’t deserve to hold more tokens and be able to dump token price by dropping tokens. Who the hell spending money on marketing during bear market? Same with Burn or allocate set to 1st July 2025…

Also quote from lisk.com:

[quote]
Which Option to Choose? The Choice Is Yours

Both options present distinct paths for the future of the Lisk project, and this vote is a testament to our commitment to community-driven governance. Your participation is crucial in deciding how we move forward, and we encourage all LSK token holders to take part in this significant decision-making process.

To ensure a fair and community-focused decision-making process, the Onchain Foundation will not participate in the vote. We believe this empowers our community members to have the final say in how these tokens are utilized.

We thank you for being an integral part of the Lisk community. Your voice matters, and we look forward to your participation in shaping the future of Lisk![/quote]

To maintain transparency and fairness within the Lisk DAO voting system, I propose a rule disallowing any members of the Lisk team, Onchain Foundation, or closely related entities from participating in votes that directly affect the distribution of DAO funds or major governance decisions.

This proposal would be great for community growth and will restore people’s faith in fair voting. Lisk holders will know that they have a real influence on the vote but as of now they believe that their opinion means less and will be voted on by the lisk team. You proven that by rescheduling lisk token burn or allocate event to 1st July 2025 and nobody knows why it was set to 1st July 2025 and not for example 1st December 2024.

The problem is that DAO is spending investor’s money by going on holiday trips to tropical islands using first-class plane flights and yachts speaking about Lisk in the middle of nowhere and partying at night with lisk foundation that organizes events. A smaller change of investor’s money is exchanged for stuffed animals, toys, and mugs with the project’s logo.
This is not professional and Lisk Amplifire parody was proof that you don’t have working product. To sum up Amplifire: most frequently used words: next year. Conference main idea: we will, we will, we will, not now, next year. Time to change this don’t you think?

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11

I’ve already answered here. In short, I will vote for burning it first, and then only if Max and Oliver vote to keep it (and they will I think), and if the community helps them (together they hold around 30-40% of the total voting power as of 21.09.2024, whether they pause or not), and the proposal to keep it is accepted, I will create a vote to try to keep them with a price milestone.

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Why Max and Olivier should be allowed to vote on it? They shouldn’t if they want community to decide. Another thing is why they should have more than 5% voting power? They shouldn’t and they shouldn’t vote on the 1st place. Would be better if we create proposal to start with reducing single person voting power to 5% cap. If it will turn out that all people connected with lisk except DAO will vote and they will reach 51% votes and community will have less than 50% I’m out.

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Max has an additional 57 LSK token holders currently delegating to him. Oliver has 9 :+1: You can see overview here.

Additionally, these are the personal tokens that were allocated to them as cofounders of Lisk. I am not speaking for them here, and don’t know which way they plan to vote, however, I think they should be allowed to vote just as anyone else as they have demonstrated commitment to the Lisk Project and LSK token in the fact that they have held these tokens for 7+ years. They didn’t have to do that, but they have, which shows they are prioritizing the long term success of project and token over personal interests.

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Why are you protecting the biggest lisk whale? If 57 LSK token holders are currently delegating him and 9 delegating Olivier it doesn’t change the fact that they belong to the Lisk team and most of their tokens if not all tokens they got for free. Even if they were just regular investors from the street delegating their tokens to Max and Oliver it should not be an excuse to allow Lisk team members to vote on burn or allocate especially one single person who posses 28.54% quorum voting power. You simply want to give Max Kordek decision-making power greater than thousands, if not tens of thousands of lisk holders. This is simply not fair.

It’s not a big deal holding tokens that you got for free. Probably many of them are inactive.

One person shouldn’t decide for them all even if they support him (but the truth is they don’t care about his decisions) but I think it’s not the case here because they are just delegating Max and Olivier because they gave them tokens. Moreover, we don’t know if Max and Oliver gave each other tokens from different crypto wallets. Maybe these delegates don’t really exist and it’s just Max and Olivier playing with tokens.

This is fraud and injustice telling Lisk community that “Your participation is crucial in deciding how we move forward, and we encourage all LSK token holders to take part in this significant decision-making process.” when lisk team will vote as well. Give this voting on crucial decisions to people, not the Lisk team. Also, I call to set 5% voting power as cap to ensure that no individual entity holds more than 5% of the total voting power. This will prevent whales from dominating votes and ensure a more equitable distribution of power among all token holders, giving smaller stakeholders a stronger voice.

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I agree that the opinions of Max and Oliver matter, but they should be excluded from this one vote, specifically about burning or keeping the 100M DAO tokens. This is fair, because they already made their choice by changing the tokenomics, and now it’s the community’s turn to decide.

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16

This is a fair opinion @grumlin. I don’t disagree with it :+1:

1 Like