Proposed Enhancements to Neuron Fund

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Thoughts on improving Neuron Fund Distribution

The current (retired) Neuron Fund framework has been gamed by bad actors and rightly shut down. I welcome this pause and wanted to share my thoughts as a founder on what a good solution might look like.

Component 1: Locked Liquidity
A significant portion of the Neuron Fund’s contribution (maybe 25%) should be matched to the projects tokens and placed in DAO controlled liquidity on the leading ecosystem DEXs . Ideally this liquidity will be split across at least two DEXs and could be split according to each DEX’s respective TVL or another metric.
I have seen this mentioned by others and agree that it’s a great idea, but it doesn’t help teams keep building. That’s why we need more.

Component 2: Use Neurons to create a runway
As part of the SNS proposal, a team should be able to create a proposed burn rate/ ICP need by year. It seems reasonable to lock the rest of the NF in neurons of 1,2,3,4 years etc according to the teams proposals. It should also be possible for a SNS to propose to get the NF distribution in a single 8 year neuron. They could then use the maturity as an ‘infinite runway’ .

Component 3: Make the NF contribution dynamic according to vote
If NF members were allowed to vote, project by project on their level of support, the final amount contributed by the NF could be dynamic based on how helpful the project would be to the community as a whole rather than a 1 size fits all curve. There are a million ways to skin this cat, but one way would be a new vote type that uses a numerical input or a slider that goes from 0 to 1.

Component 4: Implement ‘Rage Quit’ mechanism for all DAOs

If a project is doing well, it should be trading at a premium to the value in their treasury. If the project is doing poorly or has lost the trust of the community, there might be more ICP value in the treasury per circulating token than the current swap price(circulating = not in treasury but in a DAO member’s wallet or a neuron). In this case, the DAO member should be able to burn their tokens in exchange for their share of the treasury. This mechanism, combined with locking NF in neurons according to projected needs ensures that teams would be unable to draw funds faster than the community expects. It also ensures that DAO members (and the NF) have significant value that they can access if the project fails.

Ideally components 1 and 2 would be implemented before the NF returns to operational. Components 3 and 4 would likely be more complex but could be implemented after the NF is back online.

Thanks to everyone for reading and sharing thoughts you might have.

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I think rage quit is a great idea. We actually proposed it a while back here, and I’m pretty sure we were discussing it even before the SNS system launched, predicting that situations like this would eventually come up.

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I think another good perspective to take, is considering why the Neuron Fund acts as a collective passive investment fund , rather than allowing the user to decide “do I want to contribute my maturity to this”.

This post from a couple years ago points out a few other issues as well;

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I read your thoughts and I do think there might be more to fix with how exits happen for the NF.

TACO DAO’s solution for community investment decisions, where DAO members first decide whether to trust a project and then vote on % allocations to be traded into, could be applied to the NF. This would allow each Neuron Fund DAO member to add or remove support from any project at any increment at any time.

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Thanks all for the ideas!
Some of them are very aligned with options that we already had in mind.
I took note of all of them so that we can consider all options when we adopt the NF design.

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There is also the problem with liquidity on DEX’s when a project starts. Why can’t the NF be used for that or a chunk of it? That way people can at least trade the token, it is useful to the community and injects the liquidity into the IC DeFi eco.

DAO can vote on what DEX to inject the liquidity first or split it among a couple of DEX’s

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I think most people agree this is part of the solution

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100% most coins you cant but more that 50ICP worth on a dex, without loosing huge %. In some instances I have seen slippage of 50% . I always see new comers from other ecos point this out as a huge barrier for entry