WaterNeuron SNS-DAO Launch

Governance NNS Governance
10

See update from evening of June 9: WaterNeuron SNS-DAO Launch - #21 by skilesare

Update on June 14: WaterNeuron SNS-DAO Launch - #44 by skilesare

(As of morning June 9)

I’d recommend rejecting the Water Neuron proposal unless changes similar to the following are made to both the yaml and the stated goals/operation of the project:

  1. The team allocation should be much less. Potentially 0. The proposed system is a ‘turn it on and leave it’ type utility. I have no issue with the team making a good bit of value here, and if Water Neuron ends up bringing significant value to the IC then Enzo and Leo(and any other team members) should earn the right to never have to work on anything they don’t want to. But the current 20% level is much higher than almost all SNSs before them and gives an unbounded stake of something that could become a significant portion of IC itself. This team allocation can be moved to the treasury where they will have significant access to fund almost any work for the DAO that they want to do and that has existing restrictions on it via the NNS(in withdraw limits).

2. If the team does take a team share, the vesting period should be staggered over 5 years, not 1. One year is over in the blink of an eye and if they want an unbounded upside it should require significant dedication. I’m not a fan of the SNS setup for team stakes because there is no way to recover them if the person disappears from the project. It makes much more sense to actively manage any vestings from the DAO itself with the ability to recall for abandonment or other misaligned behavior.

The web team has extended lock up to over three years. I still think there is a better way to do this with snss, but they are using the tools they have

  1. The DAO should be capped at a maximum number of nICP. I’m not sure we want to encourage the unbounded collection of voting power by any one DAO. It seems like a bad practice. This number can be high so that the DAO has significant returns and budget. A number like 1% of ICP would give something like $24,000,000 in return to the WTN members from nICP holders at a 5% return on 6 month neurons at $10 ICP. If ICP goes to $100 the numbers start to get crazy. The treasury will have 10% of that return to spend on development and rewarding contributors(up to 30% of that if the team allocation is reduced).

4. The DAO needs to be much more explicit about the long-term value that it will provide to the general IC community. This is a ton of power to give a DAO. Enzo and Leo have a ton to give the DAO as long-time contributors to the IC. I’d really like to see a specific plan of how they’ll contribute to replica safety and how they will expand that vision with the returns the DAO receives.

The team has already built some replica verification tools and has indicated that they plan to build more. As significant constrictors to the IC I think it is rational to extend them the benefit of the doubt on this and look forward to seeing more plan. I would still love to see concrete plans for what the returns on the treasury WTN will be used for or if it will be be committed to stay in the treasury for a certain amount of time

  1. Remove the Neuron Fund request unless the team allocation is moved to a very low number. The Neuron Fund is just handing a bunch of value to the founders in this current set up with only a 1 year vesting and code that will run on its own once deployed. I know of two other groups looking at launching the same concept with a near-zero team allocation and it doesn’t make sense for the NF to give away that much value for this particular algorithmic concept.

  2. We still need to really understand what effect liquid staking(riskless staking) is going to have on the IC. I’ve created a thread("Dark Matter" or "Do you know where your ICP Bag's value is going?") for that issue(along with transferable neurons and bribes). If someone comes along and offers WTN a significant return for buying it’s votes, does a faceless, anon DAO have the moral willpower to turn that down? I’m not sure we know the answer to that and if we are going to experiment, we should probably have some caps on things.

Water Neuron could be an amazing utility for the IC if it is set up correctly. I want Enzo and Leo to be crazy-successful AND for it to benefit from the IC. I do not think it would be difficult to come into alignment with these things and launch a seriously interesting experiment on the IC.

If the WTN team disagrees with any of these I’ll be happy to be convinced otherwise and I think a public debate about them would actually be really constructive for teams that come after them.

Edit: fixed name.
Edit 2: added link to update post.
Edit 3: strike through on 2,4

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