PEP-39: Economics R&D Funding

Updated August 22, 2022:

  • Added creation of medium-term roadmap to Deliverables for first 30 days, as per @b3n suggestion
  • Clarified the distinction between the terms “working group” and “committee,” modified the proposal to ensure consistent usage of these terms and to clarify that the convening of a DAO committee to conduct official DAO business is outside the scope of this proposal and would be subject to separate DAO vote.

Updated August 21, 2022:

  • implemented “trailing 30-day average” to Budget section as suggested by @kjenkins and @Andy-Liquify
  • Clarified Checks and Balances section to address COI concern raised by @RawthiL.
  • Expanded Dissension section based on comments voiced by @crabman and @RawthiL
  • Implemented copy edits provided by @Blue (TG)(AKA @Zaatar), lawyer and copy editor extraordinaire.

Attributes

  • Author(s): @msa6867
  • Recipient(s): Terracelum, Inc.
  • Category: Agreement
  • Agreement Summary: Fulltime dedication of @msa6867 to provide economics R&D to the Pocket DAO in exchange for $POKT equivalent to $13,750 USD at time of enactment and monthly thereafter until cancelled.

Summary / Abstract

During the last two months I have dedicated a significant amount of time and energy to helping inform and guide DAO policy decision-making through the application of sound economic analysis and reasoning. This contribution has been well received and quite a number of DAO members have suggested that I should enter into a more formal arrangement with the Pocket Network DAO to receive a monthly stipend in exchange for continued service to the DAO in this area. This proposal seeks to establish this formal relationship between myself and the Pocket Network DAO. This funding will allow me to work on POKT full time on behalf of the DAO as outlined in this proposal.

Motivation / Rationale

As the DAO grows, and an increasing amount of governance responsibility is transferred from PNI to the DAO, it is necessary for the DAO to become proactive in funding initiatives central to the success of the Pocket Network and not think of its treasury merely in terms of reactively reimbursing the many great peripheral additions to the Pocket ecosystem that the community provides (wallets, linters, block explorers, etc.).

One need central to the success of the Pocket Network is the need to make sure that every governance decision and progress path taken by the DAO is thoroughly vetted for economic impact. Economic impact cannot be assessed in a vacuum; it must be assessed as part of a system-wide tapestry including QoS impact, security impact, etc. As such it may be thought of as part of the broader discipline of systems engineering, and is most effectively executed by one well versed in both finance and systems engineering . The economics of a blockchain project is also much larger than just its tokenomics. Tokenomics, in and of itself, is usually fairly straightforward – a closed system of rules and data. It is but one of many factors that feed into the economic milieu of a token such as Pocket. Economic analysis must include external drivers and human psychological factors such as greed, fear, procrastination and inertia to making changes.

In the past there has been a void of expertise and leadership within the DAO in this arena. Since mid-June, I have been attempting to fill this void by analyzing, modeling, modifying, authoring, debating and/or guiding community discussions on every PIP and PUP that has been put forward, from the perspective of economic impact and long-term success of Pocket Network. In the background I have been reviewing the system from top to bottom (including fixing an error in the cherry-picker code that subtly and unintentionally biased rewards toward lower-QoS nodes, PR 901), and undertaken economic research and development which will lead to new parameter update proposals, performance improvement proposals, white papers and models for Pocket Network. One such model for node runners to gauge profitability under various internal, governance and macro conditions is being beta-tested by a half dozen to dozen community members and will be released to the entire community after beta-test feedback is incorporated (dm if you wish to beta test).

These efforts until now have been voluntary. This is not sustainable. I have dropped other clients and projects to focus on Pocket Network and am passionate to see it succeed. In order to sustain continued involvement, forming a compensation agreement between myself and the Pocket DAO is a win-win for all parties.

Needs Being Met

  1. The Pocket Network DAO has a need to make sure that its proposal pipeline stays filled with high-quality performance improvement and parameter optimization initiatives that improve the economic milieu of Pocket and its various stakeholders, with immediate focus on parameter changes and/or quick-to-implement improvements that can optimize the system for the remainder of V0 and prepare for the onset of V1.

  2. The DAO has a need to discern the economic impact of all policy changes (e.g., PIPs and PUPs) that it undertakes so as to reject or rework proposed changes that have a high probability of negative economic impact and pass changes that have high probability of favorable economic impact.

  3. The DAO has a need to raise the awareness and economic literacy of all of its community members and most especially its voting members so as to avoid singular points of failure by overreliance on one person’s analysis or viewpoints.

  4. The DAO has a need to scale as it grows by fostering the collaboration of community members through informal working groups to conduct joint research and development activities and by chartering official DAO committees to which it can delegating tasks, analyses, and similar responsibilities. (Please see Definition of Terms section distinctions between the terms “working group” and “committee” as used in this proposal.) One working group that would be beneficial is an Economics R&D working group. An Economics Committee may also prove beneficial in the future as the DAO continues to grow.

  5. The DAO has a need to create a vision for what economic success looks like for all POKT stakeholders 5 to 10 years from now. There is no guarantee that such a target will be met, but it is absolutely guaranteed that it cannot hit a target that is never set. There must be a guiding principle or vision used to shape the various individual policy changes that are considered along the way.

  6. The DAO has a need to understand the tokenomics and economics implications of the switch to V1, including but not limited to:
    – adjusting allocation percentages for servicers, validators and DAO to make room for the new fisherman role (including working out the implication that the rewards of each of the former roles may go down as a result),
    – considering if, how and when the DAO may wish to incentivize the creation and deployment of a decentralized web of access point aggregators (portals) exploring both on-chain and off-chain incentives,
    – exploring the implications of scaling allowed by V1 including the removal of restraint on the number of validators (e.g., revisiting PUP-14 and by extension PUP-19).

  7. The DAO has a need to explore and vet out-of-the-box ideas that may lead to substantial innovation to the Pocket architecture beyond V1 with the goal of maximizing the long-term health and financial success of the Pocket Network and its stakeholders.

Scope of Work (SOW)

  • Analyze every PIP/PUP/PEP (excluding standard reimbursement requests) for system impact (tokenomics, security, QoS, constitutionality, impact on node runners, dApps, investors, bizdev efforts etc.); suggest changes/improvements to the same where appropriate; submit change proposals as needed; spur discussion on forum and TG as needed. [Completed: PIP-22, PUP-19,21; current: PIP-24 PUP-22-24, future: revisit PUP-14-17, revisit PIP-23, revisit proposer allocation, revisit emission reduction post portal-monetization and post v1, set fisherman allocation, revisit PIP-22 parameters, etc.). [See Need # 1, 2]

  • Develop and evolve node runner model to project node runner and service provider profitability, break-even points under various parameter settings (WAGMI reduction, PIP-22 parameters, proposer allocation, LC) and macro-economic conditions (POKT/USD price). (completed: beta version to incorporate PUP-19, PIP-22, PUP-21, current: incorporate suggestions made by beta-testers and release to the community; future: incorporate LC, v1, fishermen, future proposals). [See Need # 1, 2, 3, 6]

  • Form, lead and facilitate an Economics R&D working group composed of representatives from PNI and Pocket Community. Identify contributors for this working group. Vet, discuss, debate and refine economics-impacting vision, ideas, suggestions, proposals and upgrades. Note that the formation of a DAO Economics Committee is outside the scope of this proposal and would necessitate a separate DAO vote to create) [See Need # 4, 5]

  • Analyze V1 (and future system upgrades) for system impact and opportunities. Impacts include incentivization of fisherman and decentralized portals and the potential to increase the number of validators. Opportunities will open up with the new architecture to automate some economics-impacting functionality and/or move on-chain, similar to how QoS enforcement migrates on-chain with V1. [See Need # 6, 7]

  • Produce educational materials on Pocket that may take the form of whitepapers, documentation, presentations, etc. Some topics being considered are listed below (subject to change according to community needs). Engage with the community via social media channels to raise literacy of the community on economics issues, point to resources, answer questions, solicit ideas for consideration, etc. [See Need # 3, 5, 6, 7]:
    – Positive and Negative Feedback Loops within Pocket
    – Token Supply, Inflation and Exchange Rate: Clarification and Interrelationship of Terms
    – Economic/Tokenomic Impacts of V1
    – Comparative Analysis of Current and Future Monetization Schemes
    – Analysis of POKT Price Pressures: Liquid vs Locked and Pseudo-locked Tokens
    – Envisioning Economic Success for all POKT Stake holders
    – Other topics per community requests and/or as new occasions arise

  • Conduct research and development (R&D) on potential architecture upgrades to Pocket, vet for feasibility and advance for community discussion and consideration those ideas that pass first-level feasibility tests. Provide economics impact and feasibility analysis for ideas suggested by other community members. A sample of topics being explored are listed below. Note, this list does NOT imply the topic is being advocated! Rather they are ideas being explored for potential benefit, impact and feasibility. Some subset of these may later be put forward to the community for consideration if they pass these preliminary tests. [See Need # 7]:
    – Raise MinStake by a substantial factor
    – Enable dynamic pricing for new nodes
    – Explore Two-token model for Pocket
    – Define Logarithmic or similar nonlinear coupling between aggregate relays and rewards
    – Enable Differential rewards according to the region and chain
    – Formulate Asymptotic Emission Schedule so that Max Supply can be defined

Engagement with the community via social media channels is a vital element to all of the above. Community engagement will be used to discuss proposals, models, analyses, point to educational resources as they become available, start discussions on future PIPs or PUPs being considered, as well as to solicit ideas on whitepaper topics, analyses to conduct, architecture improvements to consider etc.

Disclaimer: This agreement should not be construed as endorsement or approval by the DAO of any analysis or research idea generated under the terms of this agreement. Any analysis, idea, suggestion etc. will be subjected to the same rigor of scrutiny that would attend contributions made by any other party.

Deliverables

Since this proposal defines an ongoing relationship, specific deliverables will change month to month while others are more ongoing in nature. Once the Economics R&D working group is created and populated, that working group can help shape monthly deliverables that best conform to the current needs of the community.

Deliverables Specific to the first 30 days:

  • Incorporate beta-tester comments and release node runner profitability model to the community
  • Form, lead and facilitate an Economics R&D working group comprised of representatives from PNI and Pocket Community. Hold inaugural meeting
  • Release first economics educational material. Topic is TBD, pending feedback from the community.
  • Produce a report that provides a roadmap of the most valuable activities to be undertaken over a medium-term horizon

Other deliverables are ongoing in nature, including analyzing and helping shape current PIPs and PUPs, analyzing V1 for impact and opportunities, ongoing R&D on future improvements, etc. Monthly progress reports on the above will be delivered to the Economics R&D working group.

Checks and Balances

Because this proposal defines an ongoing agreement rather than reimbursement for a finished product, a mechanism is needed for the DAO to evaluate performance against the terms of the agreement and be empowered to take remedial action as necessary up to and including termination of the agreement. It is natural that one of the roles of the other members of an Economics R&D working group, once formed, would be to act in this capacity, namely to evaluate my performance against the SOW and deliverables of this agreement and report the same to the community. Concerns by community members at large may be directed to myself, to one of these other working group members, and/or to @JackALaing or @b3n as liaisons between PNI and DAO, to gain insight or context that might alternately alleviate or confirm their concerns. If still not satisfied, any community member could then submit a proposal to terminate this agreement. The DAO could then vote to terminate this agreement if my performance is deemed not to be satisfactory. Separately, the DAO and @ms6867 should revisit this agreement at the one year mark, and yearly thereafter, to ensure that adequate value is being provided to the DAO under the terms of this agreement, to modify the scope as necessary to conform the agreement to the changing needs of the DAO and to revisit the budget for the upcoming year.

Budget

Budget is $165,000 USD per annum, payable in POKT in monthly installments of $13,750 equivalent. First remittance is due at passing of this proposal and then monthly thereafter. Trailing 30-day average POKT-USD exchange calculated at time of each remittance will be used to determine the number of POKT in each remittance. Note that the requested budget represents a substantial discount to the $250k + of total compensation that I have averaged in both my prior full-time employment and in my previous contracts as an independent consultant. Taking into account the experience, skill set, positive impact to the project and the various adjustments factored into the ask (cost of living in Los Angeles, slip and liquidity risk related to receiving compensation in $POKT, etc.) the proposed budget is very reasonable.

Dissenting Opinions

Overall, disposition to this proposal has been very favorable . However, dissenting opinions have been offered and are addressed here. In addition, I answer several other dissenting opinions that might arise later.

“DAO proposals should be something quantifiable so that the proposer could be held accountable for it”
I have outlined a mechanism for accountability. Not every task that it is incumbent on the DAO to perform is easily quantifiable; that does not mean it is not vital or should be avoided. Nor does “quantifiable” necessarily lead to ease of ability to hold accountable. I think the whole wPOKT/ferrum situation is a perfect case in point. Given my involvement in the community and given the formation of a Economics R&D working group which will double as an oversight committee to ensure that I am delivering value to the DAO, I believe the accountability element is sufficiently defined.

“Shouldn’t PNI fund this type of effort, not the DAO?” “You should apply for a job with PNI rather than submit a proposal to the DAO”
PNI has its own needs for economic modeling and analysis, especially as relates to bizdev, which for now still falls mainly to PNI to perform, at least for now. That being said, substantial governing responsibility has already been turned over to the DAO, much of which cannot be done without a strong guiding voice on economics. If that governance is wielded prudently can lead to great success for the project and substantial financial rewards for all POKT stakeholders. Conversely if the DAO makes two or three major slips in governance decisions it could bring irreparable harm to the project. The funding of this work should reside where the governance responsibility lies, and that is squarely with the DAO.

“I think that an opinion coming from someone directly hired by the DAO could be too strong, i.e. if you write a PIP or PUP (or even make a comment) it will be seen as “endorsed by the DAO”, even though this is not your intention.”
Precedence shows that the DAO membership is savvy enough to not have this happen in practice. I think PUP11, 13 is a perfect example. Those proposals were written by someone directly hired by PNI, who prefaced the proposals by saying " Note: I am a Pocket Core team member… The ideas in this proposal are my own and don’t necessarily reflect the views of others on the core team or Pocket Network, Inc. " I would preface any proposal the same way. And trust me… being directly in the hire of PNI did not spare those proposal from getting beaten up pretty badly and reshaped by the community.

“The creation of the Economics R&D group, that would be in charge of overseeing your work, will be formed and lead by you. This could lead to a conflict of interest.”
The text has been modified to clarify that neither the Economics R&D group nor any of the members therein would act as gatekeepers to due process. Any community member may raise issues of concern as to performance and submit a proposal to terminate the agreement. The DAO as a whole could then vote on that proposal.

In addition, I answer several other dissenting opinions that might arise later.

“The asking amount is too large” / “This will cause too great a drain on the DAO Treasury”
It is human nature to approach budgeting and spending plans from a scarcity mindset. This must be resisted. Imagine a traditional startup that raised funds in an IPO and sat on its IPO funds and refused to use it to hire employees. That company would fold and its investors would be up in arms. The funds are there to fund initiatives that generate greater value than the funds themselves thus creating win-win situations for all stakeholders. At the recent $POKT price of $0.10 the ask is just under 140k $POKT per month. This represents roughly 3.5% of current monthly $POKT inflow to the DAO treasury. This is anything but a crippling drain on the DAO Treasury. To further put it into perspective, if my involvement helps guide the DAO into sound economics decision-making in a way that nudges the POKT price upward by just a single penny per year, the DAO will have received in return more than double what is paid out in terms of the resulting increase in the USD equivalent value of its treasury.

“Shouldn’t the first remittance from the DAO be at the end of the first month, not at the start of the agreement?”
An initial remittance almost universally accompanies the start of a consulting or similar agreement and acts to set the “effective date” or “execution date” of the agreement. I have worked tirelessly over the last two months contributing to the Pocket DAO proposals, ecosystem and community; as such one perspective, if it helps, might be to think of the first remittance as reimbursement for the contributions made over the last two months and each remittance thereafter as a reimbursement in arrears for the previous month’s work for the DAO under the terms of this agreement. (To clarify, the above is just offering some perspective and is not part of the construct or narrative of the proposal itself, which is forward looking with an effective date set to the day the proposal passes.)

“I see you have a PhD in physics. Don’t we need someone with a degree in economics for this position?"
At its core, the service being offered falls under the purview of what in some circles is called “financial engineering”. This may be thought of as a subset of systems engineering and in most circles is performed by someone whose main background is in mathematics, physics or engineering. The blend of skill sets in math, physics (problem solving!), engineering and finance that I bring to the table is a natural fit to the needs of this position.

Contributor(s)

Pseudonym – msa6867
Real name – Mark Abinante
Location - Los Angeles
https://www.linkedin.com/in/abinante/

Cofounder of Terracelum, Inc. a boutique consulting firm. Formerly with Hughes Network Systems and Boeing Satellite Systems where I was both companies’ subject matter expert in Network Systems Engineering and where I worked with the IETF to ensure that developing Internet standards met the challenging needs of SpaceComm. Co-author of several patents related to DiffServ and other transport-layer QoS innovations. BS and PhD in Physics from MIT and UCLA, respectively.

Conflicts of Interest

None. Full disclosures are as follows:

  • I will concurrently service one legacy client (unrelated to blockchain industry) at no more than 5 hours per week and completely outside and above the 40+ hours per week I will commit to Pocket.
  • I run a node, mine and participate in bug discovery for the Ironfish testnet. Ironfish is a zk-SNARK L1 blockchain with no conflict of interest with Pocket Network. On the contrary, it may become a client. This is mainly a passive activity and requires no more than 5 hours per week and falls completely outside and above the commitment to Pocket.
  • I am passively invested in about two-dozen altcoins. None are competitors to Pocket Network.
  • I have no affiliation with any service provider, node runner or other company or project within the Pocket Network ecosystem and therefore no conflict that might cause a conscious or subconscious bias in analysis or policy in favor of that project or company. I have a small number of tokens in the fractional pools offered by PoktPool and SendNodes and have a single node staked with NodeFleet. A portion of each remittance will be used to stake nodes with many other node providers as well so as to avoid reliance or bias toward any one provider.

Definition of Terms

Working Group: An informal group lacking DAO charter, authority or weight; populated and convened at the will of the organizer with informal input from the community for the purpose of conducting unofficial collaborative work.

DAO Committee: A formal committee of the DAO bearing charter, delegation of authority and/or weight of opinion; populated and convened at the will of the DAO as expressed by formal vote, for the purpose of conducting official DAO business.

Copyright

Copyright and related rights waived via CC0.

5 Likes

Let’s start spending some of this DAO money. Fully support this proposal.

2 Likes

Having worked with MSA on the PUP-22 proposal, I fully support this funding requirement.

MSA is both impressively smart and incredibly diligent, and so would be a significant asset to the Pocket Network ecosystem.

4 Likes

Brilliantly written and structured proposal. Fully support this proposal, having seen the work you’ve completed thus far. Truly an asset to this ecosystem.

2 Likes

I appreciate your work, but I don’t think this is viable proposal. DAO proposals should be something quantifiable so that the proposer could be held accountable for it. I suggest you directly apply for a Job at Pocket Inc.

2 Likes

Thank you @crabman, I appreciate your perspective and know there are others who may feel the same way. I am not sure which aspect of the proposal is not viable. I’ve demonstrated that the ask is a small percentage of the inflow each month to the DAO from the DAO’s allocation of RPC rewards, and I’ve outlined a mechanism for accountability. Not every task that it is incumbent on the DAO to perform is easily quantifiable; that does not mean it is not vital or viable. Nor does “quantifiable” necessarily lead to ease of ability to hold accountable. I think the whole wPOKT/ferrum situation is a perfect case in point.

I appreciate the suggestion to apply for a job at PNI. That certainly did come up in conversations during the last month as an avenue to be explored. In all those conversations, however, the road inevitably led back to the DAO because that is where the greatest need lies. Governance responsibilities have been handed over to the DAO and if that governance is wielded prudently can lead to great success for the project and substantial financial rewards for all POKT stakeholders. Conversely if the DAO makes two or three major slips in governance decisions it could bring irreparable harm to the project.

Bottom line: given my involvement in the community and given the formation of a Economics R&D working group which will double as an oversight committee to ensure that I am delivering value to the DAO, I believe the accountability element is sufficiently defined.

2 Likes

From my perspective, one of the most important responsibilities of a DAO is the efficient allocation of capital and I think this proposal outlines a clear articulation of that. I’ve only worked with MSA on a few occasions, but have been thoroughly impressed by each interaction from his independent thought, analytical rigor, and deep first principles thinking. Additionally, as someone who’s been focused on various capital market efforts, tokenomics is what I spend the most time explaining and getting institutional participants and solution providers familiar and comfortable with. Someone with a holistic focus on this will be an enormous value-add for the entire ecosystem, not to mention the clear ROI that is outlined in this proposal. Overall, I look forward to learning from and collaborating more with MSA going forward!

One minor note that I’d suggest is that the remittance of payment should be based on a trailing POKT price (likely 30 days), I think this would be mutually favorable.

I am in full support of this proposal. Having worked with MSA on PUP21 it is clear he is a great mind and he deserves to be recognized for the skills he brings. I see him being a great value add to pocket and the DAO.

I also think this kind of “Agreement” PEP is very interesting and am keen too see what other proposals it inspires.

Am an in agreement with @kjenkins on the point the price should be taken on a moving average (to help stabilize price volatility)

Yes it is. Since this idea has now been seconded, I will modify proposal accordingly

I believe that your work is really valuable to the community and we do need more in-deep and formal analysis of the proposals. We also need to have sources of information other than community chats in order to discuss every topic with a solid knowledge basis.
Moreover, I agree with most of the needs that you mention, we need a more concrete goal, a road map, high quality proposals and debate (including numbers not opinions), an informed voter base, etc.
Forming committees could be a solution, but the inclusion of such committees in the DAO organization should be done with extreme caution, since they will likely result in some sort of power centralization (indirectly at least).

This proposal entrails something bigger than just your services, it sets a precedent that the DAO can delegate a task to an specific person.
I think that the quickest route to get your services (for the community) is to apply for a position at Pocket Inc. as @crabman said, even though Pocket Inc. does not have an economics/data team (maybe it should?).

TLDR: I think that an opinion coming from someone directly hired by the DAO could be too strong, i.e. if you write a PIP or PUP (or even make a coment) it will be seen as “endorsed by the DAO”, even though this is not your intention.
Also the creation of the Economics R&D group, that would be in charge of overseeing your work, will be formed and lead by you. This could lead to a conflict of interest.

Thank you @RawthiL, you bring up some excellent points.

Agreed that caution is needed and agreed that some sort of power centralization, at least indirectly, needs to be considered. The idea of the need for committees, completely apart from this proposal, was first brought up by @JackALaing in his July Governance Town Hall. Prior to Q2 '22 when the DAO governance was conducted by just a half-dozen or so voting members who were intimately-connected with most of the inner-working of Pocket Network, the idea of committees was unnecessary.

But as the DAO voting body grows to 50, 100 and beyond, committees are a time-proven system used by governing body to be effective in carrying out their governing duties. Not everyone can do a deep-dive into every issue. Think of committees being a subset of voting members who have very different viewpoints but have the bandwidth to do the deep-dive needed and create tl;dr summaries for the other members - which tl;dr might embed competing views and opinions not just a single opinion or a single person’s opinion. Imagine the US Senate (100 voting members) trying to get its work done without the use of committees.

That being said, if the proposed Economics R&D working group were the only DAO committee, I agree that it would not be ideal. As stated in the proposal, however, many committees are needed, not just this one. Imagine a handful of other committees (e.g., DevRel, Security, UX, Community Dev etc. just to make up a few that may be beneficial), then no one committee would be able to wield undo sway.

This is correct, or perhaps I would reword, “…delegate a task to a specific person, or group of persons.” IMO, this is part of the transition that must happen in order to scale as the DAO outgrows it’s intimate beginnings. Scary at first? Perhaps. But a necessary step. Notice, however that this is NOT delegation of authority; simply delegation of time and energy to do the necessary deep dives to produce summaries for the voting body

That is also correct. That would have been the quickest route. Not to mention would have come with benefits, job security etc. But would that have been the best for the long term health and success of Pocket Network? For reasons I outline above in response to @crabman and elsewhere, the DAO, I believe, is where the greatest need and greatest benefit for my involvement resides.

I appreciate the concern, but believe that precedence shows that the DAO membership is savvy enough to not have this happen in practice. I think PUP11, 13 is a perfect example. Those proposals were written by someone directly hired by PNI, who prefaced the proposals by saying " Note: I am a Pocket Core team member… The ideas in this proposal are my own and don’t necessarily reflect the views of others on the core team or Pocket Network, Inc." I would preface any proposal the same way. And trust me… being directly in the hire of PNI did not spare those proposal from getting beaten up pretty badly and reshaped by the community.

You bring up an excellent point. I think the first two-thirds of the “Checks and Balances” section are fine as is. This is consistent with the other functions of the working group - namely to get into the details and provide tl;dr summaries to the DAO. Truth be told, however, if I cease providing value to the DAO, the DAO will know it committee or no committee.

It is the end of the paragraph that is problematic, “Concerns by community members at large may be directed to one of these other committee members. The DAO could then vote to terminate this agreement if my performance is deemed not to be satisfactory.” This could be construed to imply that the committee would act as a gatekeeper as to whether a proposal to terminate this agreement would move forward or not. That could be a conflict of interest and was not the intention of the paragraph. I will change the remainder of the paragraph to the following:

“Concerns by community members at large may be directed to myself, to one of these other committee members, and/or to @JackALaing or @b3n as liaisons between PNI and DAO, to gain insight or context that might alternately alleviate or confirm their concerns. If still not satisfied, any community member could then submit a proposal to terminate this agreement. The DAO could then vote to terminate this agreement if my performance is deemed by the majority not to be satisfactory.”

I am happy to see this proposal be considered by the community. I think it does a few things:

  1. Identifies a need
  2. Proposes a solution
  3. Defines the scope of that solution
  4. Proposes @msa6867 as the person with the capability to deliver that solution

I find 1,2 and 4 very compelling and am happy to see the discussion above is focused on the proposed scope and how this role remains accountable. I find the scope of work to be quite broad and would personally prefer it to be focused on:

  • Establishment of an operating economics committee
  • Definition of economic review parameters and framework for PUP/PEP/PIPs and relevant review for all new proposals against this type of framework
  • Agreed set of R&D activities (for which the current ones are very broad)
    That said, I think the fact that these are primary activities for the first 30 days is good and perhaps a report after 30 days by msa can help further align on roadmap of most valuable activities for he and the economics committee over a medium term horizon.

Two other perspectives in my role around DAO talent:

  • I think it is valuable to have roles that can activate these types of connections between the community and core teams on high value activity, and it’s exciting to see this first proposal for a full time contributor to Pocket DAO
  • I agree with the sentiment that we should take great care with how we use committees in our org design but think it is really healthy to now be exploring different types of coordinating mechanisms beyond simple up and down voting

@msa6867 I’ve really appreciated the work you’ve been doing already and hope the community supports to keep it going

Thank you @b3n for your encouragement and feedback. Per your suggestion, I will add a deliverable for the first 30 days to produce a report that provides a roadmap of the most valuable activities to be undertaken over a medium-term horizon.

Regarding “Definition of economic review parameters and framework for PUP/PEP/PIPs and relevant review for all new proposals against this type of framework,” this is a great goal in fulfillment of stated needs #2 and 3. It will take time to create such a framework, and even then will be forever incomplete and open ended, as not all evaluation and analysis falls neatly inside a “framework” or list of parameters. I will add this suggestion for now to the queue of topics to be explored under “Produce Educational Materials.” If a sufficiently tight framework can be defined, this may later evolve into suggested guidance that may be used by PIP/PEP/PUP writers, reviewers and voters.

Regarding “Agreed set of R&D activities,” per feedback received from @JackALaing and others, I feel it is premature to narrow this category to an “agreed set.” Doing so may cause a suboptimal exploration of the problem and solution space. Later, the concept of an “agreed set” can be applied to R&D activities that pass initial, more informal gates and require a more substantial allocation of resources to deep-dive for further evaluation.

2 Likes

Revisiting this subject after soliciting further input from @RawthiL. From follow-on correspondence:

I updated the proposal language to conform to a consistent application of the following two terms:

Working Group: An informal group lacking DAO charter, authority or weight; populated and convened at the will of the organizer with informal input from the community for the purpose of conducting unofficial collaborative work.

DAO Committee: A formal committee of the DAO bearing charter, delegation of authority and/or weight of opinion; populated and convened at the will of the DAO as expressed by formal vote, for the purpose of conducting official DAO business.

The proposal has been updated to reflect that only the formation of an R&D working group, not a DAO committee is part of the scope. This will allow the current funding proposal to move forward without needing to work out all the details re the charter, composition and limitation of possible future DAO committees. The questions and concerns being raised in the bullet points above are pertinent to the formation of DAO committees and would be subject to separate DAO vote prior to their activation.

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I strongly support this proposal

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Hello @msa6867 ,

I am leading product for the demand side of Pocket. I do appreciate the initiative behind the proposal but I’m seeing it is largely focused on supply side economics (i.e. node runners). What specific actions will be taken to build and represent the demand side of the economy?

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Excellent question. First, it must be understood that, to date, more governance responsibility has been handed over to the DAO from PNI on the supply side than on the demand side. The parameter set {USDRelayTargetRange, ReturnOnInvestmentTarget} is a notable exception, and you can verify that I have been as active in the discussions and providing analysis for PUP-23, of which you are a co-author, as I have been on the supply-side governance decisions.

First and foremost, the focus of this proposal is to help the DAO make the best governance decisions possible. Given the current dearth of DAO governance responsibilities on the demand side, there is a natural tilt in proposal language and example papers and R&D projects toward the supply side. That being said, I absolutely desire to model and represent the demand side as well and am open to suggestions for topics for educational material and/or research projects.

My first draft scope of work did include a more demand-side task, but I was requested by PNI to remove that language from the proposal as it implied a forcing function for PNI to provide information to DAO that it may deem prudent not to provide. It must be remembered that there is a firewall between PNI and DAO that must be navigated carefully.

That being said, specific actions I plan to take to build, represent and improve the demand side of the economy include the following:

  • If possible, enter into an NDA with PNI so that I can access information needed to represent the demand side (this is similar to the NDAs that I am in process of establishing with certain service providers so that I can effectively represent the supply side)
  • Ensure that an Economics R&D working group has demand-side representation, such as yourself or Rich or even Kevin if he has the bandwidth to participate
  • Following completion of PUP-23, work with @PoktBlade and others to revamp the construct of PUP-7/PUP-23 into something more useful and mutually beneficial to PNI and DAO. Participate in all other activities in the roadmap to hand over more demand-side governance responsibilities to the DAO
  • Continue efforts to dis-enmesh portal monetization from protocol-level bizdev in preparation for v1 and the potential rise of 3rd-party poratals.
  • Conduct the analysis and write the white paper per the proposal, Comparative Analysis of Current and Future Monetization Schemes. Vet and refine this document in coordination with PNI so that it becomes a shared PNI/DAO document and guidance for bizdev.
  • Many of the other educational topics listed in the proposal already do touch on the demand-side ( e.g., Economic/Tokenomic Impacts of V1, Analysis of POKT Price Pressures: Liquid vs Locked and Pseudo-locked Tokens, Envisioning Economic Success for all POKT Stake holders)
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Thanks @msa6867 for addressing the issues that we talked about. I think that the current proposal is much more viable and clear in terms of the organizational impacts that it presents.

I would only propose that instead an indefinite contract, the agreement should be re-voted every 6 months (or any other period of time). This mechanism can give the DAO a way to silently terminate the agreement if the DAO desires to do it for any non-disclosed reason, like loosing confidence or interest in this kind of work. The voting for the renewal of this agreement can default to keep @msa6867 if no votes are cast.

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Thank you. I am glad I was able to clarify organizational impact.

I have added a sentence to the Checks and Balances section to indicated the agreement should be revisited and updated at the 1-year mark and yearly thereafter. While this stops short of converting this agreement to a defined-term agreement, it does provide a natural rallying point for the DAO to cancel the agreement if value or interest in this work has waned. I believe this is a good compromise. My earliest draft had indicated a defined-term agreement and I was advised by several senior reviewers to change this to the indefinite term currently proposed.

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I fully support this proposal.

For the value provided to the ecosystem, this is tremendous. Funding will allow you to focus on this full-time and allot more attention, I see this as a no-brainer for our DAO.

I disagree with this as well. Although the items aren’t as concrete as would be given to a direct employee of an org, Mark has shown his value so far being autonomous and likely will exceed previous value add after this funding.

I would just like to mention though, I want to make sure that an approved PEP would not be perceived as an endorsement of approval for all of Mark’s future ideas. I think MSA’s role should be more explanatory, where he acts as a presenter of analytical models and frameworks for DAO members to make easier and more optimal decisions, rather than acting as a determinate decision-maker. I see this being the case, but I would just like to emphasize.

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