PEP-39: Economics R&D Funding

This is a great conversation - well brought up points by all parties. Without re-echoing everyone’s thoughts, here are my two cents:

MSA - your contributions are greatly appreciated and nonetheless, however this proposal goes, I hope that you find a way to continue to contribute to Pocket. I think this is more of a failure on our end as we have a large treasury built around incentivizing the growth of Pocket, yet we do not have the proper mechanisms and efficiency set up to properly manage a full time contractor individual / consultant without resorting being hired by the PNI. It is quite interesting - as if this was an independent research firm with great reputation, I suspect the concerns in this proposal would be slightly different.

I do believe the voters of the DAO are aligned that we do need a mechanism for this (RE: Jinx triforce-like idea). I also believe that your proposal is different than most PEP’s since it is research focused rather than focused on delivering a software and such… we should lower our expectations on the exact outcomes.

Unfortunately, I think this is similar to the chicken and the egg problem - who’s going to drive an initiative like that? I can tell you right now - as much as we’d like to see something like this, every single person that have voiced their concerns can’t put 100% of their time on it… Now an external person being paid for this with a reasonable amount? Hell yeah… This is not the first time I’ve voted for something (SEE PUP-23) with expectation that a better system can be proposed and replaced. If this proposal does not pass - I hope you submit another reimbursement proposal with a grant that allows you to do said research. I am in support in both proposals and can sympathize with those who have brought up great points as well. I just think the tradeoffs are worth it in MSA’s scenario. I find it better that we accommodate for said contributor instead of turning them away. And it is a call to action for us as a whole to prepare better for these type of scenarios.

@msa6867
One question for you:
Are you mentally prepared if approved - that the DAO can rescind the proposal for an alternative proposal that is purpose fit for many parties and just not yours? What if that results in less pay?

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Thank you @poktblade. Yes there has been a lot of excellent discussion, for which I am glad. Sometime the best way to push forward into new territory (as in the DAO growing into its full potential) is to take action steps and figure it out as you go rather than trying to think through and plan everything in advance when you don’t have any experience yet with the new to draw from to even know what is needed. I believe that allowing me to be a front runner in this area is a catalyst the DAO can use to understand and define all the mechanisms that @jinx and others point out are needed.

If this proposal is approved and some months from now the agreement is rescinded in favor of an alternative proposal that incorporates movement to official committees or other progress measures that are good for the health and future of the DAO, i am prepared for and fine with that outcome, even if it results in less pay. During the term of the present agreement it is to be expected that all my various avenues of contributing to the Pocket Ecosystem fall under the umbrella of the compensation defined in this agreement. If this agreement is replaced in the future with a committee assignment or something of that nature with more limited scope and correspondingly more limited time commitment and more limited remuneration, then it would be reasonable for me to assume that in that new paradigm, continued contributions of value to the ecosystem beyond the scope of such official assignment could be considered for for reimbursement separate from remuneration for fulfilling “official” duties. Thus, it would be likely to result in “less pay” on paper only, not in actuality. But that is a bridge to be crossed in the future.

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This proposal, as evident from the discussion, seems premature. It appears to put the cart before the horse.

There is considerable support for enlisting the much-valued contribution of msa6867 with economics R&D.

But debate has emerged on the vehicle for that contribution. Should Pocket Network Inc. (PNI) put him on the C-suite payroll as some community members suggest, or should he head an informal DAO “working-group” with a monthly stipend as this proposal envisages? Or should a different vehicle be created?

It would seem that this is the question that needs to be addressed first. Before we populate DAO bodies with community talent, we need to ensure that the bodies we create are optimally designed to achieve the goals of the Pocket community.

Jinx now proposes a DAO economics committee with “five vetted experts,” with msa6867 as one of them.

Jinx also proposes committees for technology and governance. msa6867 responds that funding oversight, QoS, security and devrel may warrant their own committees.

Jinx writes that these committees would be “paired with a dedicated PNI counterpart to get internal information as needed to inform proposals.” The economics R&D working-group that msa6867 proposes would also have PNI representation.

As a matter of law, it is unclear whether adding a PNI member to a DAO group suffices to bypass the PNI/DAO firewall. msa6867 also suggests that he might enter into an NDA with PNI to access corporate info. How to access PNI information - vital to the effectiveness of the proposed DAO group - remains to be ascertained.

Eagle_wins raises important questions on whether the DAO should or can even enter into employment contracts:

DAOs are new and evolving legal creatures, recognized currently in only a handful of jurisdictions. However, for context, Pocket Network documentation provides that the DAO “will control all aspects of our protocol and ecosystem.” I agree with msa6867 that given the transfer of governance responsibility to the DAO, his expertise and others’ should be harnessed by the DAO – not PNI.

While msa6867’s proposed working group can be expected to create real value, in essence it will be an experiment that will help us see what works and what doesn’t. I agree with msa6867’s observation:

CONCLUSION

  1. I support this proposal. However, the agreement must be revisited by the DAO within six months to a year.

  2. At the same time, a DAO committee should be struck as soon as possible to examine and recommend the best organizational solutions to meet our current and future needs (e.g., committees or working groups, their makeup, remuneration and mandates). (A corresponding proposal needs to be drafted ASAP.) In studying these issues, this committee will keep an eye on msa6867’s working group. The committee’s findings will inform debate in the run-up to the vote on the working group’s future. Perhaps it will recommend modifying its mandate, disbanding it or incorporating it into a new entity.

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First of all, thank you @zaatar for your crystal-clear logic and contribution to the discussion. I am excited to see your continued involvement in the community. It takes all flavors of talent to get this project to the finish line and a good lawyer mind like yours can help shape upcoming discussions on committees, PNI-DAO interactions/data transfer/firewalls etc, not to mention untold other issues that will arise that we haven’t even thought of yet.

If this proposal passes, I commit to a process of having the agreement revisited by the DAO within six to twelve months. These months will give the DAO the data it needs to better shape the mechanics, checks and balances etc. that should govern this and any other similar agreements that arise.

I believe this is a more effective and efficient response to the “chicken and the egg” dilemma than the alternative of trying to perfectly define all the mechanics, absent any data, experience and lessons-learned in this arena, prior to allowing a first recurring-funding agreement.

I 100% agree. This is more-or-less what I had in mind when I alluded to a “Funding Oversight” committee (with full self-awareness that I would be the primary subject for now of the committee’s oversight). You have captured and broadened the relevant idea of this committee much better and more clearly than I could have done. Behind the scenes I have already been in the works with Jack to get a PEP draft covering the creation of such an oversight committee into the Forum within a week or two of this proposal passing. Facing the same chicken-and-eggs dilemma as this proposal faces, and pushing forward with identical answer to this dilemma, this oversight committee will give the DAO something to cuts its teeth on, so that the DAO can gain the data, experience and lessons learned from this first committee in order to improve the mechanics of committee formation in preparation for seating other committees, such as the ones that @jinx and I suggest.

The only thing that I would add is that this oversight committee would oversee not only recurring funding agreements but any and all funding that has any forward-looking element to it. An obvious example would be PEP-11 (funding to Ferrum to build a bridge). However, other PEPs that are couched in “reimbursive” language may make forward-looking promises that are worth tracking or may even be forward-looking funding requests in disguise with deliverables that slip through the cracks (e.g., PEP-24 Pocket Network DAppNode Package).

Funding Oversight

Funding oversight is critical. It could be exercised by the DAO committee whose creation I proposed in my last post, whose focus would be the design of bodies to develop the Pocket project. Or a new arm’s length committee could be set up.

While members of the working group msa6867 proposes setting up can report to the oversight committee, to avoid any hint of bias, they should not sit on the committee.

Contract

If PEP-39 is approved, in my view, a contract should be signed by both parties to formalize the agreement and ensure that everyone is on the same page as to what it entails and defining the nature of the relationship between msa6867, his corporation, Terracelum Inc., and the DAO.

A clear and comprehensive contract is key to the success of any working relationship and will help to avert disagreements and misunderstandings. Clarity is especially important given the mostly uncharted legal territory of DAOs.

While the contract obviously will embody the terms of the proposal as written by msa6867 and voted upon by the DAO, as well as any additional terms to which he has agreed through his replies in this forum thread (e.g., revisiting the agreement after six months to a year), there may be ambiguities and incidental matters that need addressing at the outset or along the way. Further, given the novelty of the role being created, core issues may arise in the course of msa6867’s engagement. A contract can provide for mechanisms to address all such issues.

Until a contract has been signed, the parties’ obligations under the contract should not kick in. This would require agreement from msa6867 since PEP-39 currently provides that he will receive payment upon approval of the proposal. The proposal stipulates that payment precedes the performance of work – not vice versa. If, indeed, that is msa6867’s intention that should be made explicit. (msa6867 should apply separately to the DAO for payment for any work done prior to the contract taking effect including before this proposal was submitted, and after it passes but before a contract is signed.)

Who would have the authority to draft the contract (including design of ambiguity- and conflict-resolution mechanisms and any other needed changes), and sign it on behalf of the DAO? The committee charged with funding oversight could be empowered to fill this role. If not drafted by a lawyer, the contract must at least be vetted by one who has the relevant expertise.

To avoid delay, a proposal on creating the committee that would prepare and sign a contract with msa6867 would need to be submitted immediately upon approval of PEP-39.

Working Group

Another issue that warrants further consideration is the working group called for under Scope of Work:

While I appreciate that the working group is just one of the deliverables of PEP-39, it may be unreasonable to expect community members to devote their time and energy to participate in a “working group” without compensation.

This issue needs to be addressed further if PEP-39 is approved. Such discussion may preclude creation of the working group within the first 30 days as envisaged by the proposal.

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There is incredible conversation around this proposal. We are reaching the limits of the initial implementation of the DAO and seeing the need for it to evolve in real time.

After reading this thread, the above comment sums up why I will be voting no. We need to be able to pay folks who are contributing. I would encourage @msa6867 to submit a proposal for work done if it doesn’t pass. I would rather see compensation for work put with specific outcomes until we have a proper accountability system in place.

I am extremely excited by the prospect of having autonomous groups focused on specific aspects of the protocol. We absolutely need committees/councils across engineering, economics, funding, and DAO operations. These should be considered full-time jobs paid by the DAO. But, this means we need to have well-defined authority, delegation and hierarchy to ensure things move as smoothly as possible.

Efforts should be focused on how we best structure these committees. Expectations of individuals participating needs to be made crystal clear, conflict resolution, checks and balances, the role of the Foundation. There are a lot of questions that need to be answered.

We have an opportunity to unlock so much more with these systems in place. I would be happy to help participate in any efforts related to designing these systems, cc @JackALaing and @b3n.

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Agreed

This is a nice thought but it is not practical. First, the legal ability for a DAO to enter into an enforceable contract has not been established in any relevant jurisdiction. Second, the concept of signatory authority has not been established and granted to any DAO representative so at the moment there is no ability for the DAO to sign such a contract. Third. the very nature of the service Pocket Network provides means that it is likely to be perpetually on the radar of SEC and other regulatory agencies (see e.g., the Tornado Cash situation)… Therefore the Pocket DAO of all DAOs must take care to maintain the litmus tests of being both decentralized and autonomous. Giving signatory authority to individuals may give agencies that have regulatory jurisdiction in the region the signer resides all the hooks it needs to regulate the DAO. And presuming that PNF could sign on behalf of the DAO breaks the litmus test of autonomy. Why embroil the DAO in legal quicksand of all this uncharted territory. Oversight committees - yes. Other mechanisms that we will learn as we go - yes. Inserting “lawyer-ese” ito DAO mechanics - no!

At what point are we overthinking everything? At what point is close enough good enough. Where was all this clamoring for signed contracts etc. for all the other forward-funding proposals that the DAO approved.

This is really digging into the weeds and is a total nonissue. In the background I have already been collaborating with several individuals to start fleshing out economics concepts like “max token supply” and other topics. I can assure you that not one of them have been refusing to collaborate on the basis that compensation has not been defined. There will be zero issue of creating a working group within the first 30 days. Depending on quality and quantity of involvement and output, reimbursive funding can be sought as warranted.

@msa6867 you make a number of very good points in your last reply - points that further emphasize reasons why establishing a full-time role, via a DAO vote, does not make sense at this point.

I’m not a lawyer but I am somewhat familar with this point and you are correct. The DAO could not enter into a legally binding contract with you. More reason why clearer guidelines need to be established.

Is it possible that by electing a full-time position, that might help make the case that the DAO is more centralized than not? Again, I’m not a lawyer but it may be that by electing full-time employees we are voting to centralize some of the DAO functions.

Lastly, I believe your point above goes beyone just “signatory athority” and may extend to any defined (read: elected) athority.

The provision of recurring funding does not imply an official “role” that could become the target of regulatory hooks. I was careful to steer clear of such verbiage in the text of the proposal

Let’s be honest, the added risk of this particular nuance is all on my side. Meaning if I contribute under the terms of the agreement and the DAO decides on a whim to not provide the promised funding, there is no enforceability mechanism I can resort to for relief. If I don’t provide, the DAO elects to terminate same as if it was a signed contract. The risk is clearly one-sided. This is risk I am willing to take because I trust the DAO on this point. Again some of this discussion is veering way into “overthink it” territory.

How did our DAO - or any of the other blockchain DAOs - get to where they are today, and make all the technology breakthroughs they have made, without every last guideline, mechanism etc. being perfectly defined. I believe there is still a place for jumping in and learning as you go, and I don’t see any real downside for this be one of those places.

Precision of language is important. By definition this is not an employer-employee relationship. Indeed, avoiding the potential for giving regulatory agencies a hook to getting into the affairs of the DAO is precisely one of the reasons I elected to pursue this proposal as opposed to other more formalized alternatives.

This is an excellent point and really good food for thought. It does not really pertain to this proposal because there is nothing in the funding request that implies the DAO granting me any sort of authority. But this is very pertinent to the upcoming committee discussions.

The DAO obviously has authority to do all sorts of things - change parameters, fund contributions… censor DApps, block countries, blacklist nodes… the list goes on. The latter items obviously being things we desire that no regulatory agency has the ability to force the DAO to undertake by threatening jail or other sanctions. DAO authority is decentralized in so much as voting membership is decentralized. If the majority of the voting power is concentrated, for example, in the USA that becomes a risk factor. As vote gets decentralized, so that no majority vote resides in any one jurisdiction, that risk fades.

The mere act of providing funding to a persona or entity that is contributing to the ecosystem does not create a hook. Especially given that the wording of this proposal explicitly states that the granting of funding does not imply that the recipient is granted any special authority within the DAO.

Some DAO committees, on the other hand, may be vested with delegated DAO authority. Therefore it may be prudent in seating these committees to take care that no country represents a majority of the seated membership. The charter of other committees may be such that they do not have delegated authority but only make “recommendations” to the voting membership prior to plenary debate and vote. The same level of concern over citizenship or residence of committee members would not apply for these committees.

Per the language you included in your agreement (below) you’d be getting paid in advance, every month so it’s the DAO that is at risk, not you. Clearly you are skilled at how you word things as you’ve mentioned.

But what I just can’t wrap my head around is why you feel the DAO should vote to hire you (or anyone else) into a full-time role without any trial period. There are trusted community members who have been contributing for years but to my knowledge, you just started contributing in June - less than 90-days ago. What you’ve done seems to have been valuable and you should get compensated for that. But with all due respect, it’s not enough to convince me that you’re the right person for the role you’re defining - effectively forever.

Try to, take yourself out of the equation for a minute. Do you think it’s okay for the DAO to vote in a full-time person - who will have influence and credibility as a result of the position - without any due diligence on that person (that I’m aware of)? To my knowledge, you have not even gone through the DAO verification process, or attempted to get a DAO vote yourself. I don’t know you IRL so I’m hoping you understand my concerns here.

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After some thought and reading into more comments, I agree with Steve points here. There needs to be a time period where this agreement naturally expires on its own without the need for another voter to put up a termination proposal. The vote as is so close, that a termination scenario could be likely and happen very quickly depending on market conditions, sentiment, and alignment of voters. I also think it’s a relatively small ask - seemingly because MSA seems to understand how early we are into this whole project, and there is still a pathway to long term sustainability for contributors. I hope no one enjoys the gratification effectively someone’s payroll in a public forum. I do not believe this is good for long term sustainability and a 3 to 6 month trial period would be sufficient to prove impact while providing a momentary incentive to do so.

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I am in agreement with steve, jinx, poktblade etc, regarding the expressed desire to define a term. The arguments made are sound. I am fine with modifying the terms of this proposal to reflect a term as many have suggested. By the time Steve’s comment first hit, voting had already started. I consulted with Jack and he indicated that modifications to proposal language were not allowed mid-vote. He also expressed unwillingness to terminate vote early to change language and start vote over.

If the proposal passes I commit to immediately posting a follow-up PEP that amends the terms of this agreement to reflect a six-month term. This will allow the whole community time to reflect and formalize some needed structures and mechanics for this and other types of recurring funding agreements that may come in the future. Modifying the agreement via amendment does not run afoul of the precedence Jack is trying to establish and preserve (regarding mods and early termination of proposals once put to a vote) and should satisfy the concerns regarding lack of a defined term.

I understand that there are broader reasons behind some people’s no vote. But for those whose “no” vote is premised primarily on lack of defined term, I would ask you to reconsider your vote based on the above commitment I am making to immediately modify the terms to reflect a 6 month term.

@msa6867 I’m still curious to hear your answer to my question.

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Hi @steve, it is a great question. And I very much appreciate the way you have challenged, sharpened and helped steer the direction of the discussions over this last week.

What I believe I observed during the summer was that I was able to make an impact because of the quality and thoroughness of the thoughts, reasoning and analysis I provided. I had no platform, no position no reputation or anything that leant to establishing credibility or influence. Nor did I once appeal to my background, education or any other factor as to why my thoughts should carry more weight than another persons. I simply put forward my thoughts and let the community digest them at face value without regard to the person making them. And yet both influence and credibility grew organically over the summer. Thus I think the cause and effect may be the reverse. It is not the position that creates influence and credibility but rather the organic influence and credibility that has led to a discussion of a possibility of recurring funding in the first place. And I certainly did not intend and do not expect that anything would change going forward. Any thoughts, ideas and analyses coming from me ought to be considered based on the face value of the material, not on the author of them.

Getting back to your question: there is no single “okay” or “not okay” answer to your question.
Different voters will come up with different answers as to what they are comfortable with depending on the particular circumstances, namely the length of time and the consistency and quality of the individual’s past contributions. As you point out I have only been contributing to the DAO for 90 days and I agree this is a short period of time compared to some who have been contributing for 18 months or longer. Balancing the other direction, my involvement has been consistent and almost daily during this time . As you point out, I am not yet a DAO voter. I am pursuing obtaining a vote via the contributor route. i.e., the 4 required milestones of successful PIPs/PEPs/PUPs/Constitution changes of which I am only half-way there. I confess that I did not appreciate the “DAO verification process” as part of the path to vote. That is an oversight on my part and one I will rectify regardless of outcome of this point.

Once I do have a vote and have an opportunity to vote along the lines of another full-time position, my personal style is to lean pretty heavily on what I’ve already seen being produced by individuals - quality, quantity and uniqueness - and give the benefit of the doubt that this is one area of life where past performance is a fairly good indicator of future returns. Others voters would have different criteria or expectations of what they expect to see.

Some great ideas for formalizing a mechanism to handle “full-time positions” and other recurring-funding proposals have arisen in the course of this discussion. The kind of due diligence to which you allude can be added to the mix of items to consider and formalize. I know that @JackALaing is tracking this discussion and I will be sure to discuss this due diligence concern when we talk later this week.

More than anything, the PEP-39 debate has shown that myriad questions need to be answered on the path to setting up the DAO structures best suited to guide Pocket network.

Unavoidably this includes legal questions. Anything the DAO does must have strong legal underpinnings.

msa6867 suggests we not “embroil the DAO in legal quicksand of all this uncharted territory” and that to avoid regulator “hooks” it’s best that no contract be drawn up between the DAO (or implicitly the Foundation acting on its behalf) and persons performing work for the DAO.

But like it or not, the DAO is a legal entity and the legal aspects of its relationships with other legal entities need to be carefully considered before decisions are taken. That has not happened here.

msa6867 says “I trust the DAO” and that he’s prepared to take the risk of working without a contract, without any enforcement mechanism (though it’s been pointed out that it’s the DAO that would be taking the risk since this proposal calls for payment up front).

No person should have to take such risk. That’s why contracts are so important.

I make these observations in order to show the need for including an expert in corporate law on the (hopefully) soon-to-be created committee that will explore the design of DAO committees and councils.

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Thank you to everyone for some incredible discussions. I think that the very existence of this PEP helped spur the community into starting to think seriously about how to grow into it’s full capability. Some great ideas have been put forward . In that sense, the ball has definitely been moved forward.

Per the suggestion of @steve , @Jinx , @eagle_wins amd @o_rourke I will prepare a PEP to request reimbursement for contributions up to this point.

Going forward I plan to continue uninterrupted with the activities already on my plate, including:

  • Analyzing system behavior post PIP-22 and developing an algorithm for PNF to use to auto-set SSWM to achieve PUP-21 non-inflationary/deflationary goal,
  • Tracing any potential leads that suggest actual (not hypothetical) fairness issues
  • Analyzing pros and cons of moving PIP-22 exponent away from exp=1
  • Continue working w a de facto informal working group (pretty much already composed of the reps @jinx suggested excepting the inclusion of @cryptocorn in lieu of @TracieCMyers, and the inclusion of @lex )to get multiple eyes on the above shorter-term issues and brainstorm and flesh out longer-term topics such as incorporating an asymptote to a max token supply into Pockets Emissions Policy.
  • Continue to flesh out system implications of TransferStake and introduce possibility of including SubtractStake capability
  • Continue working out an implementable version of stake-weighted session selection
  • Continue working out v1 implications, especially the changeup to reward pie and the move from cherrypicker to fishermen to enforce QoS
  • Continue working out the short-term and long-term implications of LC for the project
  • [Note that work on a V0 node-runner profitability model/calculator will not be a focus of priority unless I receive feedback from noderunners and/or other community members that continued work on this front would be useful.]

At the same time I will engage actively with @JackALaing and @b3n on the PNI/PNF side and with interested DAO members (@Jinx , @zaatar et al) to help shape the mechanisms needed to enable “fulltime positions” , official DAO committees, etc. in the future.

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@msa6867 has already wrapped up this proposal thread with some gracious words, but for the sake of clarity:

This proposal was rejected with 7 approvals and 14 rejections Snapshot

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Do I understand correctly that the DAO has just saved us $13,750 USD per month at the expense of one of the most active and prolific members?

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Hey @lex . I’m sure it had nothing to do with saving money. I think the DAO said no because (1) the mechanism to manage a recurring-funding agreement are not in place yet and probably more importantly because (2) the way it may appear to give a platform/voice/authority/weight etc. to one individual’s voice/opinion/analyses etc. over others. I will put in a reimbursement request next week for contributions made over the summer. When I do, that will be a good place to voice your support if you have found my contributions to the DAO to be valuable.

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My light frustration lies rather with the DAO being a bit more stingy than I would like.

I understand the need to be conservative and thorough.

However, currently we do not have hordes of contributors from the community knocking at our doors to disincentivize participation by publicly drowning in bureaucracy one of the most prolific contributors.

There is abundance of communities and projects out there and the scarcity of people’s attention and labour and threads like that is how we get less activity not more.

In my superficial view, you sir are taking it more graciously than we deserve.

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