Given Smart Contracts team were the first to suggest vesting and minting MKR, there were a lot of really great discussions in the Smart Contracts Budget Proposal. I’m bringing this into its own thread so we can talk beyond smart contract core unit. Below is a summary (but not exhaustive) and collection of some points brought up in forum threads and Smart Contracts Core Unit Presentation. Please discuss perspectives in this thread.
Generally, budget discussion encompass a few areas
- Incentives / Vesting Amount
- Incentives Structure (Vesting, performance bonuses)
- Sourcing MKR and its Mechanics (minting, buy off market, etc)
- Social contract about MKR & minting
- Consistent approach across core units or unique per core unit
Discussions points on MKR Mechanics
Social contract about MKR & minting
- If we mint, there should have strict codified limits for minting
- We can’t remove governance power to mint (ever). Governance always has that power.
- “Ppl that have invested in MKR for years don’t want to all of a sudden have the rules change when the ideology was a deflationary token supply.”
- MKR should only be minted if the total supply is less than 1M (always aim for net deflation).
- "In some cases we may need to mint to pay salaries. Consider this situation where something bad happens and Protocol is done. At the end of the month we need to pay core units."
- MakerDAO to make a strategical (long term) choice: how much do we want to send to the burner (qq), how much of the burner we want to re-direct to the Core Unit (pp) and how much we want to keep for growth/salaries/etc (1-q1−q).
- MKR should be minted (as long as approved by Governance), regardless of the total supply
Minting as a more efficient mechanism and is not exposed to fluctuations of surplus buffer or price of MKR
- If MKR price climbs fast, we may not definitely burn the required amount.
- We might be incentivizing the burning of MKR tokens (compared to a more generic approach where growth is the overarching target).
- We can’t intercept MKR going into the burner
- Buybacks are a vector attack by front-runners
- Burn in an auction and mint immediately
- MKR should be set aside for vesting at the onset of a core team forming
- Cliff (at least 1 year)
- Streaming after the first year
- Weighing the vesting towards the end (10-20-30-40%) to retain for the full term
Other considerations for incentives
- Options (purchase price)
- Prediction market (Creates shares for goals)
- Performance based to tie into vision/strategy to set goals (Group effort focused)
- MKR vesting tied or similar to Sourcecred framework distribution
- Governance distributes set MKR rewards to groups / core units. Core units can then resolve vesting within their teams
Other questions to consider
- Do we and if so how do we scale/standardize for other teams, can there be a framework?
- What happens to contributors jumping between core units?
- What happens with contributors joining later?
- Fast forward, what does it look like for a new generation of people / governance?
- What are the plans for Maker Foundation MKR and could that be used for this?
- Is it feasible to build performance measures within the team or across teams?