First of all I commend those who distributed the Shimmer token in such a fair way.
Compared to the distribution models of other projects, this may seem too fair, maybe even naive for some. However I see this as a big chance of becoming a flagship model for well established communities in this space.
This a counterproposal to the proposed 20% increase of Shimmer supply.
I recommend everyone to read through the well written proposal by IOTA X-Team member Kappy:
I agree with all the points made by Kappy regarding the positive impact of a community treasury. However, I oppose increasing the supply by 20% retroactively because 20% alone wouldn’t even make us competitive and as I believe such a fund can be achieved in a more legitimate way.
Do not initialize a disadvantage
The SMR token is not publicly traded and no one can say exactly how much it will be worth. So how can we say that 20% will be enough for the ecosystem fund?
Let’s take a look at the list of prominent examples provided in the linked proposal:
If we make research on these examples, two things become clear:
- All these projects have made public before that there will be a treasury which is used to attract new projects and grow the ecosystem. (In our case, unfortunately, the same cannot be said.)
- We would need at least 30-50% in the treasury to be competitive.
The way I see it, we need a bigger fund, but expropriating 30-50% would make too big a ripple and even the most selfless staker would feel treated unjustly. Here one can see that the idea of changing tokenomics after investors were incentivized to accumulate IOTA to get their promised share of SMR is wrong at its core and that it only has to be a more tangible share while the 20%, at least that’s what it feels like to some of us, is a tolerable mediocrity. My thesis is that subsequent increase of the supply and be it only by one coin represents a case of injustice.
Respect the small investor
Suggesting changes is good, playing with other people’s money isn’t.
Investors bought into IOTA to participate in the airdrop, accepting to lose money owed to the market condition during the airdrop, and now should be expropriated by 20% afterwards?
If this is not dubious please imagine the same scenario with Assembly:
Asian VC’s invest in a clearly defined idea, and while their tokens are locked, the tokenomics are changed because the community wants it that way. How does that sound? It would be unthinkable to even consider it. Why is it even conceivable with Shimmer? Is the right of a small IOTA investor smaller than that of the venture capitalist?
The idea of changing such fundamentals afterwards is inherently wrong and even a referendum doesn’t justify it.
Now those who say that investors didn’t buy extra IOTA after the Shimmer announcement from november 16th, and all the tokens they received were free anyway, should take a look at the IOTA Volume Data on exchanges.
This is only the USDT pair on Binance as an example:
Daily Volume in November:
14th - $6M
15th - $12M
16th - $85M
17th - $102M
The volume spiking 10-20x compared to the days before speaks for itself, and the worst part is that if these people disagree with the increase of supply, and it happens, they will have to watch it with their hands tied since they do not have any fair option to market sell their coins as a form of protest but even if they could it would still be a mess. My opinion is that a subsequent increase in supply, even though it could harm the projects reputation, should only be possible on the condition that Shimmer funds are not blocked and that people are able to transfer their funds to at least trade over-the-counter, otherwise I fear expropriation.
Cause and effect and the future of crypto
Among all Crypto Communities the IOTA Community is one of the few that can proudly call themselfes OG’s as we have existed continuously for 7 years while many projects have failed. So if important decisions are to be left to such a well established community, it is important to keep in mind that future communities will likely look to us to justify their actions, which can lead to a legal vacuum if we do not act wisely. What I will say is that announcing an airdrop and then changing tokenomics while tokens are locked violates the rights of participants and not only damages the reputation of a project, but also pushes the entire space in an investor unfriendly direction where people lose trust and the big money naturally stays away from. There are things that can be voted on however some things shouldn’t be even considered like our current proposal as we have noted above increasing the supply by 20% will neither make us able to compete with the big boys, nor will those who push this proposal through retain their integrity and the longterm effect of all this might even be worse.
Don’t cheat the team, incentivize it
Having underlined the dubiousness of increasing the Shimmer Supply by (only) 20% I would like to finally bring my actual counter-proposal.
We have this status quo and it is up to us to make the best of it. To find the best solution for this problem we first have to understand the motivation behind human behaviour. The drive for our actions usually originates in one of these three points, and all of them are reasonable points as long as others are not harmed:
- We do it for our own pleasure (consumption, enjoyment, prestige)
- We get paid for it
- We follow a higher purpose (do the good/right thing)
I think we all agree that creating an EDF belongs in the third category as we all want IOTA to succeed and many of us are even ready to sacrifice a part of their SMR stack to support such a plan and enable a kickstarter effect for the Shimmer ecosystem. But since we know that investors will get harmed financially we should probably consider including points 1 and 2 to prevent doing unjust.
I propose that we start a donation drive. Everyone who was willing to enter the 20% call should also be willing to donate 20% (or more) themselves, but since this will probably not be nearly as many as expected and those who participate might want to be acknowledged for their selfless act each donation address will receive an NFT indicating how many coins and what percentage of their stack they have donated. The amount will be represented in the form of an artifact, and the percentage donated from their individual stack in the respective color. This will have an upselling effect, let’s just imagine 4 artifacts and 4 colors resulting in 16 different traits.
(These are just random examples and numbers can be adjusted by people who have better understanding of the matter and even increase amount of traits by adding more diversity)
1-33% = Poop brown
33-66% = Shimmer blue
66-99% = Honor gold
100% = Ego death black
10.000 MSMR = Triangle
69.000 MSMR = Square
100.000 MSMR = Hexagon
420.000 MSMR = Circle
The official IOTA NFT will give SMR holders the opportunity to exchange their inflationary SMR into a scarce asset with utility which for example can serve as a ticket on IOTA events (like those kickoff events we already have once a year) and will give the community back a proof of contribution as OG’s before their names get drowned in the unmanageable complexity of our thriving ecosystem.
NFT holders will also be able to make votes on topics like which project will be approved to get funding.
Voting power will multiply depending on NFT colour:
Brown = 1x
Blue = 1.5x
Gold = 2x
Black = 3x
This will encourage people to donate a larger rather than a smaller portion of their stack to get as much voting power as possible.
On the IOTA Conference the artifact can give the owner different service levels:
Triangle = Free Entry
Square = Seat Guaranteed
Hexagon = Drinks 4 Free
Circle = Special Seat
This will give whales the respect for their actual amount of donation.
I think I can talk for everyone if I say that we would rather be honoured with NFT’s and owning a proof of our contribution instead of being expropriated and not receiving anything at all.
I haven’t come up with the ultimate solution, and I don’t see myself in charge of writing a master plan, but I hope I’ve been able to provide some momentum and get people to think about it and summarize what they think, and I’m sure we can come up with a great, legitimate alternative to Kappy’s well-intentioned proposal.
I only ask the IF not to rush into anything on such a sensitive topic.