This is only in consideration exactly because the network isn’t live yet. Otherwise, I completely agree with the sentiment.
If I understand this correctly, A,B,C introduce a free-rider issue where everyone wants there to be an ecosystem fund to help pump their bags and make a robust ecosystem, yet all are disincentivized to use their personal tokens to create it. I.e., you might not donate but you would reap the upside rewards.
This has to be an all-or-nothing give-me-your-energy Goku spirit bomb
Using the EDF. You probably know that a group of ten or so community members (of which I am a member with GMan, Linus etc) have been working for the past three months or more on something called the Bridge Fund. The idea was that after a BUILD vote on the main IOTA treasury fund we wanted to have an interim way to get money out there while a DAO etc was formed - and the EDF was offered by the IF to help us - similar to the suggestion here.
We have produced lots of useful docs on the principles under which funds could be allocated etc. We thought we had agreed with IF that the EDF could be used, then Phylo told us the following last week - basically suggesting it was not a good solution - something of a big disappointment after our work. I’d like to know how his words below fit with the use of the EDF for Shimmer before we discuss further:
“Including the bridge fund operation into the EDF Verein is complicated. It would need to be a subsidiary. As the Swiss Verein is not yet finished setup, such a subsidiary could only be setup after the Verein is established and will take a couple of months (switzerland is slow)
Including the subsiduary now in the setup will delay the whole swiss entity setup.
A feasible solution might be MIDAO, Cayman island Foundation etc etc or other Wrapper Solutions like the UNA
but all of this will take time.”
Very easy - the EDF could of course receive the 10% Shimmer tokens and handles it by itself under the ownership of the Swiss Verein, by members of the Swiss Verein. What the bridge Fund was planning to do was to “use” the Vereins legal structure by persons “the community committee” that are not part of the Verein. For this, the only possibility would be to form a subsidiary that would define the special relation of a bridge fund committee with the Verein.
What Kappy is proposing here is different. It is to give the swiss Verein directly 10% of the Shimmer tokens and the Verein can use them in the interest of the ecosystem managed by the IF. So your comment here does not relate to the proposed idea of Kappy. I just can tell you what our legal team has told me. and that is that the idea of including the bridge fund “somehow” into the Verein is to complicated.
Hang on a moment. The IOTA Bridge Fund committee was looking for a solution, and was and is quite relaxed as to how that is done. It did not lay down any restrictions on how the EDF helped us. At the very first meeting where the EDF was mentioned, two possible solutions were mentioned:
a) That the Bridge fund committee made recommendations but that the final decisions were made by EDF members, therefore taking the legal risk from the Bridge Fund members.
b) That some of the Bridge Fund committee be temporarily employed within the EDF, once again to provide legal protection.
Though we have also been discussing a suitable legal wrapper for the final DAO (Swiss Association, MI LLC etc) that is for the longer term.
In short, if you have an EDF solution suitable for the Shimmer situation then please make it available to the Bridge Fund. After all, the Bridge Fund is discussing money that has has already been allocated for the community to build.
So the Swiss Verein would have nearly no limitations for what the funds will be used. The only important things are the usual KYC and AML regulations to clarify the identity of those that receive funds to avoid criminal activities.
Besides that, the newly formed Swiss Verein does not have the limitations that we know from the old German EDF.
The “old EDF Funds” have been limited to be only given to individuals and only for educational purposes (and some other things).
The Swiss Verein can do nearly everything with newly received funds. It can spend it for marketing, pay teams with it, etc whatever it sees feasible to bootstrap a successful ecosystem.
Note for the record that Phylo has answered me in the bridge-fund-internal thread on the IOTA Discord and has said he does not want this topic in this thread.
As far as I understand it, the difference is that the Bridge Fund wanted to be able to influence how funds it directed to the EDF were spent, while here the suggestion is that Kappy is going to direct 50% of the funds to the EDF for them to spend as they wish (no doubt wisely but without community direction). Do I have that right?
It raises the following questions we need to know before voting on this proposition.
Q1. How much does the EDF currently have in available funds?
Q2. Of that, how much is bound by exactly the same conditions as would apply to any future Shimmer contribution to the EDF?
Q3. Is the EDF restricted at the moment (before it gets the Shimmer funds) from supporting worthwhile projects because of shortage of resources?
Q4. If so, in which way?
I am absolutely PRO Kappy’s proposal. We need funds to attract projects, to attract users, to gain value. I am also in favour of separating funds of the different ecosystems IOTA, Shimmer, Assembly.
But I am not certain about the numbers you provided. If we bring in the Kusama comparison, we can estimate with a ~5% mcap of IOTA for Shimmer. At current valuation ($756mn IOTA mcap) this means ~ $0.02 per SMR ($756mn * 5% / 1,741,075,688 SMR). So we would only have ~$6 million funding in total ($0.02 * 290mn SMR).
The $1.00 per SMR would imply a SMR mcap of over $1.7billion or $35 billion mcap of IOTA ($1.7 bn / 5%). That’s super optimistic and in my opinion needs a strong bullrun and already attractive projects and a strong user base on the SMR network. [side note: in the last bull run we saw a Kusama mcap of $3.5+ bn. If we assume the same potential valuation for SMR, some day the DAO and the EDF-Treasury could control $300mn.]
So I see a chicken or the egg problem here. But the IOTA community is strong and the tech is super interesting and strong too. Thus, it’s opening opportunities for other projects to likely port from different networks over to SMR without depending on huge external funds in the first place (see e.g. Dom’s discussions on his last US trip). So I guess we will initially get those attractive kick-starting projects and community engagement to overcome the cold start problem.
How do you guys think about that potential cold start problem and the initial fund valuation?
Greetz
[ps: feel free to correct my calculations or spelling]
As to my knowledge:
Q1: 12,25Ti in this address iota1qr8rn6qslr8emx3had7q5m3r40vcn349slfnjvmfpsnmkgqtyphty9x6ps0
Q2: none of those funds are regulated by the same conditions as a potential Shimmer allocation, it is bound by the regulations of the German Foundation law, not the new regulations of the Swiss Verein that would receive Shimmer tokens
Q3: Yes the EDF funding is currently restricted by the conditions of the German Foundation law and the conditions by which those 12,25 TI are regulated
Q4: i do not know the exact regulations of the german EDF Funds
Yes, what would be possible is that the IF holds the 10% securely stored on behalf of the community and as soon as the DAO is set up and ready, the funds get transferred into the community DAO by the IF. Because the tokens need to be created at the launch of the network, there is no way of minting them easily after Shimmer is life. Once Smart contracts are life and the DAO System is deployed the community gets full control over their 10%. Before this, the EDF could already offer initial funding to projects from its own allocation.
Yep firefly vote is the way to go imo and in general i would like to see a treasury.
Looking into the cardano space I would also like to see some kind of self filling mechanism. Maybe this could be the first thing to spent that treasury. A group that works out a sustainable mechanism. So as Long the Network will be used there will always be enough funding to develop. And yes I know there are no fees ;D
I don’t agree to this. For me there is no difference wether the chain is already live or not. We staked our funds to receive a certain amount of SMR & now everybody has a certain percentage of the total supply and we should go live like that. Minting 20% and diluting everyone is not good practice in my view and I think most of the crypto community would agree to this. The fact that supply can be changed simply because we are not live yet should not be abused. It destroys trust.
Phylo, I notice that Kappy says above “This is why 10% would be given to the new IOTA EDF based in Switzerland which could have community involvement.”.
Is he misinformed as to the possibility of community involvement, and if not, to what extent is that possible. Obviously this refers to the apparent impossibility of catering to the Bridge Fund type of community involvement.
in case SMR will stay at 2ct, SMR has failed the hard way i’d say. the level that IOTA is at, is due to no tokenomics. but, looking at your (and also my mostly used) example “KUSAMA”, you’ll see that the price rises with rising utility of the token. and in addition: KUSAMAs valuation rose parallel to DOTs valuation - bc ppl saw what will be possible with DOT when tech and also projects on KUSAMA will be deployed on / moved to the mainnet DOT.
PS: The good thing is that SMR wont start without any projects deployed in due time on it. so, utility and some tokenomics will be there in the first few months without the need to deploy lots of funds from the treasuries.
Thank you for the proposal. Are you able to further define “short term” ? Also what is the prospect of the legal challenges and hurdles being resolved?
My understanding is that the Shimmer token would be available to trade on exchanges in the future. What would prevent exchanging (per proposal and vote) some of the unclaimed tokens to shimmer for building the ecosystem? Am I missing something here?
In general, I am in favor of build but my concern is the public perception of the dilution of the supply.
