Community discussion: Should the DAO replenish its Treasury by changing the 3rd Year of PNT inflation to 10%?

What follows is a draft for a DAO proposal that the pNetwork team is putting up for discussion. If no major points are raised, this will be officially proposed in the DAO in the coming days.

Edit (updated on August 30th, 2022): here is a new revision (rev.2) of the PIP17 Draft Proposal based on feedback shared by community members both in public community channels and in private. Among other things, this contains material provided by the core team showing costs allocation and figures based on historical data, so to make it more accessible for the community to see what it takes to maintain pNetwork strong and healthy.
Slides 3, 9 and 10 are new additions compared to the previous version.

Community discussion: Should the DAO replenish its Treasury by changing the 3rd Year of PNT inflation to 10%?

Summary: This proposal aims to replenish the pNetwork DAO Treasury via a PNT inflation mechanism at an overall 10% rate over the next 12 months. This would enable the pNetwork DAO to fund activities directed at the growth and further development of the protocol and the ecosystem. The entire proposal (rev.1) is available for review here.

Edit: PIP17 rev.2 Draft Proposal is available for review here.

Previously applied at a 42% rate and at a 21% rate during DAO Years 1 and 2 respectively, the inflation rate would be halved for Year 3 to reach 10% rather than going directly to 0% as previously planned.

Newly emitted PNT tokens would be directed to the pNetwork DAO Treasury and would be under the control of the DAO. Should this proposal be approved, the pNetwork DAO would be able to manage the Treasury and decide how to allocate funds via dedicated DAO proposals. Specifically, three key areas of focus would be grant programmes, security budget and liquidity mining.

Important note: the newly issued tokens would represent locked tokens (out of circulation) until the DAO decides if, how and when to spend them.

Motivation: Because of the hack that happened in September 2021, PNT tokens coming from the inflation mechanism have been used to compensate those affected along with PNT tokens from the team. Therefore, the pNetwork DAO Treasury is currently empty. This proposal aims to create a strategic reserve for the DAO to fund the further growth of the protocol.

Benefits for pNetwork as a whole:

  • Create a strategic reserve that enables to provide for pNetwork’s future and aims at advancing pNetwork as a world’s leading cross-chain protocol
  • Decentralize the decision-making on DAO Treasury funding via DAO proposals
  • Incentivize new contributors and retain existing contributors for the further development of the protocol
  • Add security-oriented practices that benefit users in their decentralized journey
  • Grow the ecosystem and incentivise pNetwork active users

Specification: The DAO Treasury is a key element that allows DAOs to grow and to fund future evolutions of their reference project. According to the “State of crypto” report by a16z, DAOs have accumulated $ 10+ Billion in treasury assets under management. A large majority of value held by these DAOs is in the form of the protocol’s native governance token.

This is a proposal to replenish the pNetwork DAO Treasury via a PNT inflation mechanism as explained in its entirety (including comparison with other projects) in the deck rev.1 here.

Edit: PIP17 rev.2 Draft Proposal is available for review here.

According to Banklesshq.com, treasuries help DAOs fund critical development, grow their network, express their values and increase their longevity. The goal of treasury spending is to reward core contributors and attract the right set of new contributors. For example, Uniswap, Compound and Aave have proposed grant programs that aim to fund individuals and teams that contribute to the protocol. Or, projects like Yearn have a decentralized and bottom-up work structure where the core team gets paid from the community treasury via an operational fund.

Creating a pNetwork DAO Treasury is expected to positively impact the project, enabling the DAO to fund activities directed at the growth and further development of the protocol and the ecosystem. Should this proposal be approved, the pNetwork DAO would be able to manage the Treasury and decide how to allocate funds via dedicated DAO proposals. Specifically, three key areas of focus would be grant programmes (for the core team and external teams), security budget and liquidity mining.

A more detailed explanation of the proposal rev.1 is available here.
Edit: PIP17 rev.2 Draft Proposal is available for review here.

What would be the impact of this proposal on pBTC-on-BSC compensation plan?

there would be no impact, since the compensation plan started almost one year ago and it’s now almost completed.
This proposal would add some new liquidity in the treasury that was drained by the compensation plan, liquidity that will be used by the dao for the future growth of the pNetwork protocol

Hi Willy, thank you for you answer.

Could you clarify your point “it’s now almost completed.” To my knowledge all the pbtc should be bought. About me there are still 70% of the pbtc to be exchanged for pnt tokens. And I participated to the maximum in each of the compensations.

Hi @Orangina - the progress of the compensation plan is currently at around 2/3rds. If you are still at that lower percentage, that may be because you haven’t joined some of the steps - for example, you may have skipped Step 1 that gives access to either Yolo Parrots (redeemable for PNT tokens, in case you don’t care about using these NFTs). Considering all of the steps in the compensation plan, the current progress is around 2/3rds done and it is expected to reach completion within 2 or 3 months as planned.

The compensation plan has been discussed in length and the funds directed to the CP reimbursement were allocated to it a while ago. For this reason, the current PIP17 draft proposal has nothing to do with it.

If you are interested in discussing further the compensation plan, please refer to the relevant thread.

It is because of the compensation plan that the DAO Treasury is currently empty as both the DAO and the team have dedicated resources to cover for it. This PIP17 draft proposal aims to address this very point. The costs to support the pNetwork project (yield farming, security and development) are significant, but currently they cannot be covered by the DAO even though it is the entire pNetwork DAO community benefiting from it in terms of project health and growth. This PIP17 draft proposal aims to give more control to DAO participants over the project by refilling the DAO Treasury, hence giving them control on how costs are allocated.

In order for these costs to be more visible for the community, the core team will shortly share material showing costs allocation and figures based on historical data, so to make it more accessible for the community to see what it takes to maintain pNetwork strong and healthy.

Hi Thomas,

this looks like a one off action, while it would be nice to discuss how the treasury will be feeded by business operations.
I think that also understanding DAO current running cost may add value to the discussion.

Can you please provide us some information on the above points?

Thank you

Below is a new revision (rev.2) of the PIP17 Draft Proposal based on feedback shared by community members both in public community channels and in private. As anticipated in my previous message, this contains material provided by the core team showing costs allocation and figures based on historical data, so to make it more accessible for the community to see what it takes to maintain pNetwork strong and healthy.

PIP17 Draft Proposal rev.2 here: [SHARED EXTERNALLY] Draft of PIP 17 rev.2 - Inflation - Google Slides
Slides 3, 9 and 10 are new additions compared to the previous version.

cc: @gmork this new revision should also address your latest point.

If anyone is interested in diving deeper into this topic, questions from the community were answered during the latest pNetwork AMA. Find the recording here: https://twitter.com/pNetworkDeFi/status/1565000729944793089?s=20&t=v1ua74kYLhlTIwYG8V6iTw