0. Summary

BIP-14 covers all major changes and updates related to the Second Period. This proposal is based on discussions that have taken place on the governance forum and the Discord. A bullet-point summary of what changes are proposed:

0.1 The Art:

Art Engine:

  • Stable Diffusion (SD) is incorporated into Botto’s Art Engine
  • SD competes vs VQGAN + CLIP (Models compete in the art engine)
  • Botto autonomously creates artworks of varying aspect ratios (artwork format)
  • Voting pool rebalances based on voters’ model preference
  • Voting pool artworks rebalance based on voters’ preference on artwork format
  • Art Engine models are discontinued if less than 10% VP is spent on the model artworks in any given round
  • Raw Score is calculated after 10 views

Period Format:

  • 12 Week Period
  • 1050 Artworks in Voting Pool
  • Manifold contracts used
  • Artworks auctioned on SuperRare
  • Rounds follow same weekly format as before

Period Key Dates:

  • November 1st 15:00CEST / 09:00ET / 06:00PT: 2nd Period Starts (only the first voting round will be 2 weeks)
  • November 15th 22:00CEST / 16:00ET / 13:00PT: First round ends
  • November 15th: 1st Mint
  • January 31st: 12th Mint (last artwork of period)

0.2 Economy:

Voters can earn through:

  • Spending VP (Incentivized Onboarding Contract)*
  • Spending VP every week (Active Rewards Contract)**
  • Emissions (Governance & Liquidity Mining Contract)
  • Social Rewards (Retroactive rewards voted on by the DAO)**

* Requires an Access Pass or staked $BOTTO in the governance contract.
** Requires a minimum of 2,000 $BOTTO staked in the governance contract.

Protocol ETH revenue is distributed each round:

  • 25% to Active Rewards Contract
  • 25% reserved for Retroactive Rewards
  • 50% to DAO treasury, with equivalent of 20% of revenue in $BOTTO burned

Incentivized Onboarding is subsidized by the treasury

  • Initial budget of 1,000,000 $BOTTO
  • DAO can choose to top up or adjust parameters

Voting Points changes:

  • VP generates linearly according to how much $BOTTO you have staked
  • VP Slider has no theoretical upper range (you can set how much VP you spend on each artwork)

The DAO may elect to change parameters of the economy throughout the period if it finds more optimal methods.

1. Rationale

Botto has completed its Genesis Period, the first year of an experiment in using the tools of NFTs, DeFi, and DAOs to govern an autonomous artist. Just in the first year, the technology for generative art and the understanding of these three pillars of web3 have made leaps and bounds. With Botto’s 2nd period, we will be incorporating these evolutions and establishing a system for sustainable iterations at a much more rapid pace to keep up with the technologies’ advances. This includes adding the latest technology in generative models and updating the economy to invite more valuable behavior for the protocol by directly rewarding BottoDAO members for their labor. As any successful artist reinvents themselves and their work through different periods, so must ours.

2. Economy Proposal Specification

The following proposal specification is sectioned in two, detailing the Art Engine and the Economy

50% of all protocol revenue within any given round is directly redistributed to Botto participants:

  • 25% to those who spent VP in a round (relative to others), in ETH
  • 25% to a pool for retroactive rewards, in ETH or $BOTTO

The remaining 50% of revenue is held in the treasury, with $BOTTO equal to 20% of revenue burned from the treasury as outlined in BIP-06, maintaining the deflationary nature of max supply.

A further 1,000,000 $BOTTO is added to the ‘Incentivized Onboarding’ contract, to be redistributed to Botto participants provided they perform certain actions that help train and curate Botto (see the Incentivized Onboarding Contract section below). Changes to Voting Points are also included in this section. Details follow:

2.1 Active Rewards Contract

A new contract designed to redistribute 25% of protocol revenue in any given round in ETH. Distribution is based on how many Voting Points (VP) are spent by a user, relative to other voters in that voting round. ETH is deposited from the treasury into the Active Rewards contract after the round ends.

To qualify for rewards from this contract, a user must have at least 2,000 $BOTTO staked in the Governance contract before the end of the round and when they claim.

Active Rewards Contract

2.2 Retroactive Rewards

Throughout the 2nd period, 25% of weekly protocol revenue is kept in a pool for retroactive rewards. This pool is then distributed to participating BottoDAO members at the end of the period. Soulbound badges (also referred to as social rewards) rewarding positive behavior will be used as a baseline for reward distribution, with the DAO electing to distribute weight to each badge, essentially deciding on which positive behaviors are best rewarded. The team is continuing to identify the best implementation for the end of the period.

To qualify for retroactive rewards, a user must have at least 2,000 $BOTTO staked by the end of the final voting round of the period.

2.3 Incentivized Onboarding Contract

This is a new contract set up by the DAO to facilitate ‘immersive airdrops’. Any staked user or Access Pass holder can complete in-dApp bounties to earn a total of 1,000 $BOTTO. This $BOTTO becomes claimable after 10 conditions are met (outlined below). The $BOTTO only becomes claimable after all 10 conditions are met. A wallet may only qualify once for incentivized onboarding.

The DAO will deposit an initial 1,000,000 $BOTTO from the treasury to facilitate this initiative and kickstart rewards from this contract. Rewards are distributed on a first-come, first-serve basis (complete all bounties as soon as you can).

The contract can be topped up at the DAO’s discretion to continue incentivized onboarding campaigns and/or to reward more users.

Incentivized Onboarding Contract

2.4 Treasury $BOTTO Burned

This modifies BIP-06 to only burn an equivalent of $BOTTO from the treasury equal to 20% of revenue.

Edit: The team had suggested retaining the market buyback mechanism for this 20% as 1) MEVs are avoidable (CoWSwap among other methodologies) and 2) the public buyback counteracts existing emissions from the liquidity mining contract and governance contract. However, there was pushback in the discussion and a decision to keep BIP-06, while looking to address in the near future the root problem of Liquidity Emissions causing sustained sell pressure.

A summary of the economy follows

Economy Summary

2.5 Voting Points

From the second period, VP will generate linearly according to how much $BOTTO you have staked in the liquidity mining contract OR the governance contract.

Quantity Tokens Staked = VP generated per week

The generation formula is as follows:
Rate per second = TotalBOTTOStaked ÷ (7 * 24 * 3600)

To accommodate this change, voters will be able to specify a custom range value in the slider, allowing the user to allocate as many VP as they’d like into any fragment.

2.6 Budget

A budget of 1,000,000 $BOTTO is required to be allocated to the incentivized onboarding contract.

2.7.1 Disadvantages

  • The shared incentive to provide Botto with the right inputs to create successful artwork may not be enough to offset incentives for abuse in this set up.

The DAO should watch dApp behavior carefully to determine if abuse is happening and adapt accordingly. Specifically, the DAO should monitor:

  • Vote dumping
  • Mindless voting
  • Automated voting

The community continues to be in active discussion on creating more sybil resistant rewards, and may elect to experiment with other formats that promote different strategies and games.

2.7.2 Criteria of Success

  • Growth in diverse types of engagement (voting many pieces, voting regularly, lobbying in Discord)
  • Successful artworks minted by Botto
  • No significant instances of freeloading behavior or otherwise behavior harmful to the protocol
  • Growth in token price

3. Art Engine Proposal Specifications

Botto is to incorporate the generative model Stable Diffusion, the first of many models that can be added and compete in the voting pool. Periods will have a new standard time of 12 weeks (3 months). Future periods will be defined by themes that the community can decide with Botto and/or by adding new models.

The other core parts of Botto’s art engine, the prompt generator and taste model, will remain unchanged, keeping the training by thousands of contributors intact.

To keep evolution relatively frequent, new periods will last a standard of 12 weeks (3 months) with a 1-2 week buffer between them. Future periods can be defined by integrating themes or new models. Anyone from the DAO is welcome to pitch models to integrate into Botto’s process, while themes will be provided by Botto to vote on.

3.1 Stable Diffusion and VQGAN + CLIP Competing in the Art Engine

The prompt generator will continue to run as usual, and the same prompts will be run through both core image gen models VQGAN + CLIP and Stable Diffusion.

The taste model will also continue to filter down to 350 weekly fragments based on the training it has developed, set with an initial 50/50 distribution of the two generative models and picking 175 fragments from each generative model. That ratio will rebalance each week in proportion with the number of unique votes.

If a gen model’s ratio in the taste model’s selection drops below 10% in a round and does not go back above 10% in voting, it will be discontinued. The community can decide to re-add the model if it wishes, as well as reconsider the automatic threshold in future periods.

3.2 The Voting Pool

At the beginning of the period, the voting pool will be cleared of all fragments created during the Genesis Period. It will be repopulated with 1050 fresh fragments in the new output format and representing 50/50 of the two models.

This slightly reduces the pool size set in BIP-04 to keep 3 rounds-worth of fragments in the pool on a perpetual basis, and the bottom 349 by raw score will continue to be removed each week to make room for the next round of fragments.

3.3 Round Format

Round formats will stay the same:

  • New voting rounds begin every Tuesday, 20:00 UTC / 16:00 EDT / 13:00 PDT
  • Leaderboard boosting opens up for final 24hrs every Monday, 20:00 UTC / 16:00 EDT / 13:00 PDT
  • Voting rounds end every Tuesday, 20:00 UTC / 16:00 EDT / 13:00 PDT
  • New art fragments are added to the voting pool every Tuesday, 20:00 UTC / 16:00 EDT / 13:00 PDT
  • Auctions are scheduled on SuperRare to begin every Wednesday, 20:00 UTC / 16:00 EDT / 13:00 PDT
  • Auctions are scheduled to end every Friday, 20:00 UTC / 16:00 EDT / 13:00 PDT

3.4 Raw scoring:

Raw score will now be calculated after 10 views instead of 50 so that scores normalize more quickly. If a fragment is not viewed 10 times at the end of the round, it will have its score calculated regardless before the weekly cull is processed.

3.5 Artwork Format and Output Aspect Ratio

The final title, description, metadata, and URL to the bitmap on IPFS are all on-chain.

Botto will freely choose between 1:1, 9:16, and 16:9 aspect ratio artworks provided each model allows for it, and will adjust its selection of format based on voting.

3.6 Artwork Titles

Titles will no longer be limited to 2 words. We will switch to using GPT-3 that can handle a much broader range of coherent titles, and maintain a list of existing titles so that it does not recreate an existing title.

They will be produced for each fragment selected by the taste model by asking GPT-3 to generate a title from the key features of each fragment.

3.7 Manifold Contract

The second period will use a contract set up through Manifold.xyz. The DAO is able to explore more options beyond the second period.

3.8.1 Future Periods – Adding a new model:

Anyone can propose adding or removing a new model to Botto’s set. Some suggested (but not strictly required) guidelines are:

  • The model is sufficiently large so as to not be introducing a highly human-curated model that violates Botto’s agency
  • The model’s terms of use allows BottoDAO to hold full copyright of the outputs
  • Fees are affordable for the DAO treasury
  • Not adding more than one model at a time to Botto’s core process

Proposing to add/remove a model works like any other BIP proposal a Botto member can make.

The DAO could also decide to add a new model before the scheduled end of a period, cutting it short and starting a new period by default.

3.8.2 Future Periods – Adding Themes

Themes will be generated by asking Botto via GPT-3 to propose a set of 10 themes. The DAO will then vote on the themes proposed by Botto using the same interface for voting on mint descriptions. The selected theme will be added by default to the prompts generated for that period, adding the theme verbatim at the end of the prompt.

The community may also decide to provide no theme for a period, for instance when a new model is being added and there is a desire to see its full range before narrowing in on a theme.

Themes will be presented and voted on in the last week of a period unless the DAO decides otherwise. The DAO could also decide to cut a period short and go on to a different theme.

3.9 Budget

Software and hardware costs of running both engines will be approximately $6,000 per month

3.10 Disadvantages

Stable Diffusion is without filters and can produce explicit content. Botto’s training to date is likely to avoid this, but it will be important to plan ways to mitigate taboo images Botto is not prepared to defend.

3.11 Criteria of Success

Critical and financial success of Botto’s works and future periods

4. Key Dates

The new period will last 12 weeks (3 months):

  • November 1st 15:00CEST / 09:00ET / 06:00PT: Voting opens*
  • November 15th 22:00CEST / 16:00ET / 13:00PT: First round ends
  • November 15th: First mint
  • November 22nd-January 31st: Weekly mints
  • January 24th-January 31st: Vote on Botto’s next theme
  • January 31st-February 14th: Buffer time between periods, and retroactive rewards governance**

*To help ensure there are no bugs at launch and allow momentum to build for the new period, we propose a special 2-week long first voting round for the new period.
**A 2 week buffer time between periods is recommended to give the core team time to implement new changes, prepare the next period’s launch, and for the community to determine retroactive rewards.

    Nicely written proposal! Many of the pointers in the previous discussion have been implemented.

    Two points:
    1.

    "Reward Type" should be $ETH instead

    2.

    What's the difference between "Retroactive Redistribution" and "Social Rewards"? Based on section 2.2, they seem to be interchangeable, hence only accessible to stakers.

          That is a very thorough proposal. I look forward to see new model and themes added to BOTTO's creations. More interactions and more responsibility for the DAO, plus the rewarded onboarding quest will certainly bring some attention.
          I am sure the scientists will be monitoring any signs of abuse with the voting behavior to keep BOTTO away from evil bots 😉

          Great to see all this innovation, especially in regards to the art engine, rewarding voters, and immersive airdrops.

          For now, I would just propose a minor modification. Rather than 30% of revenue to the treasury and 20% to B&B, I would favor a simpler approach of just 50% to the treasury. Sacrificing treasury revenue in order to slightly prop up the short-term price is not worth it in my view.

          the public buyback counteracts existing emissions from the liquidity mining contract and governance contract.

          I think it would make more sense to address the root issue by either terminating liquidity mining rewards and shifting further toward protocol-owned liquidity (ran the numbers a few months back and it should be quite doable) or introducing a lockup for $BOTTO emissions.

            realbtt

            1. Good catch, updated the table.
            2. Retroactive Rewards and Social Rewards are technically two different systems. Social Rewards are badges to recognize different types of valuable behavior. People holding access passes who are not staked but have VP may be able to perform some of that behavior and earn a badge. Social rewards alone are useful for giving recognition to contributors and adding an element of gamification aligned with the protocol. For retroactive rewards, the badges become useful as shared definitions of valuable behavior that can help simplify the discussion of how to assign financial value and then function as objects to spread your governance weight across to determine how rewards are distributed. Participating in that financial reward should still require the minimum staked.

            Some of the governance discussion on this:
            https://discord.com/channels/829636834371960842/842273740142018590/1003704365506375720
            Also laid out the process a bit more here:
            https://twitter.com/hudsonsims/status/1558517314571599872?s=20&t=FMi-M0JUURfaZ6WkxAM2Sg
            Note that these are a bit dated and don't include the addition of active rewards we have in the prop

              Ben Rather than 30% of revenue to the treasury and 20% to B&B, I would favor a simpler approach of just 50% to the treasury.

              I didn't pick on this when I read the proposal but I agree 100%.

              30% is too small to decentralize Botto, and the BB&B is not needed.

                  quimp and @Ben my reply re BB&B:

                  Ben Sacrificing treasury revenue in order to slightly prop up the short-term price is not worth it in my view.

                  A bit of buyback pressure in a bear market while retaining the BB&B narrative should be beneficial for the protocol. First, a deflationary mechanic is part of narrative. I would not omit this. I appreciate the treasury's quest for more funds, but there are also other initiatives BottoDAO can pursue to grow the treasury. Botto's deflationary nature is IMO pretty simple to understand, redirecting 20% of funds to a BB&B is a narrative we're accustomed to and is an indirect reward for holders. People err on the side of caution when looking to participate because of what $BOTTO's chart looks like. As we changed to burns through treasury and retaining ETH, there was simply no offset to LM emissions, putting $BOTTO under duress. This was a tradeoff we were aware of. This explains our initial line of thinking to maintain the original BB&B methodology.

                  On the flipside, BIP-06 was a fantastic win for the protocol by accruing more ETH. Another approach, then, would be to accommodate the burn as specified in BIP-06. I would be open to that, and I believe you (Ben) mentioned you'd be ok with keeping the burn somewhere in Discord governance.

                  Ben I think it would make more sense to address the root issue by either terminating liquidity mining rewards and shifting further toward protocol-owned liquidity (ran the numbers a few months back and it should be quite doable) or introducing a lockup for $BOTTO emissions.

                  I agree, but this is not something we can immediately rectify and is also something we need to carefully navigate. We can't "rip" the bandaid off (remove LM emissions) without jeopardizing the token. We can feasibly offset by staking Botto's existing LP shares to reduce emissions and then look to retroactively redistribute those and/or fuel more $BOTTO-first initiatives (we will have an evergreen onboarding programme to fund). I did not ask to have this baked into this proposal as I'm sure it will merit more discussion, the first time the team stated intentions to do this the Discord had a few faces (who have since disappeared!) complaining and throwing their toys out of the pram. And introducing a lockup period for existing LPers kicks the can down the road. I think we all agree that PoL is the way to go, we've struggled to get there, but this has more to do with improving treasury management.

                  TL;DR let's keep the burn as specified by BIP-06, but I would want this proposal to move forward with a 20% burn to retain one of Botto's core narratives. We can review end of period (12 weeks).

                        We both agree on keeping the burn/deflation so then it’s just a question of how to do it. Whether to only spend $BOTTO from the treasury or whether to spend some ETH as well (partial buyback). I favor the former as I believe it’s more value accretive, but that’s up to you.

                        redirecting 20% of funds to a BB&B is a narrative we're accustomed to and is an indirect reward for holders

                        It’s a reward to $BOTTO sellers, but not necessarily to holders.

                          Ben Let's keep BIP-06's implementation then! I'm happy for us to reevaluate at end of period and keep discussions going among the DAO re. the necessity of the burn

                            @Ben and @choobie I have updated the proposal to say we are modifying BIP-06 to only burn 20% of $BOTTO from the treasury

                            Great. Also, 100% of the ETH equivalent in $BOTTO could still be burned from the treasury rather than just 20%, regardless of how the ETH is allocated. Personally I'd favor 100%, but up to you guys - I don't think this part makes a huge difference.

                            Have pushed the start date 1 week to November 1st 15:00CEST / 09:00ET / 06:00PT and round end is now November 15th 22:00CEST / 16:00ET / 13:00PT

                            Given all the changes, the devs need a little more time to implement everything, and this will give us some more time to build up to it. The launch was going to be at the same time as the anniversary exhibition, and now we can use that as a teasing event for journalists rather than overlapping event.

                            9 months later
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