BIP-21: Distribution of Retroactive Rewards for 2nd Period

hudsonsims

0.0 Summary

The Fragmentation Period has concluded and it is now time to decide how to distribute the retroactive rewards pool of 33.1724625 ETH.

This BIP puts forward a simple weighted vote across 8 categories. The retroactive rewards will be distributed according to the percentage of votes each category wins from the DAO.

0.1 Steps

A. Weighted vote on categories:

Days voted
number of fragments voted on
number of Boosts
number of Winners voted on before leaderboard
VP spent in each round (doubles up on active rewards)
number of BIPs voted on in Snapshot
buy back & burn $BOTTO
send to treasury

B. Divide up retroactive rewards pool among categories and weight by rounds participated in

E.g. If “days voted” got 10% of the vote, 10% of the retroactive rewards pool would be distributed to voters based on the proportion of days voted relative to everyone else.

1.0 Background

In BIP-14 that established the parameters of the second period, we introduced direct distributions of revenue. There was significant debate about how to go about it, and so two systems were established: active rewards and retroactive rewards.

Active rewards are 25% of revenue distributed each round to voters weighted by the amount of voting points they spent. This was coupled with a change to voting point generation such that everyone generated voting points linearly where 1 $BOTTO = 1 vp generated per week, and removing a cap on voting points such that it could be easy to vote as much as you desired on one fragment.

Some members disagreed with this because of how it favored whale voting behavior to pick favorites rather than provide a diverse amount of feedback across many fragments. The counter to this was that there was still strong incentive alignment by whales to give Botto good feedback, and so active rewards for voting points spent won a good deal of support.

Retroactive rewards were established to give the DAO an opportunity to decide on the other 25% of revenue at the end of the 12 week round and the available hindsight of what was seen as valuable contributions and potentially reward more diverse behavior.

BIP-14 and other discussions proposed a badge system to help facilitate this such that it would be easy to see different types of contributions to inform what to reward.

That system was not set up or agreed on in BIP-14, and when a sketch of that system was put forward, the response of the community was that it was not a priority over other systems like setting up vBOTTO. (Side note: the feedback was not that it wasn’t wanted, only that other improvements were a higher priority. Further, an establishment of vBOTTO could allow for a badging system, soulbound or not, to be implemented permissionlessly.)

Discussion of the draft on the retroactive rewards over the last few weeks has led to some categories being added: voting on governance proposals in Snapshot, doing a buy back & burn, and sending to treasury for DAO to invest elsewhere. Other categories received positive and negative feedback, but the structure of the weighted vote allows for people to simply adjust their weight to their preferences, so no categories were removed.

2.0 Specifications

2.1 Revenue to be distributed

2nd Period Revenue

*Revenue not counted for distribution this period is the 37.94485 ETH from additional Genesis Sales after the OTC deal with Moderats, which will be put forward into revenue for the next period.

Qualifications for retroactive revenue distribution was established in BIP 14:

user must have at least 2,000 $BOTTO staked by the end of the final voting round of the period.

The end of the Period was January 31st 22:00CEST / 16:00ET / 13:00PT

2.2 Defining categories to reward

The categories are defined in the table below. These calculations will only include eligible wallets who had 2000 $BOTTO staked at the end of the Period.

2.3 How to vote

Wallets can divide up their governance power among the categories in Snapshot however they wish.

For more info on how this works, see Snapshot's Documentation on Weighted Voting

2.4 Calculating the distribution weighted by rounds participated in.

In addition to the proportional contribution to each category, each category (except for VP Spent, Buy Back & Burn, and Treasury) will also be weighted by the wallet’s proportional participation of all the rounds.

For each category:

(participation in the category*rounds participated in)/12

3.0 Timeline

As this is the first time doing this, we’ve set a longer schedule to ensure accounting is correct, data is accessible, and there is time for DAO members to make their own analysis.

To aid with deciding how to distribute your voting weight, we will provide several possible scenarios of voting outcomes to show what those final tabulations would look like in each case. We will also provide raw data for others to do their own analysis of different scenarios.

BIP published (today Feb 10th)
Raw Data + Scenarios released by Monday Feb 20th
Weighted Vote Feb 27 - March 3rd
Share Tabulation March 3rd
Distribute March 4th

hudsonsims

hey all, been playing with numbers, pitching a personal take on the retroactive rewards scenarios. btw, speaking for myself as a member of the dao, not necessarily as the team here

here's link to the sheet: https://docs.google.com/spreadsheets/d/1-zANasIQQbmHAdQlVd2cH0pS-0_tW0OGEaR3qX6iqhA/edit#gid=192430491

Categories
Days voted - 5%
Number of fragments voted on - 50%
Number of Boosts - 15%
Number of Winners voted on before leaderboard - 15%
Number of BIPs voted on in Snapshot - 15%

first, would personally would lobby for 0% on burn, treasury, and VP spent.
VP spent was already well rewarded in active, sending to treasury is unlikely (IMO) to get much weight and so would send an amount that is insignificant for the treasury, while draining from what could be sent via other parameters that would significant to smaller yet dedicated participants. Same rationale for burn, likely insignificant in that impact, while pulling from other categories.

to me these are your “third party” candidates, voting for them is primarily a statement, that if done won’t really move the needle much on your preferred category, but would detract from where majority would benefit.

2nd, would go for mostly # of fragments voted, with a bit to other categories. the other categories are generally qualifiers of voting a lot, too, so this makes sense to me. i think BIP participation is significant. it’s a simple vote, but would like to see a nod to that as that shows engagement with a very important part of our activity as a DAO as that is working on the protocol as a whole which impacts a lot.

i set this up in scenario X if people want to see in the sheet, but could be changed by someone, so sharing screen shots. The variance of total rewards is the lowest here compared to the other scenarios, and graph looks very even

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