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.