AGP Discussion: A simple Network Budget

Hey everyone,

Creating a thread around the “simple Network Budget” AGP I’ve authored. I must recognize it isn’t simple. Yet :wink: !

Budget should be easy to understand, so let’s work on this proposal together and make it better. Budget should also offer predictability and security, so let’s refine it with that in mind!

A few elements that I think are important in this budget:

  • The calculation of the budget based on treasury value. This is fairly simple and similar to AGP-103.
  • The allocation of this budget to different Finance proposals. This is the part I found a bit complicated in AGP-103 and wanted to replace with Dot Voting.

The idea behind this budget proposal is that all proposals that get approved as well as all ongoing expenses go to a Dot Voting round. I thought that this would provide a comprehensive view to voters, and the possibility to reallocate capital quarterly.

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Hi Louis!
Thanks for the proposal, I find the use of Dot vote very interesting and potentially a good solution to arbitrate cases where the budget is exceeded.

However I must share with you my concern about a crucial detail: the dot vote concerning the entirety of the budget.

This would lead to catastrophic perverse effects:

  • it would potentially turn every ANV into a zero-sum political fight for funding. The ROI on shipping versus “propaganda” would be vastly reduced for teams, leading an already exhausting funding process to become increasingly so. I don’t think anybody wants 80% of their time to be spent on politics.
  • for small teams a delta of decimals in the dot vote would lead to no project or funding multiple times the amount necessary to deliver on their proposal. Not funding voted projects or overfunding them seems like a very inefficient means of capital allocation.
  • not only would teams have no time visibility as the dot votes could happen every quarter but the visibility on the amount itself would be nul. This creates issues in building a proposal but more importantly in hiring talent. To build a world class product the network needs to be composed of world class talent, with such a system I don’t see a way to attract such individuals.

So that’s for the bad, but I do see some reedeming qualities if applied well.

For example if the sum of passed proposals is 120% over-budget all passed proposals would be cut proportionally to attain 80% total budget. The remaining 20% would then be allocated via a dot vote. This would allow more capital to accrue to the most prioritised items. If the minimum amount+dot vote amount would not be satisfactory to a proposer they could always withdrawing leaving a surplus to the treasury.
And it would be an amount small enough not to cause those dot votes becoming life and death for teams so they can focus on drafting sensible proposals.
As the base rate of cutting funding pre-dot vote would be uniform it would encourage cross-team collective bargaining to try to fit all proposals into the budget. This makes negotiation a collaborative process rather a public political struggle pitting all against all.

In conclusion this mechanism could be very useful for arbitrating the edge cases of budget overflows in a fair manner, but it should not be used for anywhere near 100% of the budget allocation.

EDIT: There’s an obvious attack that leads teams to propose higher and higher budgets to get a higher base rate. The question of how to allocate budgets in these situations is crucial and some solutions such as https://colony.io/budgetbox.pdf are very inspiring, could be cool to see if there’s any cross-DAO collaboration possible

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Hey hey!

Awesome inputs thanks!

It is true that last minute budgeting is a problem for lack of predictibility and the politics it may incentivize. I like your proposition to limit Dot Voting to only part of the budget in order to mitigate that.

Another community member suggested me that in order to avoid politics and incentivize collaboration, there could be a week allotted to negotiations in the process. Finance track proposers would be able to collaborate, share work on their different projects and split the money so it fits the budget. Dot Voting (or some other mechanism) would be used only if the discussions aren’t successful and we’re over budget.

Agree. I think that the budget is tricky and being creative on solutions will help :slight_smile: ! Working altogether on this would also make it more legit.

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