[Financial Proposal] Deploy ANT 'Price' Based KPI Options via an UMA Priceless Contract

Summary:

This proposal is to serve as a request to kickstart a conversation with Aragon about ANT price based KPI options. The discussion will be based on the value and duration of what a successful KPI option is. It’s to be posted on the Aragon forum for a period of fourteen days.

Proposal description:

Key Performance Indicator (KPI) options are synthetic tokens that will pay out more rewards if a project’s KPI reaches predetermined targets before a given expiry date. It is important to note that KPI options serve as a very effective Web 3 method of measuring progress tied to compensation. KPI options give incentives to holders because over time, their efforts can increase the value of the options.

ANT is an ERC-20 token – a type of fungible token created to be compatible with the Ethereum network.

Since July of 2021, when Aragon first integrated KPI options, the value of ANT reached its all time high. KPI options have proven their effectiveness within the project, hence a reason why there should be more discussions about how they can be better implemented with ‘Price’ as the Key Performance Indicator.

Potential points of discussions:

  • Amount of ANT that should be put as collateral towards a KPI options campaign
  • Duration of the KPI option
  • Upper Bound (price goal) & Lower Bound (minimum or valueless redemption)
  • Any questions about KPI options directed to the SuperUMAn DAO

Note: In full disclosure, I’m posting this as the lead Ambassador for the SuperUMAn DAO. We would love the opportunity to add value to the Aragon Ecosystem by providing our expertise of UMA contracts throughout the process.

Verify my main addresses here:
0xdB19c47E87Ed3Ff37425a99B9Dee1f4920F755b9
0xaE26ad5E5dDbaB571330A0D4649C8AB8A19f9e6E

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Many thanks for the Proposal @Inalittlewhile. One questions, do you foresee this as an extra way to reward contributors and do you have and data on a good dollar value to set aside based on other communitys you have worked with?

Happy to see the relationship with UMA and Aragon continue :grinning:

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Hey, hey - I find the topic interesting while it could lead to an unhealthy fixation with “number go up”. Without a clear, logical path of how an activity would result in increasing the value network value in a very direct financial way in the short term, it’s tricky to tie the performance of most network contributions to price.

Can you please clarify what is this proposal about? Its classification suggests a funding request, the title talks about deploying KPI options, and the description talks about starting a conversation?

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My pleasure and thanks for the kind words. I do see ANT KPI options as a way to reward and further incentivize current contributors. There could be a portion designated to addresses who aren’t yet contributors, as a way to encourage them to come in and start helping.

As far as how much ANT should be appropriated, I would suggest a range of five to ten percent of reserves. It’s good to point out that KPI options are fully collateralized to payout the max amount if the goal is met, and so, can’t be liquidated.

In a linear or step-by-step payout design, a community can reach a portion of the goal and redeem that amount of the collateral. The remaining collateral is reclaimed by the DAO.

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Hey there. I agree the ‘number-go-up’ mentality could lead to some undesirable consequences. What other Key Performance Indicators might help move the ANT price up without directly focusing on that aspect?

You raise a good question which helps further the intent of this post and the clarification you requested. In part, this post is meant to begin an engagement process with questions like the ones you asked.

The intent of the proposal is first to allow two weeks for all interested people to weigh in and ask questions or provide their thoughts.

After the two weeks, I think a poll is in order according to Aragon Gov process guidelines. Depending on community sentiment and poll results, we should have a direction to move (or not to move) from there.

If KPI options are something unfamiliar, people can learn more about them with the following link.

UMA docs - KPI Options Summary

Hi everyone, I’m Clayton, the community lead over at UMA.

Without a clear, logical path of how an activity would result in increasing the value network value in a very direct financial way in the short term, it’s tricky to tie the performance of most network contributions to price.

@fartunov This is a good point, but price still ends up being a pretty good measure of success so long as it’s over a longer time period. For example, if you had a KPI Option expire on a particular date and based on the price on that date alone, that could lead to spammy/pumpy behavior.

But I would suggest actually a 30-day TWAP so that the related price shifts are actually more persistent and reflective of growth in general.

The attractive thing about KPI Options based on price is that they align incentives quite well (insofar as price is a proxy for adoption or other of Aragon’s KPIs, or it is perhaps an actual KPI.) They also make sure that the DAO is only paying out in the case that they are successful. One way I look at price increases is that there is more buy pressure, and thus your community has succeeded at increasing the number of people who want to hold ANT tokens (or how many they want to hold) and thus that release is only being turned on when there’s sufficient demand to absorb it.

Just my two cents.

3 Likes

Thanks Clayton for the valuable feedback. I also like a more general KPI, such as price, because it allows contributors the leeway to decide how to go about the effort of increasing it.

That decision making process builds a sense of ownership. I also see it as the means to core team creation allowing for further personal/team development.

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Hi. I am EB from SuperUMAn DAO and a UMA token holder.
Firstly, I thank @Inalittlewhile for the proposal. This highlights the value proposition that KPI options offer. Unfortunately, KPI options are the most underrated especially for lack of understanding. These options offer true value and potential that can push and align the goals of the community members with that of the protocol. There is no downside and for ease of understanding, I am linking my article explaining KPI options.

I agree to a 5 to 10 percent of reserve appropriation as suggested by @Inalittlewhile.

@fartunov The underlying activities can be designed in a logical and rational way that can help to achieve the desired outcome with a long-term vision. The price action goes a long way in tying the performance and I understand your reservation about the unhealthy short-term pump. This is where the metric identification and the associated activities have to be carefully carved out. The proposal offers a medium for discussion where we can address these pain points.

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Skip the debate, KPI Options remains one of the best incentive tools in the DAOworld. Respect to @Inalittlewhile for putting up this great proposal. UMA is proud, the SuperUMAns are the proudest.

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