GIP 1 - Flexible revenue-based $DBL buy backs

Buy Backs Proposal

Summary

The Galleon DAO core crew wishes to create a flexible Doubloon ($DBL) buy-back and incentivise mechanism using product revenue going forward in 2022. The initiative must be reviewed again prior to rolling over to 2023.

Abstract

Active doubloon tokenomics discussion and experimentation is a core directive with Galleon so long as it follows basic principles:

  • Tokenomics design must benefit current token holders through empowerment in governance and direct & indirect reward initiatives whilst balancing the needs of using $DBL as a method of scaling Galleon DAO in growth and scope.
  • All peripheral products should benefit DBL directly or indirectly through novel mechanisms
  • Any market incentives program should focus on long term, well-aligned rewards as opposed to encouraging mercenary usage.

The core team want to start engaging in creating positive feedback loops for DBL based on Galleons’ wider success in its products early on where possible with the mindset that we can adapt fast down the line as circumstances change. Buybacks are the first tool in the belt in our journey to propel DBL from being a passive governance token with no utility to one benefitting from the success of the organisation.

We want to propose that the core team are empowered in 2022 to flexibly create DBL buybacks through product revenue when accrued revenue is over $10,000. Buybacks will not be signalled prior, nor will be executed at any interval that could be predicted or front-ran. It is planned that the DBL gained through this mechanism is placed back into the ecosystem for growth through:

  • Contributor rewards
  • Incentivising revenue-generating activities such as product issuance (e.g. through flash issuance on SetSwap), the rationale is assuming that the minted product will be sticky TVL that generates continuous revenue, carrying on the cycle.
  • LP bought DBL, providing liquidity for DBL and generating some revenue from LP fees.

Motivation

Governance tokens that carry no utility or do not accrue any of the financial benefits from the DAOs success have historically failed to capture value over time with the vast majority of them perpetually devaluing versus ETH.

Galleon wants to take an active stance to put Doubloon at the forefront of the DAO by enabling a toolkit of initiatives that can be enacted by the core team to help steer a healthy future for the token and most importantly, reward those participating in the DAO via governance or contribution and choosing to hold their voting rights long term.

Specification

Implementation:

  • Accrue fees from products every month
  • When revenue accrued reaches $10,000 in product assets and above, the core team is optionally able to create a DBL buy-back if deemed appropriate.
  • Buyback is executed through DEX liquidity from the Arbitrum DAO treasury multi-sig address.
  • DBL tokens gained should be put back to work through the initiatives laid out in the Abstract
  • Buyback is logged on docs.galleon.community for transparency post-execution.

Resources Requested:

None

6 Likes

Using DAO revenue to buy back $DBL just makes sense, especially when looking toward future rewards, staking et al.

Great proposal suggesting we push it straight to snapshot.

1 Like

I like that, specially if with the buybacks we can then use that DBL to pay for further incentives, that way we dont increase the Circ Supply :smiley:

1 Like

Would love to have a bit of a chat about the use of the buybacks.

The buyback itself makes sense to me. It also makes sense to me that DBL would be recycled into productive initiatives based on their ability to generate more revenue for the DAO.

To the extent that contributor activities can be somewhat attributed to future revenue generation, I think it’s okay to use DBL from buybacks to pay contributors. Staking rewards, however, are not inherently revenue generating. So I struggle to see the rationale for using buybacks to payout staking rewards.

Couple other ways to use buybacks that would be revenue generating:

  • Use DBL from buybacks to incentivise mints of the best performing / most trending product with the thought that retention over the long-term is circa 50% so these incentives will drive higher revenue;

  • LP DBL token providing liquidity for DBL and generating some revenue from LP fees.

2 Likes

Had an internal discussion on this, I think your points here landed very well and added some valuable input into furthering how the bought back DBL could be utilised. The initial proposal has been amended to reflect this under the Abstract.

  • Removed reference to staking rewards (we still are considering staking in a future GIP)
  • Added reference to issuance & DB LPing
2 Likes

https://snapshot.org/#/galleondao.eth/proposal/0x6ca835624ba45214e6a39b7abe81a46be0c1a7878805efbbba1b2cf6da92c35f

The snapshot vote is now live. You only need to vote if you oppose the initiative.

Though I agree with proposal conceptually, there are few questions:

  1. Are we talking about buyback with all the revenue above $10,000 or the amount to be used for buyback will be determined by the core team?
  2. “Core team is optionally able to create a DBL buy-back if deemed appropriate” - so basically it’s not about guaranteed benefits for DBL holders but about core team right to perform buyback (which might never happen).

Wouldn’t it be better to give the community right to decide whether buyback is appropriate or not? I’m sure it’s possible to keep the buyback’s time hidden: for example this kind of decisions could be implemented in random moment in 30 days after voting.

1 Like