[PIP-68] KPI Options Redeemable asset

[Adrian.A]

The KPI tokens were distributed weeks ago, so I believe it’s now a good moment to further discuss details on how the distribution would be done.
At the time of writing, the KPI options were distributed in the shape of wDough-kpi tokens, to later be redeemed as veDOUGH based on the ratio defined by the KPI on Staking considered.

Background

1. The reason for choosing veDOUGH vs DOUGH as the asset for redemption of the KPI Options lies in the clear intent to avoid flooding the DOUGH circulation supply with up to 5m tokens at the moment of conversion. This would in fact invalidate the whole case built around the creation of incentives in order to pursue a higher % of staked DOUGH out of its entire circulating supply.

2. The possibility to have the KPI Option backed by veDOUGH was somehow aired since the very early convo held with the UMA tech team. Unfortunately this wasn’t possible with their standard contracts, consequently the initial proposal posted on the PieDAO forum referred to DOUGH as the asset backing the KPI Options. Same for the initial snapshot vote signaling support by the community for this initiative.

3. As part of the discussion triggered by such proposal, the community has been further exploring the possibility to still get veDOUGH as asset backing the KPI Options, requiring the development of a wrapper taking care of converting the KPI Option to veDOUGH at expiration. This solution was eventually conceptualized and developed shortly after by the core team for the reasons above.

In order to avoid gray areas on which should eventually be the asset to be distributed at expiration of the KPI Options, I would propose to the community to formally select one among the 3 following solutions:

A) Options redeemed as veDough
B) Options redeemed as Dough
C) User to select either A or B at the moment of conversion

Specifically
Option A) corresponds to the current implementation of the KPI Option, developed by putting the above mentioned wrapper in place that allows options to be redeemed automatically as veDough. Main benefit of this option is undoubtedly the possibility to avoid selling pressure on our governance token DOUGH, while at the same time incentivizing the long term alignment from our community members to PieDAO.

Option B) Options redeemed liquid as DOUGH, with the main downside being its dilution and negative price impact, and the extra cost for those willing to eventually stake those tokens to veDOUGH.

Option C) User would select either A or B at the conversion of the KPI Options. This would provide the option to allow each address to choose whether or not to stake their tokens, with unknown effect on the DOUGH Circulation supply and price.

We’d like to discuss in the open what our members think before we put this forward to an additional vote.

Supporting documentation

• The original Forum post can be found here
• The initiative Snapshot vote can be found here
• The announcement can be found here
• The UMA contract mention in the initial snapshot changed from 0x79b6BD0FC723746bC9eAEFeF34613cF4596E6dEF to 0xdfD82bF0e1CEEC9740B9004A0921a5DE61D3557E to reflect the effective timestamp of conversion to be considered

[Mark_sr]

It seems appropriate to give people the choice between Dough and veDough. I’m optimistic that most will see the benefit to the PieDAO community of continuing to stake veDough. Personally, I agree with Einstein-‘compounding is the eighth wonder of the world.’ I’ll continue to reinvest my veDough.

[mickdegraaf]

I think people should at least have the option to get liquid DOUGH as it was originally advertised and voted on as such and people might have decided to lock for 3 years because they were receiving a reward in the form of something liquid.

I don’t understand how we came to a point where the implementation widely differs from what was voted on and advertised. Especially considering the current implementation required extra work.

If any entity promises me something I expect them to honour that promise and not back down after the fact. DAOs are no exception to that imo.

To further encourage people to migrate to veDOUGH you could consider slapping a bonus on top for those that do.

Considering the contracts are already live I would suggest the following:

The DAO will open up a limit order on some platform/contract allowing people to swap their wrapped KPI options to liquid DOUGH. Honouring the original agreed upon proposal and advertisements.

[alexintosh]

Option C seems the most obvious and provides all the benefits from both worlds. It allows people to settle and stake in one single action and allows others to redeem the liquid assets.

No need for limit orders either, the implementation can easily be upgraded to support regular settlement.

I would suggest against extra monetary rewards for those who do settle&stake but I’d be interested in exploring something like: You get a believer NFT which gives you access to extra features like alpha products.

[mickdegraaf]

I like the NFT idea a lot!

[Joshuatov]

In this article it sounds clear the original idea was to distribute options as dough, not vedough. I think we should stay true to this, but there definitely needs to be some extra incentive to stake these rewards rather than selling them.

So if we go ahead with a supporters NFT (which sounds like a great idea to me) how will that work?

Will users be required to stake 100% of their options to get the NFT? Will the be a specific limit of dough required to buy the NFT?

If a price is set for the NFT, it could allow other users a chance to buy into the program even if they missed the chance to receieve options already.

https://medium.com/piedao/launching-uma-kpi-options-for-dough-staked-ee57ed6a10e7

[richandcreamy]

Love the true believer NFT idea

I’m also in favor of those people being a beta test group to try first iterations of products as talked about in Discord.

[dopkloofdude]

I follow how the team evaluated the KPI Options deployment landing us with it being backed by veDOUGH. Perhaps this should be put to vote really for the community on whether A, B, or both. I suspect that both will win out. But perhaps people can vote with their selection of A or B. The NFT idea is very interesting. More broadly, I exploring applications of other products and platforms and their usage in the PieDAO would be exciting.

[Adrian.A]

I also believe that, at this point, C is the best course of action. Besides that I wonder if it’s technically possible to allow people to redeem just a % of the total. eg.: If I have 1000 Options, and I want to allocate 600 in veDough and 400 liquid. Thoughts @antodp / @alexintosh ?

[Adrian.A]

Regarding the NFT, its a nice idea. The NFT can also be an incentive for others, like for example:

• Anyone with +50K dough staked
• New stakers that stake +50K dough
• etc.

[alexintosh]

My 2 cents. Let’s not over complicate things on the smart contract sides. If someone wants to split their allocation they can claim and do it themselves.

[PharkieB]

It’s regrettable that the original discussions, articles and promotions propose DOUGH rather than veDOUGH, given the strength of #1, Background. That was a mistake?

I’m happy for a subsequent vote to override a previous one i.e. original proposal said ‘DOUGH’, an update says ‘veDOUGH’. Those that don’t like it would be overruled, tho I note PieDAO has no ‘ragequit’ option (i.e. ability to exit a veDOUGH position, at a fair price, if a vote seriously upsets you).

I suspect the result of a vote will be option C, and then, due to the sell pressure, this will seriously downgrade the DOUGH price. We may have a prisoner’s dilemma problem i.e. what’s in the interests of an individual veDOUGH holder in the short-term (sell DOUGH from KPI options) is opposite to the interests of PieDAO in the long-term (stake veDOUGH for 3 years). A Nash matrix of (+1, -1). At this stage, that negative outcome seems unavoidable.

I would vote for option A (everyone must take KPI options as veDOUGH) since, if that gains a majority, it protects me AND those that vote the same way against people acting selfishly. For me, that’s a stronger ‘true believer’ position than voting option C then choosing veDOUGH. If option C wins, there’s an incentive for me to act selfishly (sell the DOUGH before the price plummets).

In mitigation of those negative effects, I support the proposal by @mickdegraaf to offer an incentive to choose veDOUGH rather than DOUGH. But who pays for the incentive? And I like the idea of offering an NFT for those choosing veDOUGH.

[Adrian.A]

Let’s issue a vote to understand which direction to follow , and if option C results as the chosen one we can further discuss incentives

[Adrian.A]

Proposal open for voting

https://snapshot.org/#/piedao.eth/proposal/0x355ea2dda8d825ccda50b367719d1ad6d85f1786f1b177196eec9fc8dd94c810

[oilreg]

A … seems to be most proper … cause the KPI is directly depending on how much veDOUGH stakers we have… thou… i kinda like C … if DOUGH price tanks i can buy more

[BlockEnthusiast]

Should long term stakers be concerned by short term price movements?

We are all committed for 3 years on average, locked.
Those most committed get the most DOUGH return from KPIs.

Your saying the most sensible thing for the 321 most long term committed DAO participants to do is dump and that is unavoidable?

I have to disagree. Liquid DOUGH represents rewarding our most loyal fans with a choice. By presenting a choice it gives an opportunity for those who choose to roll that DOUGH into more staking to actually earn a significant different by not proportionally deflating the majority of staked funds.

It also gives folks the choice to LP which is earning very high return, or invest in our pies, or pay their bills, and do whatever they want.

I think if fearing dumping, best move is to get a Rari market set up so folks can borrow against their DOUGH and maintain exposure while utilizing purchasing power.

Afaik 10.5m DOUGH received proportional KPIs. If we don’t hit 15m in ~2 months, that would reward 2m DOUGH. That means that 10.5m goes from receiving 85.07% to 8

I modeled the net change in rewards captured if we rolled over 100 percent of KPI’s as veDOUGH.
That ~20% return shifts to 2% more rewards per year since so large a portion of staked assets got rewards.

Far better for those even more committed to dilute those who may to sell and would capture an even greater increase in relative rewards from treasury farming.

We have enough DOUGH off market we can’t be hurt by gov attack, and cheaper DOUGH just makes the opportunity to participate more affordable.

We are in this for the long haul. We are are all committed. One of the things I think this space represents resistance to is short term profit seeking, where only token price matters.

We have pinned our yield to a mostly ETH treasury, so veDOUGH return is not impacted by token price. We should not fear the absolute worst game theory when all the participants are already here together committed to be making decisions together for years to come.