I’ve been spending more time the last two days going over spreadsheets, trying to figure out a way to take SAIAdao from Daohaus to Solana. I wrote a long proposal that detailed a rebalancing of shares and loot, giving each member an amount of both based on their current proportional weighting. It floated like a lead balloon, basically. I had decided not to try and deal with the obvious imbalance between OGs and noobs, the later of who were entering into the dao at an immediate loss, which further increased the gains of earlier entrants.
So I spent a few more hours yesterday creating additional rows which allowed me to boost participants who came in at a certain ratio. It doesn’t quite restore new members to their original valuation, but it is very generous. Each OG basically loses 25% of their nav claims. So I’ll probably give it a few days to settle out before we start taking steps to actually execute it. There’s a lot of work to be done in other areas.
We still have to figure out whether to proceed with my original proposal, to balance shares and loot between all members, which allows us to remove the claim on nav that shares currently have, and make them governance only tokens. My experience with defi leads me to believe that these new governance tokens, $SAIA, will ultimately have more “value” than the actual claim tokens, which I’ve dubbed $DUST for the time being. So far I’ve done a poor job of making the case to members which is fine. My original proposal forced OGs such as myself to give up shares in exchange for preservation of claims, but if we’re going to be giving up 25% of our claims then we should at least hold onto our shares.
The math makes my head hurt. I feel like I should be much better at spreadsheets, but they’re so cumbersome and it frustrates me that I can’t write Python code that does the work in a Pandas table or something.
So phase one of our migration to Solana will be distributing additional loot to recent members to correct the imbalance. I’m probably going to go back and look at my weekly reports during the time period to chart out NAV and see if any more tweaking is required. For example, people who came in right at the GAO drop would have seen a larger drop in their claim value as there was a pretty steep correction following week one. Anyone who came in the last few weeks should actually be closer to their entry price. That said, it will probably be better to keep the two groups roughly the same. On the other hand, part of the discrepancy between the entry price and the theoretical exit price is the value of the ‘valueless’ governance tokens, of which the earlier group has more. Ugh, I’m talking myself in circles here.
The reason we’re in this mess is that I was attempting to simulate the way defi protocols will issue governance rewards to users who stake LP. I made a couple of mistakes. First off Daohaus is a two “token” system, and both have claims on the bank. This isn’t really the case with most defi protocols. I was attempting to offer increased yield on shares for early adopters as a reward, and was a bit overaggressive. So here we are.
There have been questions raised about potential governance attacks on the NAV tokens which I’ll address at another time, right now I’ve got to figure out the best way to proceed with the additional distribution of loot. I’ll probably spend some time writing up a script that can create the proposals; I don’t want to spend an hour doing it manually, and it’ll be a healthy exercise to help me get better at web3 development.
We’ll obviously need to pause new memberships; we probably don’t need cash until the minigame and we need to figure out what the last entry price actually was and how to actually move forward. Allowing more entrants into a broken system is unfair both to them and people that are locked in at a loss, so we’ll have to just lock the doors, and get the migration to Solana completed. I don’t have any promises about that happening before the minigame, in fact it will probably be better for it to happen after, and give us a chance to farm assets and bring NAV back up to a place where all members are in a better position.
Distribution is going to be the biggest challenge. There are several ways to do it: manually, via a script, using a Merkle distribution, vesting contracts. The main issue is we have about a hundred members with varying amounts of two tokens to distribute. I thought it was clever to rebalance the share/loot balance and distribute LP tokens instead, that would have halved the work we needed to do, so right now my main challenge is figuring out how to do that.
The other problem is what we’re going to use for governance on Solana. Getting tokens in wallet addresses is going to be an important step, as there are things like Collab.land and Grape Protocol that we can use to turn Discord into a quasi-governance platform. The Solana governance module is coming along, and the Mango front end for it looks fabulous. The only problem is that it looks like it requires a Solana dev to be able to make proposals. But the fact of the matter is we can no longer wait on Squads to launch, so I’ll just have to focus on getting this done ourselves.
I had hoped to be focusing my time on other projects for the time being, the DEX has lots of things that need/can be done, we have a grant proposal with Step.Finance that I could be working on, and the question of asset lending/scholarships is going that is going to unlock lots of potential yield. But for now, I’ll keep my focus on moving this bar forward, to get the rebalancing proposal across the line and implemented, and providing the first tranche of liquidity to members.
Assuming we’re able to get a proposal agreed on by next week, I should be able to have the first tranche of tokens in member’s hands by the end of the month.