ICCP Create Safety Pool with Revenue from Illuvitar Sale

[vernal lily]

DRAFT ICCP Inspired by Kieran's comment on the #1040218513413001256 about creating a temp safety pool: #1040218513413001256 message

Current Draft (12/15/22):
https://docs.google.com/document/d/1UrPkDmqo1SVsTvmUX37fQmlgzm2T0tHnqKcLR2lSXJk/edit?usp=sharing

Summary
Creation of safety pool from Illuvitar sale.

Abstract
The community is open to using the revenue generated from the initial sale of Illuvitars to support the DAO. The transfer of the revenue from Illuvitars will be stored in a “safety pool” for 18 months. The “safety pool” is to be used by the DAO and use of the funds will be voted on by the council. as a general purpose reserve fund for any unforeseen expenses. 18 months after the creation of the “safety pool” any funds remaining in the pool will be transferred to the vault.

Rationale
Bridge funding to create a padded runway is the current need in the best interest of the DAO. Instead of having to dip into treasury for this bridge funding, the revenue from Illuvitar sale could be used to create a “safety pool” that could be used for the same purpose but could be returned to the vault for revenue distribution if it is not needed.

( EDIT)
Safety Pool
The “safety pool” will be an ERC-20 wallet composed of 50% ETH and 50% USDC.

If the DAO requires funds from the “safety pool” a vote from the council is required to release assets from the “safety pool” to the treasury.

The "safety pool" will exist for only 18 months from its creation. After 18 months any remaining assets in the "safety pool" will be returned to the vault.
(END EDIT)

[rotund plover]

Thx for setting this up. Generally looks good to me.

In terms of wording:
Is it really a "current need" ? We should add the arguments that justify the need if that is the case.
Alternatively, we could frame that the proposal is good to have for the DAO, aka is optional. In that case we could use wording such as "in the best interest of the DAO" or similar

[vernal lily]

Updated thanks for reviewing. This is just a draft and I hope others can give edits and improvements.

[tall valley]

Looks like a good idea. Maybe a little more clarity on how it would work, but looks good thus far.🍻

[near nymph]

what if the safety pool can be accessed to provide 3 months of runway.
so we are provided with runway info every quarter

and what if the safety pook is 50% eth and 50% stables

[vernal lily]

You mean not return it to the vault?

[near nymph]

during that 18 months

so we review the runway every 3 months, if it looks like we need to use the pool, we take 3 months worth of runway

[vernal lily]

I think it's a good idea to define what is stored in the pool, but why not 100% stables?

[near nymph]

we maybe at the bottom, revdis is received in eth.
50/50 is like staying neutral to movement

[vernal lily]

I made an edit to add a required vote by council and the 50/50 split.

Since the amount that will be raised is uncertain, it is not clear to me if we will get 3 months of runway from the sale. I think it is best to leave it open to the council to decide and be informed about the runway before they vote on if they want to release the safety pool to the treasury.

[vernal lily]

Made some additions and clarifications, let me know what else seems too vague.

[vague blade]

I have no problem to give the DAO loan with my expected revdis for it to run longer. 👍

[vernal lily]

@sonic horizon I’d like to push this to the next phase, when it’s the right time. Should I do a pull request on git? Should we wait longer for more input?

[sonic horizon]

With current setup you would need to garner some more support, and it hasn’t been up for more than 24hours

[copper smelt]

No it’s not like staying neutral it’s speculating. This defeats the whole point of a safety fund. The time your most likely to need the safety fund is if the crypto markets keeps tanking. Also the correlation between ETH and ILV is very high.

It would be madness to keep anything in ETH. This is a mistake a lot of projects made in 2017 and many died because of it. Do you keep your rent/mortgage payments in a 70 vol asset? If ETH tanked to $200 you’ve just wiped out half your stable fund and half your extra runway. Any safety fund should be 100% stables or ideally cash.

[near nymph]

the treasury is in ILV, if ETH tank to $200, we are done anyway.
revdis from the land sale was in eth and it was sitting there for weeks.

staying 100% is an option yea, but when eth goes up people gonna complaint that they should have stayed in eth.

[near nymph]

lets add merch sale

and marketplace fee

[tall valley]

Ok, I think that this is a good longterm thing to think about. You never know when shit will happen, right? Having a small back-up of money (safety pool, emergency fund, etc...) is a good idea for hard times. I think that we can all agree on that. Thank you for presenting a solution for this.
However, I think we need to hear other opinions on the matter. For instance, I'm sure that the Warwicks and team have been thinking about this sense the crypto markets have been crashing. I would like to hear what they have come up with.
This (in my opinion) is not a long term trend in the crypto markets, it's more of a black swan event. If you have heard anything about the FTX debacle, then you would know that cryptos in general will do what they did after the Mt.Gox debacle. They went up. THIS IS JUST MY OPINION. Cryptos will soon be going up again. ILV will do better than most (as long as we keep producing fruit). The American economics and politics will go down the tubes. And all of us in Illuvium wont care, because we will be to busy collecting Illuvials in the Overworld.
So yes, we need to make a back-up fund, but let's slow down and do it in a way that would best fit our economic and DAO centered ecosystem. 🍻

[near nymph]

Yea thats more likely what will happen, but you should read kieran's posts in #1040218513413001256
this is my take

• the bridge raise is less likely to happen because of market condition + FTX
• they are reluctant to sell token at the bottom
• they have downsized the team from 200 to 140
• they are being very conservative about runway

imo, we may face runway issue if we have more delays and macro continue to worsen

[tall valley]

Well we all know how Kieran likes to jump the gun on money issues. I'm sure after he talks to his oldest brother, he will have a cooler head.

[near nymph]

i think thats the opposite of what happened

kieran was always (too) optimistic about delay and runway, but the brother, imo aaron, made sense of the situation

i sensed about runway issue for awhile now, but this just confirmed it, so yea

people are preparing for a major recession, so this is just the team being defensive, which is good,

[tall valley]

Lol, you may be right. But I was talking about the brother at IMX.

[near nymph]

oh kain, yea he must have known about how crypto is plunging to tje abyss

[tall valley]

I'm sure Kain has info on FTX, that non of us have. I hope that he can calm Kieran down.

Again, thank you for bringing at least one solution.👍If I cant come up with an alternative, or anyone else for that matter, then I would like to see your idea discussed seriously. 🍻

[vernal lily]

I think ultimately this ICCP is just holding the funds from the vault for the illuvitar sales and hopefully they are not needed. It's meant to alter this section of IIP-13 Illuvatars:
Rationale
Illuvatars is a fun way of giving players their own unique identity in the Illuvium Universe. The
revenue generated from the sale will go into the Illuvium vault to be distributed to stakers in
the protocol.

I think if Illuvitar sales are not adequate to fund the safety pool then other sources of revenue could be included in the safety pool, though another ICCP or IIP.

[near nymph]

sure

a separate one

[jovial owl]

The safety pool is a good idea imo but while I get the general hesitancy, it would make plenty of sense to set it up to be a long term system so we don’t need 20 more iips in the future about securing minimum funding rates.

[loud bone]

A loan to the dao rather than a complicated safety net makes a lot more sense and sets a better precedent.

[jovial owl]

Is it really that complicated to just have monthly checks on remaining funds and set aside a portion of the next months revenue to ensure there’s enough money to continue development? Eventually if ILV doesn’t bring in hundreds of millions a year rev dis will have to be modified anyways to survive/ continue to grow imo.

[vernal lily]

I agree that I would rather have a long term solution that guarantees future IIPs are not required. I see this as a stop gap measure, that hopefully most will be willing to get behind and has little impact on the tokenomics as they stand.

If projections of revenue are off and a more robust solution is required to keep Illuvium afloat then we will still have this safety pool established and the funds in the pool could be used to seed something like you mentioned.

[twilit tinsel]

I think this will already be in the written up IIP as Kieran mentioned doing exactly this. Makes complete sense and if they don't need to use the money they can return to stakers via rev div.

[kindred haven]

Synthetix

[vernal lily]

Do you mean there is another iip in the works? Kieran did mention that he would write one, but I do feel it would be good if we can draft something together as a community.

[near nymph]

we can throw in 2 x T5 here

[winter sphinx]

Agreed

[marble torrent]

I have an edit to the current proposal. Why not have a goal for the safety pool to sufficiently extend the runway (lets say the goal is 30M USD). Whether that be from the illuvitar sale and initial merchandise sales to get there, once we reach the goal the funding of the pool stops. Then my main change would be for that 30M USD to be an interest free loan from ILV holders for a year, to be paid back and distributed in a year from now. I feel this would maintain investor confidence, and give the illuvium team sufficient runway.

[tall valley]

Oh yeah, my bad, you are correct.

[cunning prawn]

Great ongoing discussion. Here’s my take - personally, I don’t see the value of a separate pool of money as reserves. Technically, the entire treasury belongs to the DAO, so separating funds feels unnecessary. The question is more focusing around the current economic conditions, options to raise funds, and enabling the team and DAO to operate effectively in challenging times.
Combining the basics of the “pause Illuvitar revdis” and the safety pool, here’s my perspective. Pass a IIP to dedicate Illuvitar revdis to the treasury with a threshold of restoring 24 months of runway. The threshold would be based on a 90-day rolling average of monthly expenditures from the treasury wallet. Once the two year runway is restored, revdis proceeds as normal. If it drops back below 2 years, revdis is again dedicated to treasury.
I set the threshold to 2 years to increase confidence in these uncertain times, and allow for the potential of slower mainstream adoption.
For now, the idea focuses only on Illuvitars, but could be expanded if necessary and the current economic challenges persist or if Illuvitars alone are not able to achieve the desired safety threshold.
I’m happy to take this to a separate thread and prepare a draft IIP that further outlines the idea. Just figured here would be a good place to start gauging sentiment.

[normal oriole]

In terms of steps to keep the idea simple, could structure this as 2 IIPs.

1. Treasury takes all revdis as ETH (and does what it wants, likely converting it to stables). This has been overdue (IMO) anyways.

2. Implement a threshold of USDC (as you mentioned) below which Illuvitars revenue goes to the Treasury. This would go directly as ETH because of 1), (and converted again, likely to stables for runway)

I do like this, I think the clear structure of a threshold is probably optimal, as opposed to a persistent percentage that might undershoot or overshoot the amount needed for operations to continue comfortably.

[cunning prawn]

Luckily 1 has existed. Props to Danny for that. Formalizing it would be good.

[cunning prawn]

I'd like us to think of money as time right now. And keeping it focused on the treasury wallet is clear, publicly available data to base it on.

[normal oriole]

Definitely, I see no benefit in splitting things out to separate wallets. If it's clear that the USDC in the Treasury wallet is the metric, it can be tracked, and transparency is more important now than it ever has been.

[jovial owl]

I Like it, much cleaner version of what I was thinking about.

[vernal lily]

I actually like this idea better to have a persistent system that is in place for a minimum amount of reserves in the treasury.

My question. Is 24 months too much for when the game is launched and revenue is really flowing? I imagine after launch expenses should/could increase so it should be less than 2 years of cash liquidity. I can imagine a situation where keeping 2 years in cash is not in the best interest of the DAO for a good amount of time while it is a growth company. It could be better to invest in a new game, put money toward a tournament, or some other large expense. I could foresee illuvitars revenue always 100% going to the treasury, which I don't actually think this is a horrible idea. But it might be seen as not in line with the spirit of this idea.

Also the idea of a loan seems to really be sticking with some. I wonder if that is worth keeping somehow.

[normal oriole]

It's certainly possible to clearly define that the amount of runway required (in terms of time) is a variable that could be easily changed in the future if the need arises.

At the current time, I think planning for worst case scenarios has merit, considering market conditions. 24 months might not be the perfect amount of runway to maintain, I think the appropriate amount of time would have be determined in conjunction with the team (particularly with advice from Danny and anyone else on the team who can speak to revenue projections, development progress etc.).

[vernal lily]

Just for an example Activision which I see as a mature risk adverse company had 1.6years cash in 2020 and 1.9years cash in 2021

[vernal lily]

Yeah I think being conservative is great and I'm all for giving the DAO what it needs. I feel some might be less inclined to agree(but it could just be the vocal minority) If possible I would love to see Deraji's proposal or the gist of it part of a ILV holders vote snapshot to get sentiment.

[near nymph]

creating a separate wallet is good for bookkeeping. we dont want it mixed up with other stuff

[cunning prawn]

They also have an established player base. While I'm optimistic long term, the web3 adoption curve scares me. I love bringing in their cash reserve for context!

[hasty eagle]

Hi @cunning prawn answering your deraji-bat-signal !

90d mov avg = 1.36m$
24 months coverage = 32.6m$
Treasury USD = 16.1m$

That’s 16.5m$ that would go first to the treasury before anything reach the stakers

Gonna piss off some people 😅

But yes, great way to secure the project. I approve.

For me it’s ok but factoring in huge expense is today the issue when looking at the blockchain without more info. How do we know the status of all subcontractors and sub contracted studios ? Factoring in the ramp up / ramp down of the workforce and workload should be easy with proper management. But yeah, inertie of expense can be tricky.

So I’m sorry to repeat again, better have clarity on the expenses in a better way than a stupid guy looking at the blockchain when things are already there and calculating the moving average (=me). Better have some official financial infos from the team and a structured way with the incoming finance sub-council we are planning to have. And no, there is no legal issue doing that with a good enough level of informations.

Once we reach 2 years and the revdis start to flow ilv back to the treasury. What do you suggest ? Building up more treasury to get more revenue margin ? Selling quickly for more runway ?

[cunning prawn]

Thank you sir. I figure this is the start of a debate, but relies entirely on publicly available data and ties money to time in today's environment.
While i know people will be opposed to change in revdis terms, this is a safety play in uncertain times.
Once 24 months is achieved, continue to build treasury at the normal pace or begin to increase scope, etc. Choices are enabled. If people want revdis restored sooner, they can push for expense reduction.
I believe this metric enables more clarity on the actual situation with a tangible endpoint.

[hasty eagle]

You know that I would still want to understand where the money is going or planned to be used for, right ? 😅

Like wtf are we talking about illuvifest and so on when we should survive first 🤣

But yeah it’s already too late to move into preservation mode. The sooner the better.

But for all that to work. We need revenues. Good to hope for illuvitars to bring in 10s of millions of $ … what if it don’t ?

As I said before :

« It's good to have a strategy with 3-5M active players by mid-2023.

Now, give me a strategy if you've 30-50k active players by mid-2023.

Like that, if Illuvium land anywhere in between the team have a plan to execute without thinking. »

[hasty eagle]

I would also encourage to activate the forge ASAP.

With a little change : only for treasury tokens. No seed, no team. Just treasury.

Money for the treasury at much less discount than a raise would be. And the community could benefit from 10/20/30 % or more discount … it work : good, it don’t : not much impact

[crude snow]

I like it

People will be pissed off with the 16 million revdis thing, but as a DAO with the long-term objectives in mind, it is of our best interests. The revdis given up would be peanuts in comparison to the future potential

If ILV can even get there from here, it puts us in a really comfy spot.

The runway of the project should be the most important thing first and foremost, sacrificing short-term revdis is absolutely nothing in comparison to future potential if the project can be developed properly

[hasty eagle]

@crude snow To put that in perspective, people would give up 2$ per ilv … for @cunning prawn proposal ………

And if it make people feel even better : 1/2 would come from seed/team revdis … 1/4 from stakers …. (Treasury already get 1/4)

[cunning prawn]

Amazing perspective! If we asked the staking community are you willing to allow your first $2 of revdis per ilv to go to preserving the DAO's runway, I think most would have a hard time saying they need $2 more today if it means ensuring confidence in uncertain times.

[crude snow]

Like you mentioned earlier, framing is key

[hasty eagle]

Vote for this guy

[vernal lily]

I think $2 per ilv seems steep and in line with what I was setting for my expectations for revdis for the first year. But if it was contained to just illuvitars I'd be fine with for the foreseeable future not getting revdis from illuvitars

[cunning prawn]

that in itself is a problem. If $2 was general expectations for first year revdis, that means the treasury in January 2024 is at $4 million and 3 months runway without other adjustment to expenses. Getting products out and continued decrease in runway time is a scary proposition.

if my proposal is implemented across all revenue (not just illuvitars) and expectation is $2 per ILV, instead, revdis is $0 per ILV for 2023, but the runway ends the year at just under 12 months. That feels a lot more comfortable given the current state of the market

[hasty eagle]

People will be happy in the end having given up 2$ to have a studio able to live forever. The loud minority unhappy « because it’s written in the white paper 2 years ago it have to follow it word by word »

Damn later on they can even redistribute what the community has given them with a proposal like this … and maybe later one you’ll get 50$ per ilv … if illuvium cant get shit done in 2023 .. and have no way to correct the trajectory … you’ll end up with nothing …

Sounds like an easy choice …

But again : this is not a white card for the team to continue burning cash for shit stuff, they should move into survival mode asap anyway, deliver fucking revenues streams, OW should have 150% of people working to deliver it to the public (not in beta) in the coming 2/3 months. Period.

[vernal lily]

The burning cash part is what I would be worried about, I would expect the team to be doing a lot of marketing to begin with and that IMO should make it so you are very cash light in the early years, reinvesting in the company to promote and enhance it.

I think a middle ground would be to just make an ICCP that solidifies we are going to delay revdis for Illuvitars and it will not go directly to the vault. We could then debate what to do with those funds once we know where we stand.

[hasty eagle]

What if illuvitars bring nothing ?

I mean potential 200k silv2 at 40$ … that’s already a shitload of illuvitars that could be sold without revenues for the dao …

470 000 disk to sell to cover silv2

I know the royalties are also there, and we shouldn’t forget about them btw

[vernal lily]

I think then it would be easier to swallow the need for all of revdis to go to runway.

I'm playing devils advocate here. I think ultimately Deraji's proposal might be needed but giving time to see how the teams projections align with reality would be a good idea.

[cunning prawn]

that becomes the question - what is a reasonable projection for revenue and balance between sILV2 and ETH for Illuvitars alone, and for all 2023 products? What does revenue need to look like to enable a stable runway at $1.36mm/month burn rate under the current revdis structure versus my proposal? If revenue exceeds these projections, amazing, let's vote to give it back to stakers! If it doesn't deliver on projections, the DAO is left with fewer options. I'd rather adjust terms now than be in the middle of a product and need to adjust. I'm also happy to have this conversation now so people can vote for someone else in a few hours if they so choose. This is likely the exact conversation I'll plan to have with council if I retain my position.

[hasty eagle]

@cunning prawn let’s sell the 2 t5 to FTX for 20m$ each

Let just have them pay in USDC please

[vernal lily]

I think this proposal does not prevent future more extensive proposals from being passed if needed in the future. I think it could be more clearly written and it could wait to be formalized after the planned sentiment snapshot.

[loud stratus]

I think it should be updated so that there is an interest or a payback on the RevDis provided to the safety pool. So it works more like a loan rather than a straight funnel. All used revenue from the safety pool is considered to be the loan amount and once the runway or game launch has been established, any unused revenue is not factored into the loan and so is returned to stake holders. Once the game launches, this used revenue plus interest (or just the funds used) is slowly returned to the snapshotted stakeholders out of the treasury’s earned RevDis.

[vernal lily]

I think making it a straight interest free loan would make it clearer and perhaps more people would be ok with it.

My worry is that if the DAO needs these funds we could be in a precarious position. Or that we might want to seed fund Deraji's proposal with the safety pool. My thinking was to allow for flexibility.

For example if the DAO needs funds from the "safety pool" then they could simply vote to transfer the funds to the treasury or they could make an IIP to have a repayment plan and interest rate added as a stipulation of the transfer.

Ultimately this proposal is just formalizing holding onto these funds for 18 months and not having them go through the normal revdis and if the DAO needs them for one thing or another the council would be able to use the funds for that.

I do plan on formalizing this more after the sentiment vote is complete (or if for some reason we find out that vote isn't going to happen) and would love to have an extensive notes section with everyones points of view.

If anyone is interested in helping me wordsmith a google doc let me know.

[deep rivet]

So, initial thoughts here from both Botch & Deraji are the following:

1. Great intention but is this a matter of what we want or what we need?

2. In what order of priority should be tacked on in terms of ensuring runway? What it sounds like is that its the individual token holders rather than the DAO who has the responsibility to ensure theres sufficient runway.

Why cant we pull the other levers first before tapping on building a safety fund from Revdis? Theres selling of treasury, forecast revenues from the treasury for Illuvitars, Merch. Theres also the forge, etc. Shouldnt revdis be the nuclear option rather than the first line of defense?

3. Assuming we push through, why not just do what kieran suggested of getting 50/50 so that stakers still get some of their revdis?

4. If we are to restore 18-24 months of runway this should be a one time setup on a clear amount backed by numbers and proper forecasting of burn rate.

i disagree about dipping below 2 years then will need to refill again. Thats basically saying two things (1) Revdis only when we hit profitability; and (2) Free reign to increase burn rate since stakers will provide the safety net.

Again, im all for foregoing my own revdis since its not much. Intent is great and for the benefit of the DAO. But we need to ensure there are limits and rails.

When the stakers become the first line of defense or relied to be, the optics are bad. 1) Team failed to properly forecast and manage; 2) what precedent does this create for future situations? Have we considered a huge sell off cause of this? I mean if we can project how long were not getting revdis, would it make more sense to sell then just buy back due to no revdis for X months?

So my suggestion is to just set an amount that can only be used upon voting by the council with at least 4 votes and not 3. You put a limit on the siphoning of revdis and you allow oversight of the DAO in terms of use.

[cunning prawn]

I’m self admittedly fiscally conservative, a realist who focuses on planning for the worst, and a “corporate” guy. That frames how I think. While I understand the perspective that revdis is sacred and that’s why we’re here, and I know why people think that, I went back and reread the white paper yesterday. Guess what isn’t in there - revdis (in its full IIP-22 form). We’re here to create a DAO around a high quality web3 game, and that DAO community will ultimately consist of the team, gamers, and stakers, and hopefully more as individuals engage in the lore of Illuvium. Right now, the focus is on stakers first and foremost. While that’s what I am, I’m going to continue advocating that revdis shouldn’t be the third rail of the project when the highest level intent is to build what is described in the white paper.
Taking a corporate slant, I’ll use Disney as an example. Obviously, they have an immense global presence, a variety of revenue streams, extensive IP, assets, and equity upon which to draw, over $10 billion in cash on hand, and nearly a century of existence. They also had nearly a four decade history of paying dividends to their shareholders. In 2020, they paused that to prioritize cash during a period of uncertainty.
Looking at Illuvium, there are a variety of mechanisms of raising funds (though far fewer than a Disney), consider the impact of each of them to build a sustainable DAO in the vision of the white paper.
As I evaluate these various proposals and ideas, at the center of my thinking is what best enables Illuvium to realize the long term vision? While stakers have an expectation around revenue, is that genuinely the best use of funds right now? What is the DAO more likely to regret doing and not doing a year from today?

[trail temple]

While Disney couldn't have predicted the future and covid, they also put themselves in a weak position financially after the 21st Century Fox aquisition, for $71.3 Billion in 2019, that attributed to the dividend pause.

[cunning prawn]

that's fair. i'd also say Illuvium couldn't have predicted FTX and other recent black swans, so expectations set in the 2021 P2E bull run need to be mitigated under the new situation. Cash on hand is the best mechanism of sustained existence as token prices have fallen 98% from ATH when token sale is the primary expected mechanism of raising funds. Ensuring sustained DAO existence is my paramount priority in uncertain times. I'm not comfortable with 2023 recovery and mainstream adoption with no stable revenue yet.

[deep rivet]

I feel end goal is the same. Its how were getting there where it gets muddled. If we are to create a safety fund, I just want it to be capped rather than open ended. We can always do this exercise again should the need arises.

[trail temple]

Capped and loan based has always been my stance on it.

[cunning prawn]

i also want to be real on what to expect from an Illutivar sale safety pool. while i haven't seen other's estimates, using land sale as an example, that generated $8 million in ETH in June 2022. While this sale will last longer, with potentially over $10 million in sILV2 out there, what is the expectation? My bias is to take it beyond a single product and set time based/financial based benchmarks, as I can already hear the community arguments the next time "the council rugs us on revdis again."

[vernal lily]

I've been reading back on IIPs and Whitepaper (actually the medium article on tokenomics since I think the posted whitepaper is missing some info on the tokenomics section).

This is all that I could find:
From the Medium Article 9. Tokenomics, Launchpad, and Reward Details

Illuvium Vault Revenue Streams
Illuvium Vault revenue streams can broadly be divided into two categories; In-game Purchases and IlluviDEX exchange fees."

From IIP-13 Illuvatars

Rationale
Illuvatars is a fun way of giving players their own unique identity in the Illuvium Universe. The revenue generated from the sale will go into the Illuvium vault to be distributed to stakers in the protocol.

From what I can see all of the talk of all revenue going into the vault has been made by Kieran in interviews. I think that this causal mentioning of how revdis will work needs to be formalized with an IIP. I couldn't find even the land sale revenue going into the vault mentioned in IIPs related to minigame or land sale.

Then another solution perhaps is a Revdis IIP that could clarify definitions (such as profit from merch and not revenue) and at the same time setup a safety pool with any revenue that hasn't yet been promised to the vault.

[cunning prawn]

being honest, and not speaking from a council position, this is likely strategic. The more formal documentation outlines elements like this, the higher the potential regulatory scrutiny. Its one thing to say it on youtube. it's another to clarify this in governance. A conservative approach is definitely applied to how things are written.

[vernal lily]

This has been my assumption. I am leaning towards just the simplest solution to this idea of holding on to funds in case we might need them and create an ICCP that rewords the Rationale on IIP-13 to : "Illuvatars is a fun way of giving players their own unique identity in the Illuvium Universe. The revenue generated from the sale will go into the Illuvium vault to be distributed to stakers in the protocol."

[vernal lily]

My thinking is that IlluviDEX exchange fees are not going into the vault and no one seems to mind. If a rationale was created that we want to be cautious and hold funds until a more clear financial situation is established would that be the least controversial. I know it could just be seen as can kicking but if we do wait we will be more informed to make a better decision.

[jovial owl]

We can still hit more of a middle ground too and just go month by month setting aside avg monthly spend and giving the rest to rev dis per usual.
While I don’t think ilv stakers are quite as entitled to free money as we like to pretend I also think the team should have that pressure of needing to output products and updates to keep money flowing in rather than just giving everything to them until they have a huge cushion.

[vernal lily]

So with Lelahel's numbers that would be first $1.36m to treasury each month, maybe a loss of around $.15/ILV a month to stakers for revdis (if my math is right)

[jovial owl]

I dont think they hit the min threshold for distributions

[vernal lily]

#1045053504638685265 Started a thread to hopefully bring back conversations on the forge. Would love your editing skills if your willing 😀

[near lake]

@vernal lily I had read this before I was even elected and I believe my brain did use it as inspiration. Essentially thank you for doing all the heavy lifting. I'll be writing up my proposal today and I'll get your feedback and then continue the discussion with the council.

I would like to ask why 50% usdc and 50% eth?

And why 18 months?

[vernal lily]

50/50 was a Sam contribution and I didn't have a good reason to go against that. 18 months was hopefully something for discussion. My thinking was it would be plenty of time for revenue to be flowing from other forms of revdis.

My working doc if it's helpful: https://docs.google.com/document/d/1UrPkDmqo1SVsTvmUX37fQmlgzm2T0tHnqKcLR2lSXJk/edit?usp=sharing

The rationale is a little clearer I think.

Rationale
Definition of runway - How much cash your organization needs to operate, and how long it can survive without fresh capital coming in.

The shorter the runway for an organization the more a team will worry about job security. To prevent this the revenue generated by Illuvitars could be held by the DAO and not go directly to the vault for vault distribution. It will be held to provide more of a safety net that the team knows is available and thus decreasing the fears that could be caused by a runway that is shortening.

The safety pool will exist for only 18 months to allow for other revenue generating streams to come online. The time limit makes it so that if the funds from the Illuvatar sale are not needed by the DAO they will be automatically reintroduced to the Vault for vault distribution.

[near lake]

I'd rather leave time limits open ended. Or restricted by development. Eg either its held until the council goes for a vote. Or it's held until the revenue streams are deemed enough. However the more I think about it I don't think a time limit is necessarily harmful I just think its need to be clear its a last resort.

@vernal lily thanks for this.

Anyways test just came back covid positive so gonna be running a tad slow today but this is next on my to do list

[vernal lily]

Thanks for the communication and dedication to the DAO 🙂 sorry to hear about your covid positive result hope you feel better soon.

[near lake]

Im not too bad yet. But tomorrow may be significantly worse

[normal oriole]

Provided a few thoughts, I have more but we can wait to see what Scoriox comes up with. I do like a fixed time period for the safety pool to be held, but would want to determine what that time period should in consultation with the team.

[vernal lily]

Thanks so much for the feedback. I think all your changes are more clear and better formatted. I made the changes to the google doc

I think maybe taking out the 50/50 out all together makes the most sense just leave it up to Danny?

[normal oriole]

There's a lot of information I want to get before making any kind of statement on what's best. The only thing I'll say with confidence is that anything other than stablecoin can fluctuate, and that's contrary to the goal of risk management.

My personal opinion is that while it feels like ETH has already reached "the bottom", it's entirely possible it has not reached the bottom, and the conditions under which ETH decreases in price are exactly the conditions in which we need to maximize runway.

[near lake]

Ill be rewriting the doc in about an hour, ill send you a dm

[near lake]

I had these same thoughts when I was initially thinking about this and even after I revisited this in ideas. There's no point on betting on crypto at all

[jovial owl]

50/50 is a minimum share for stable side imo if this is truly a safety proposal. It lets eth have a chance to rise and grow the runway but 100% stable you know your purchasing power should drop at most 10-20% in a year which hopefully is unlikely going forward and will be more towards 5-7% next year.

[vernal lily]

After watching @normal oriole 's wonderful IIP writing guide: #🎨〕community-content message
(Well listening to, not watching cuss it's still looks like it was recorded on a 🥔... )
Wanted to list some counter arguments that I thought of that have not been discussed and could be added to the end of the proposal:

ILV price improvement will be affected since the illuvium revenue will not go through normal revdis. ILV will be lower if this proposal passes.

The ultimate value of the revdis (in ILV terms) if all money is just held in and then redistributed back to the vault will more than likely be lower. The price of ILV could be higher and if the totality of the safety pool is just held in stable and then the ILV purchasing power of the safety pool will be less then the original ETH spent on Illuvitars.

[vernal lily]

Not saying this is better but an alternative to consider: instead of holding USDC still purchase ILV and hold that in the safety pool so that some of the normal revdis tokenomics is in affect.

[jovial owl]

Would you be open to exchanging the eth side for ilv that can be staked instead, so you get the upside of ilv, rev dis, and still have a threshold for minimum purchasing power with half stable?

[cunning prawn]

The key to me is risk mitigation. Holding USDC (as opposed to ETH or ILV) helps mitigate for further issues in the market or industry as a whole, as all assets still tend to move together. Holding back revdis but moving it to ILV is only a half measure of mitigation. It avoids irrevocable distribution, but maintains the same risk that was encountered around a potential capital raise, potentially needing to sell the asset at a low valuation. If this is truly a hedge against uncertain market conditions, USDC or fiat achieves that to a greater extent.

[languid glen]

So not enough votes for this?

[twilit tinsel]

Was rolled into my idea I think. Its been drafted.

[cunning prawn]

Revised draft coming "soon" to "very soon" from the council integrating a range of feedback received on this proposal.

[winter sphinx]

Assume the workflow will be drastically approved when Gov2 hits?