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Thesis

JuiceboxDAO is a place for builders. As it has matured, more people have begun contributing and submitting proposals for compensation, and more projects have been paying membership fees along an issuance rate that trails the market JBX rate.

Meanwhile the DAO’s mechanics for membership issuance have remained largely unchanged due to constraints of the V1 Juicebox protocol, which the DAO operates within. We’ve tuned reserved rate, discount rate, redemption rate, fee rate, and our payout schedule out of experimentation, but it might be time to think bigger by leveraging the new V2 tools at our disposal and our improved upon state-of-decentralization given the expanded multisig (lots of work left to do here, it is our biggest risk imo).

This proposal is to change the routine that runs when the JuiceboxDAO treasury receives any payment:

• If the payment would yield more JBX on an AMM than from the treasury’s issuance rate, exercise the trade on the AMM offering best rate for the trade size and send the resulting JBX to the payment’s beneficiary.
  • No new funds added to the treasury.
• Else, issue new JBX at the current issuance rate.
  • Funds added to the treasury.
• Reserved tokens should be distributed either way, proportional to the JBX yielded for the beneficiary.
  • This causes a nominal dilution rate, used to attract developers who are not fucking around. (tankbottoms i’m gonna start using this phrase, thnx).
    • If the AMM price is down, more JBX is distributed to the reserved token participants per unit of volume, increasing dilution to the contributors who are now further incentivized to catalyze growth.
    • If the AMM price is up, less JBX is distributed to the reserved token recipients per unit of volume, decreasing dilution.
    • If the AMM price has hit the issuance rate, mint and distribute more JBX into the hands of builders to further decentralize and expand the protocol ecosystem.
  • Reserved tokens can continue being distributed to arbitrary recipients to fulfill arbitrary incentive strategies.
  • Reserved tokens can be distributed as locked positions, though it might be simpler to leave the choice to do so for each recipient.

Motivation

A few elements of JuiceboxDAO’s token mechanism have been coming under stress lately:

• Fees The protocol currently takes fees and issues JBX at an issuance rate, which is currently well overvalued compared to the AMM JBX rate.

Note: The AMM liquidity depth is shallow. The following analysis must hold true independent of liquidity depth for any mechanism implementation based on it to be effective.

Observations: - Projects get fewer JBX than they would by spending fee funds on the JBX market. It’s in JuiceboxDAO’s interest if projects are more significant members as the protocol ecosystem grows, and in token holders interest if there is upward pressure on JBX market price. - The DAO takes in treasury funds and mints new JBX in return. Given the current treasury depth, the DAO would be better served refraining from additional treasury funds and not minting new JBX while the market satisfies the demand better than the issuance rate. - Reserved tokens get minted to contributors commensurate to the issuance rate, which as noted above, is well overvalued compared to the market rate. It’s in JuiceboxDAO’s interest if contributors are more significant members as the protocol ecosystem grows.

• Contributor equity

  The protocol currently issues reserved JBX at the overvalued issuance rate, as stated above. The same observations are relevant.

  Additional observations:

  • In the past, this mechanism has rewarded contributors working in a very uncertain and risk-on environment with significant chunks of membership as certain campaigns running on the protocol took off. Towards the beginning of the experiment, those bearing more-significant responsibilities to the DAO has a larger chunk of the reserved token rate. As the contributor set grew, we moved in favor of equal distribution to prevent a temptation for comparison along incomparable vectors. Badass mfers only.
  • The issuance rate has been tough to taper, despite efforts to do so. There is pressure to taper issuance alongside the pressure to continue rewarding contributors substantially. These are somewhat at odds, both are valid variables to consider.
  • The decrease in fee rate from 5% to 2.5% further decreased issuance to reserved token recipients (assuming a constant fundraising volume).
  • In lieu of the modest reserved token distributions, JuiceboxDAO has relied on merit-based airdrops to distribute JBX to contributors and the broader community. This has allowed for more precision and strategy when distributing tokens, but increases the burden of management. The DAO has also encouraged substantial payouts from the treasury, with which contributors are encouraged to acquire membership if they prefer.

Risks

1. The major risk here is the DAO’s intent to begin leveraging off-protocol JBX markets to satisfy its internal mechanism. Up to this point, the DAO has refrained from touching AMMs under any circumstance. This proposal opens up that can of worms.
2. The DAO treasury will not grow, so long as AMMs offer a preferable price compared to issuance rate (currently 440k JBX vs 45k JBX)
3. Actors on the reserved list are incentivized to keep the AMM JBX price low while stacking JBX. Reserved list members earn the most JBX when the price of JBX is very low on AMMs (percentage, or when the price on AMMs is more expensive than treasury issuance

Specification

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