Hackathon project for Diffusion (Berlin, 19-20 Oct): Funding for the cultural commons. Moloch x BC a community currency that is: priced algorithmically as its own market maker, that is decentralised, with built-in redistributive and governance mechanisms

A continuously minted community currency with built-in redistributive mechanism governed through a DAO (Moloch Fork): DAICO funding mechanism for a Moloch DAO.

Building team for Diffusion: https://diffusion.events/ Token Engineering Hackathon.

Track 1: Tokenomic design - Integrating Bonding Curve Token with Moloch fork: Transfer tax is applied when minting and transferring the BC token that is distributed to token holders, “DAO tax” is applied when minting and burning the currency that is used to financialise the DAO. If possible maintain the code of the Moloch intact so as to not break its audit.

Track 2: UX design - Simple UX for interacting with BC contract. Market-Maker: Real-time price feed, buy, sell. Moloch UX redesign incorporating BC token as shown in the mockups included in this document.

Goals:

Make an open source prototype of a Moloch x Continuous Org with its own native Bonding Curve token, that can be used and iterated upon by other teams - projects.

Launch a community currency that is programmed to be redistributive, has decentralised “monetary policy”, does not rely on centralised exchanges for liquidity.

Prove that a continuous token sale through Bonding Curve can be used effectively as a self-sustaining decentralised funding mechanism for the commons through DAOs. Investor’s incentives drive sustainable funding the commons. A DAICO for a “continuous organization”.

Background:

https://medium.com/@TrojanDAO/the-trojan-dao-859b866a15ee TrojanFoundation website Trojan DAO interface Blog Github Trojan DAO forums Weekly meetups in Athens Twitter Berlin Blockchain Week Osaka Blockchain Week

Rationale:

The concept of a community currency to fuel the cultural ecosystem that is:

priced algorithmically as its own market maker without having to be exposed to centralised exchanges.No ICO. that is decentralised and democratically controlled, has built-in redistributive and participatory governance mechanisms.

is inspired in part by this critique of Yannis Varoufakis towards bitcoin (Bitcoin and the Dangerous Fantasy of Apolitical Money). It is also inspired and acts as a response to the following events that have impacted cultural work in Athens, and serve to highlight the relation to the cultural economy and the contentious relationships between the global and local “cultural economies”, as well as the opportunities for the emergence of alternative cultural economies:

Where Did the Money Go? documenta’s Board Presents an Interim Audit Report, and Some Excuses “Artistic freedom does not mean freedom from the business plan,” said a representative of the shareholders”

documenta 14 Employees Carried Bags of Cash to Athens and Other Irregularities

It is also inspired by the following quote by artist Joseph Beuys (1921 –1986):

“Money has to undergo a metamorphosis again, it has to relinquish its role in the market economy and engage in an economy of capacities. Then we would come full circle, since each human being can then act within his company as co-creator of the future, can - in full dignity - contribute to shaping this future. No area of life will be free from this concept in the future. That means that people will recognize the social organism, and they must think within this context. They must also think about economic structures. They must always think through the entire social organism.”

Cultural and activist projects, specially those taking place outside the usual institutional frameworks do not usually generate revenue, often being dependent on donations in order to get off the ground and grow. At the same time, many artists and activists are wary of the existing funding landscape that is mostly defined by for-profit institutions and wealthy donors. The commons of autonomous art, interconnected with other social struggles and solidarity movements in the city, provide a clear the perfect example of a public, social good that is always under threat due to lack of sustainable funding mechanisms, despite having active and dedicated communities, because the main vehicle of funding for activist and artistic actions are donations which is not a sustainable means of funding. Donations are made at a loss to the individual and only incentivized by an individual’s value of that social good/cause. the limitation of social good funding to centralized funding sources (i.e. governments, foundations, wealthy individual benefactors).Reliance on public bodies places funding for culture at the whim of party politics, government activities, and other forces.

Thanks to blockchain, we are now able to experiment with autonomous governance for culture in ways that were never before possible, creating programmable economies around cultural work that can encode shared sets of values, while contributing towards protecting and improving shared resources. Blockchain technologies may be presenting us with a new window of opportunity; an exit strategy from a system that is built to serve the interests of the 1%. The art world is ripe for disruption!

Participants, creative teams, artists, and patrons can collectively fund cultural work, and the creation of shared infrastructure for cultural practices, while all participants can be involved in the decision-making for the distribution of funds through voting, organizing around common interests, values and artistic ideas of its evolving community.

Paired with DAO governance, bonding curves unlock new opportunities to redesign the way communities govern and fund organizations, resources, and commons. Members of the ecosystem can chose to use their tokens to govern (vote, decide, stake) the allocation of capital from a common pool towards projects that they consider to be of importance, while investors can earn through . The goal is to set in place the minimum mechanisms for an emergent alternative economy aligned around common goals.

The community currency can be used to bootstrap the ecosystem, and add further incentive layers and sustainable funding potential to the existing Moloch DAO game-theoretical incentive alignment governance mechanisms.

Overview of development requirements:

Bonding Curve market-maker token contract with buy-sell spread. Anyone can mint, anyone can burn.

Moloch DAO deployed with the BC token as its native token.

When Trojans, the native tokens, are minted, transferred or burned, the Trojan Bonding Curve contract applies two kinds of taxes. A transaction tax, which is automatically distributed to Trojan holders in proportion to the amount of TROJ that they hold, and a “DAO tax”, which is sent to the common pool administered by the DAO (the Pool contract in Moloch).

Resources: https://github.com/TROJANFOUNDATION/trojan-bonding-curve/tree/master/contracts

https://etherscan.io/address/0x286ae10228c274a9396a05a56b9e3b8f42d1ce14#code

UX: Enable users to interact with the Trojan Bonding Curve market-maker contract through the Moloch interface.

Tokenomics:

Anyone can buy-sell Trojans. Does not have to be member of the DAO.

Buying Trojans: When Trojans are bought from the smart contract the code deducts two taxes: a transaction tax of 1% and a “DAO tax” of 2%. The transaction tax is automatically distributed to Trojan holders in proportion to the amount of TROJ that they hold. This acts as an incentive layer for Trojan token holders. The DAO tax is sent to the common pool administered by the DAO (the Pool contract in Moloch).

Transferring Trojans: The 1% transfer tax is also applied to transfers of Trojan tokens between addresses.

Selling Trojans: The only way to withdraw Ether from the smart contract is to sell back TROJ to the bonding curve contract. When this occurs, TROJ is burned and removed from circulation. Every time Trojans are sold for Ether, a 3% “DAO tax” is deducted from the sum and sent to the common pool controlled by the DAO.

DAO-nomics:

The Trojan DAO is a Moloch fork, deployed with the Trojan currency as its native token. It acts as a distribution mechanism for the new currency, allowing its members to collectively decide on the allocation of the TROJ currency towards projects and development tasks that add value and expand its ecosystem. To participate in DAO governance, users must make a proposal by submitting an amount of Tribute to the DAO in the form of TROJ and requesting an amount of governance shares, which also act as access to an amount of funds in the Guildbank. An overview of the MolochDAO mechanisms can be found here.

The “DAO tax” which is deducted from the buying and selling of the Trojan Token, accumulates in the Moloch Pool contract. DAO Grant recipients will receive proportional follow-on grants from MolochPool, so if the Guild Bank donates 1% of its funds to a grant, the Pool will do the same.

The DAO distributes grants to projects that have passed the rigorous DAO vetting process which receive grants from the DAO are paid out in TROJ. The 3% “DAO tax” that is applied by the Trojan Bonding Curve contract when TROJ is burned thus also acts as a friction layer that captures some value and sends it back to the common bank whenever DAO members cash out to exit. Even when money-grab scenarios from DAO members take place, the “DAO tax” captures back some funds through this mechanism. A very useful mechanism to have when trying to reduce bureaucratic steps, such as the need for monitoring and milestone reporting.

Additionally, by paying out Grants towards participating projects in the TROJ currency, a broader organic growth of the Trojan economy/ecosystem is encouraged, with the possibility for agents participating in projects that received Grants from the DAO, such as venues, artists and others, to be distributed TROJ through their involvement and thus becoming TROJ holders themselves, which in turn could enable the emergence and spreading of an alternative participatory “cultural economy”.

Development tracks:

Token development:

Draw from the Trojan Bonding Curve Token and the Sparkle Token to create a Bonding Curve contract that applies a “transaction tax” and “DAO tax” as described above.

What advantages / disadvantages does an increasing price curve have over a “flat” curve as used by Sparkle for this specific use case? Discussion/ exploration of the effects that various curve parameters would have.

Frontrunning. Is this mitigated through buy-sell spread?

Gas price: Gas price assumptions should not be hardcoded into the BC contract. This is not good smart contract coding practice in general, and can lead to issues such as the contract breaking with future Ethereum Network updates that can impact gas fees.

Hardcode the paying of the “DAO tax” from the Bonding Curve contract to the DAO Pool contact:

address payable creator = DAO pool

Is it possible for the Trojan Bonding Curve contract to automatically send the “DAO tax” to the Moloch Pool contract?

If not → Send the DAO tax to a multisig i.e. Aragon DAO with trustees that can be responsible for sending the funds to the Pool contract. (least favorable solution- increased bureaucracy, increased centralisation). Design a new contract that has the same functions as the Pool, but enables receiving funds directly from the Trojan Bonding Curve contract. Add a “vote to call contract” to the Moloch fork. Make the Pool contract itself a Bonding Curve contract! Similarly to the WIP experiment that we have previously explored with the Guildbank contract (github).

Run tests.

Optional - to be explored: Token upgradability In this case, any changes to the reserve ratio and the other curve parameters could also be able to be agreed on decentrally by the DAO. Otherwise when a change in the token parameters is decided, then existing members would have to ragequit and a new DAO deployed in its place. This could potentially be done by building the BC token on minime (github).

UX development:

Customise the Moloch UX to “interact” with the Bonding Curve market-maker contract:

Guildbank value displayed in USD and TROJ on DAO dashboad:

“Trojan center” gives real-time exchange rate of Trojan BC token, button to buy, button to sell, approve Trojan and Approve Pool.

Previous work: Previously, we have experimented with making the guildbank in the Moloch DAO itself a bonding curve. You can find this experiment here: One obvious issue that was encountered was the … Possible mitigations for that scenario would be:

the use of a “flat” bonding curve that maintains a stable rate between TROJ and ETH, or applying batched bonding curves (link).

Optional further work: Tokenomic modelling through CADCAD, collaboration with Commons Sack?

Interested in joining the Trojan hackathon team? https://devpost.com/software/trojan-dao-daico-funding-mechanism-for-a-moloch-dao

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We won token Engineering track and Silver overall in Diffusion for this! Congrats all! https://twitter.com/TrojanDAO/status/1186300080070053888?s=20