The phrasing is currently not very much in favour of option 3 with things like “Strong link to price” or “favors short term thinking”, whereas option 2 gets away with “can be shut-off if it gets too large” (which is exactly the opposite of my point, it will not be possible to shut down).
No, price appreciation is a prerequisite on Nexus Mutual for adoption. We can clearly see the demand for insurance, but because the price is not increasing enough we can’t meet that demand.
This also ties into this point:
May favour short term over longer term decision making
Why? If we think the foundation might not be able to handle this amount of NXM responsibly, than maybe it should be vested over 1-2 years. Otherwise I don’t see reasons why this should favour short term thinking.
I mean we could not even fund one team member with option 2 at this point and if we take the October 2019 spike out of the equation the resulting burned NXM a month would be cut in half. I don’t understand why we’re even discussing this option as a source for funding the foundation for the next year when it couldn’t even extend the runway by 1 month.
I am not following this line of thought. Could you please elaborate? How does an increasing price of NXM address more demand?
Generally speaking, I think the purpose of this discussion is to outline all possible options to fund the Foundation in a sustainable way. So all options should be considered and ultimately are not mutually exclusive, so perhaps could be implemented in parallel or in sequence? Option 2 has the benefit of being directly tied to adoption and to be more gradually dilutive, but obviously as you rightly point out it does not solve short term needs in any meaningful way so this is a more longer term option that should be considered alongside others. You seem to suggest it creates a precedent and cannot be turned off or amended in the future, though since it will be up for a governance vote I am not sure why that is. Would love to hear more arguments on that.
A one-off minting event with a vesting schedule would conceptually achieve a similar outcome, though clearly it better addresses short term funding needs. A vesting schedule is something that should be discussed, though presumably we now also have a Foundation Board that would deliberate on spending/budget?
@Hugh I agree with @HeyChristopher that wording in the slide should be more neutral.
The price of NXM is directly related to its ability to underwrite risk. A high price of NXM means there is a lot of capital in the pool to meet the existing demand. I didn’t mean to suggest that a higher price creates more demand, but that we already have too much demand that we cannot meet. A higher NXM price and therefore more ETH in the capital pool can address more demand.
I have just followed the conversations between the Electric Coin Company and the ZCash foundation. What was meant as a limited supply of funding to build the chain (over $200m!) quickly turned into an entitlement of perpetual funding with threatening the community to abandon the project and start a new one. Cryptopunks became more greedy than Wall Street bankers.
If this sell-spread really becomes a meaningful amount and it’s growth is promising enough for the receiving foundation to hire more people, a sudden drop in funding will likely lead to a cry for help to the community with a similar entitlement. A lot of if’s, but just one wrong turn and it’s almost unavoidable.
Thanks again for your comments. Here is an updated summary slide. Let me know if you think anything is misrepresented here, I’ve tried to keep it more neutral.
I like it. One more suggestion: When you present this to the community, I think it might be worth pointing out that the foundation had initially much less token available than other DeFi products (when putting valuations into proportion) and that it is therefore suggested to mint some more token to ensure mid and maybe long term sustainability.
