[Non-Constitutional] Invest in Builders & Ignite ARB Demand with q/acc

[Griff]

@AbdullahUmar

Looks like overall program KPIs are presented, but could we get some more clarity on the KPIs required for the unlock to happen as a project graduates? Are these projects specific or generalized? How public will they be/is there a place to view milestones till graduation?

They are not project specific, they are mostly economic, and the data is very public

The default graduation KPIs consider several factors:

1. Minimum 50% of the supply circulating (which will take ~14 months)
2. Market Cap above $15M (at $8M market cap ($1M in the bonding curve) we turn off minting)
3. Enough liquidity in DEXs to handle the supply.
4. (For the first few) Sign off from the q/acc team to protect community from unknowns.

However, we are early in experimenting with this mechanism and have gotten feedback that this is too strict so we are currently working on an accelerated graduation plan that can allow teams to change from time based vesting for their token unlock to a KPI based unlock for the Team’s token. This is still early in it’s design though, and no promises it will validated enough to make it into the first season.

@AbdullahUmar

What’s the long-term vision behind dealing with the tokens that Arbitrum receives, and who will manage this portfolio of small caps? Should DAO-held tokens be used for treasury diversification, sold for cash, burned, used in retroactive reward programs, etc? This doesn’t have to be fully answered right now, but a vision is helpful.

Another great question! I would personally advise to hodl and count it as treasury diversification, but we will need to get advice on this from some AAEs about the ideal address to set in the protocol for Arbitrum’s hodlings. I would imagine the AF will hold the funds and it would be managed by some treasury committee… but the initial tokens are locked for a year and then streamed for a year… so there is a lot of time to figure out the management.

@AbdullahUmar

If the majority of early buyers participate expecting a pump, due to a “price floor” and low float, it may actually create sharp price crashes once lockups fully expire. This could make the Arbitrum DAO allocation worth a lot less. A good way to mitigate long-term issues around token price is to effectively diligence projects. Tokens that actually have some sort of usecase or financial backing demonstrate less downside volatility. The counterargument is that this is following a more venture-esque approach with a few expected home runs. But when the portfolio of projects is limited to 10, the instance of a home run can also be limited since there’s always a luck component to venture investing, even if the initial vetting process has a stated ~4% acceptance rate.

Wow! You really get it! Thank you for diving in so deep to this, it’s pretty complicated but you really seem to understand the mechanism.

Yes, not every team is going to be a winner… some projects will fail and the tokens won’t be worth much… but as you said that is standard for small cap investments (and grant programs). The projects have 6 months to prove token demand before the buyers in the q/acc round have their tokens start to unlock, and a year before the larger team allocations start to unlock.

The best thing to do is to look at the quality of our projects and decide if you think they are worth betting on.