oSnap Integration Incentive Program

Ideas Bank
1

Introduction

We propose an incentive program for driving DAO oSnap integrations. oSnap is a powerful tool to autonomously execute outcomes of Snapshot votes using UMA’s optimistic oracle. This proposal aims to structure an incentive program for the rollup, and others, to meet specific integration criteria for successful and efficient integrations of oSnap. Upon meeting these criteria, UMA’s own oSnap module would pay out the agreed-upon incentives.

Motivation

Our strong relationships from years of communication and content partnerships in the space have created a pool of untapped oSnap integrations. The rollup could help scale the oSnap sales process by providing integration support and education for DAOs. Our team has taken the time to understand oSnap and UMA through conversations with the community and internal team. The result of this discussion is a mutually beneficial incentive design for meaningful oSnap integrations to the benefit of the UMA community and integration teams.

Integration Criteria

  1. Number of Transactions: The oSnap module should process a minimum of 1 transaction within the first 30 days of integration. This criterion ensures that the oSnap integration is functional and actively used by the community.
  2. TVL: Total value held in the Safe of the oSnap owner. DAOs who integrate should have over $100,000 in total value secured by the owner who deploys the oSnap module for the integration to be eligible for incentives. Total value in safes secured by oSnap is a key metric for tracking adoption of UMA’s OO.
  3. Community Engagement: The integration team should actively engage with the UMA community, providing regular updates on the integration progress, addressing questions, and gathering feedback. This criterion ensures that the integration process is transparent and collaborative.

Incentive Payout Structure:

Upon meeting the above integration criteria, the DAO will pay out the incentives to the team as follows:

  1. 500UMA for integrations which meet the Number of Transactions criteria. If the newly integrated oSnap module makes a transaction within 30 days then the OO should resolve this criterion as Met. If no transaction is made within 30 days of oSnap integration, then this should resolve to Not Met. Requests within 30 days are too early unless a transaction has been made.
  2. 1000UMA for each $100,000 in TVL held by the Safe of the oSnap owner. The OO should take TVL of the safe owner who integrates oSnap, divide by $100,000, then multiply by 1000UMA to arrive at the amount of TVL incentive for integration.
  3. 500UMA for Community Engagement. This should resolve as Met if the rollup provides an integration report to the UMA community detailing the result of the integration. The report should include feedback on the purpose of the DAO’s integration, how and why they plan to use feedback, and any technical feedback on the oSnap integration.

Technincal Specifications

As part of the proposal, the incentivization process would include an oSnap module responsible for processing transactions for successful integrations. This means integration support teams, such as the rollup, would assert that an oSnap integration met integration criteria. The UMA community would have a chance to dispute whether or not the integration did meet certain criteria. If so, the oSnap module would process the incentive claim.

Conclusion

We believe that this incentive program will motivate the rollup to lead high-quality oSnap integrations, benefiting the UMA ecosystem and its users. We kindly request the UMA DAO community to provide feedback on this proposal.

2

I’m not sure whom “the rollup” is in this sentence?

  1. 1000UMA for each $100,000 in TVL held by the Safe of the oSnap owner. The OO should take TVL of the safe owner who integrates oSnap, divide by $100,000, then multiply by 1000UMA to arrive at the amount of TVL incentive for integration.

So that’s 10k $UMA for each $1M in TVL. One interesting thing to point out is that DeFi Llama will only count non-protocol-tokens (so, circulating tokens) as TVL. This means that, for example, Across’ integration TVL is all its non-ACX TVL, such as USDC etc. These amounts for the three recent integrations are:

Across: $4,620,000
BarnBridge: $1,633,078.3
ShapeShift: $2,996,669.84

If we used this instead of protocol tokens, we’d end up with payouts of 46k, 16k, and 30k UMA, which isn’t so crazy. I might want to see how people feel about a) some kind of cap on the high end, b) if we should include BB and SS retroactively and c) if we should consider only offering this to the first number of DAOs that integrate, so as to create urgency.

@Bitbool I also want to clarify–Do you mean these tokens would be put into the tokenholders’ hands in the DAO treasury, or into team hands? I’m hoping you mean into the treasury. Because…

Risk Free Value
One thing I really like about this is that oSnap solves this dilemma we see in the space where the Risk Free Value of a token is greater than its trading price. Turning on oSnap puts more power into DAO tokenholders’ hands, and should make the token trade at a value closer to its RFV, or, could lead to an occasion where the underlying treasury is redeemed.

Adding some UMA to their treasury at the same time seems like a neat move, and a nice motivator to make the switch.

DAO participation in UMA voting
Something many people on the team want to see happen, including myself and @pemulis1 is to have DAOs voting in UMA. We’d love a world where these DAOs take these underlying tokens and stake them for voting, have their native token appreciate as a result of the underlying but unsold $UMA, and also start to perform the public service of securing the oracle that secures their treasury. The exact mechanics of DAO voting aren’t fully hammered out, but they wouldn’t necessarily need to be right out of the gate.

Who does the work?
Final question is–Who does the work of setting this up, why are you suggesting it yourself, and are you looking to integrate your project?

3

The rollup (formerly DeFi Slate) has a network of communication and content partners in the space, mostly DAOs and DeFi protocols, which has created a pool of untapped oSnap integrations. This grant program is to incentivize the rollup to hunt for potential integrations as we connect with new projects. The intention is that this program will incentivize additional oSnap integration hunters, not just the rollup.

a) A maximum amount of UMA is a great idea. The DAOs incoming are most likely not experienced voting within UMA so they should not have an overwhelming amount of voting power. An analysis of recent votes to understand the strength of voters measured by amount of tokens would help determine a reasonable cap to DAO voting power. Question is: How many UMA are usually used in each vote? I suggest a cap of less than half otherwise the DAO could swing a vote on its own.

b) Since Across, SS and BB have already integrated, one reason to pay out 46k, 16k, and 30k UMA respectively is it would bring each DAO on as a voting partner. This is still valuable as it decentralizes UMA and increases voter participation but not core to the proposal of increasing oSnap adoption.

c) Yes, limited time offer. Only available to the first 100 DAOs, or 1,000,000UMA paid out. Those are rough numbers.

Yes, UMA incentives paid to DAO treasury.

I love this for a few reasons. One is the security benefits to the oracle. A larger and more decentralized voter set would benefit all the teams who are currently using UMA’s OO as a source of truth. Second is the implicit adoption of UMA by DAOs. This increases mindshare and awareness of UMA’s mission, and overall helps build community. Third is first-mover advantage in nested delegation voting mechanisms. As we spoke about recently on UMA delegated voting design, delegation is increasingly common among DAOs with robust governance. Adoption of UMA voting could let DAOs source votes from token holders, this nested governance process rolls up the DAO’s vote onto UMA.

The lightbulb turned on when we spoke to @pemulis1 about oSnap. The original idea for this incentive program was constructed by myself and @Alex after considering the network of potential integrations on the rollup. I believe you understand this proposal as an incentive paid to DAOs, rather than head hunters who find and support integration. I think this works! It still incentivizes us to go find DAOs interested in oSnap. Those DAOs would receive an incentive for integrating oSnap and we (the rollup) would receive a kickback for bringing DAOs the incentive opportunity.

1 Like
4

I love the creativity of using oSnap itself to incentive oSnap outreach!

I think the payout structure is too expensive, though. I don’t think the incentive should scale up as TVL increases. Not only would that be easy to game, large DAOs would consume a huge amount of UMA tokens. I like a small incentive to attract interest, basically a marketing expense. Tens of thousands of UMA tokens going to a DAO that does an integration is too much, especially since we’re already having a lot of success driving adoption just on the merits of the product.

For reference, I was talking earlier today to a DAO that has treasury worth hundreds of millions of dollars, which is looking to adopt oSnap without any incentives because it solves key problems for them. If this program was in place, their integration would instantly vacuum up all of the incentives available.

I would rather see an incentive structure that offers some amount of UMA if all three criteria are met, rather than separate payouts for each of the criteria and a variable payout depending on TVL. Another criteria that would be worth adding is that the $100,000 in TVL be in there for some minimum amount of time, to prevent someone from funding a Safe, adding oSnap just for the incentive, and then closing shop.

If that doesn’t sound interesting, we could also look at a grant for specific work The Rollup could do to increase oSnap awareness. We’ve had success selling oSnap on its merits so it’s really a matter of finding the right people to talk to.