LIP-30.md #61
LIP-30.md #61
Conversation
LIP-30: Treasury Reorganization title: <Rework the Lens Treasury> description: <Diversifying Lens's Treasury> author: < (@ZKJew), > discussions-to: <Lens> status: Draft type: <Protocol> category: <Treasury> created: <(2024-08-09) > --- ## Abstract <!--- Lens protocol has undergone a vast amount of growth over the past year. This is showcased in Lens’s treasury holdings which boast over $500,000 dollars in value accrued from mainly Lens profile and handle mints. The goal of this LIP is to foster discussion and a layout a plan for proper treasury management.---> ## Motivation <!--- Currently, the majority of Lens’s funds have been stored in MATIC as it is the gas token for the polygon POS chain that Lens currently inhabits; however, Lens’s current V3 visions will see a migration away from polygon to “Lens chain” and will need various different payment tokens that is not just matic. In addition, matic has been seen to be a less than satisfactory investment when compared to its competitors. Furthermore, treasury diversification should be done in order to support Lens’s long term needs in terms of subsidies of gas for high quality users.---> ## Specification and Rational <!-- Lens protocol should diversify its treasury into the following basket of assets ETH (50%) to pay for DA gas on ethereum and as a better store of value comparatively to matic, additionally 10% should be held in LINK to pay for CCIP bridged data to Lens chain. Also, 10% should be held in AR to store posts on areweave, 10% should be saved in MATIC for profiles that prefer to use Momoka, 10% should be held in ZK in order to allow for Lens to scale high throughput interactions using zkporter, and 10% should be allocated to buying and supporting Lens’s main currency $BONSAI through burns, airdrops, or other incentives like liquidity provisions or burnt liquidity. To manage this, Lens will DCA into these holdings when the revenue meets a certain benchmark for all new profile mints and will retroactively DCA the old mints in a responsible manner. --> ## Backwards Compatibility <!--- No backward compatibility issues found. ---> ## Copyright Copyright and related rights waived via CC0.
|
|
totally biased opinion, but I agree with some of the treasury being converted from MATIC to BONSAI - for a few reasons
I listed these reasons to present a logical way of thinking about this use of funds from the Lens Treasury. TLDR; everyone's having fun with BONSAI; DCA from MATIC => BONSAI and airdrop it on Lens Network Day 1 |
|
Completely agree with Carlos on this end point. The best and most common I have gotten for the Bonsai allocation is why are we enshrining a meme coin and not market weighting others (meaning why pump your bags but not mine lol). To which I say tbh right now bonsai is the best and only really universally accepted currency on lens and if there's a competitor that can rival the use case of stimulating the economy, the change or weighting can be made - however, ultimately I think 10% of rev to stimulate the collector economy is not a bad idea and I really don't think the bias is more of a factor practicality and liquidity. I do think that if this is passed the treasury should burn even liquidity before airdropping any stimulation. |
|
I might have a more extreme viewpoint but I think the purpose of the treasury should be totally different. I wouldn't put the onus of paying for the costs of running and securing the chain onto the treasury at all - in every other L2 the transaction costs are what pay for the security - I don't see why anything should be different here. If the protocol can be operated without spending treasury funds on polygon it can be achieved on zksync too. Instead of infrastructure expenditure the treasury funds which have been almost entirely raised from profile mint revenue should be allocated entirely towards the community and ecosystem and how it can be supported and grown. To that end I would propose 50% of the treasury be allocated towards $ZK tokens, creating a delegate and voting bloc for zksync governance that wields this voting power at the behest of the Lens community. The other 50% should go into $BONSAI. A portion of those funds can be used for incentives on Lens Network to make sure the launch goes off with a bang, a portion can be used to provide liquidity support for tokens being launched in the Lens ecosystem, whether that is a possible $LENS token or to support a new or existing pair on zksync such as a USDC of ZK market or to provide liquidity support to any other new tokens that are launched in the Lens ecosystem that are deemed worthy. These could be creator tokens, utility tokens or something else entirely. I would also really like to see more secondary markets being created for Lens collects and it might be worth considering some kind of SudoSwap style AMM for collects to support these markets as they begin to grow or experiment with other such models to make more active trading become successful. Lastly, any remaining bonsai can simply be held as a strategic reserve for any future plans, experiments or even creator/builder grants. It is a somewhat less diversified proposition so I wouldn't be opposed to a 30/30/30 ZK/ETH/BONSAI split also for risk management reasons but overall I think the treasury will be much more productive overall when deployed with a growth mindset toward its users and builders, especially since Lens itself is still so small and early. |
|
@c0rv0s I think you've been drinking too much of the cool aid man, but I will break my opinion on this rational down. I excluded actual #s because I don't think I have data comparable to the team for proper percentages for conversion of flows, but I think 10% of revenue towards the purchasing and redistribution of Bonsai (OTC) is probably already an extreme equivalent. It would be the equivalent to the US government doing QE into GME imo for 10% of revenue. "I might have a more extreme viewpoint but I think the purpose of the treasury should be totally different. I wouldn't put the onus of paying for the costs of running and securing the chain onto the treasury at all - in every other L2 the transaction costs are what pay for the security - I don't see why anything should be different here. If the protocol can be operated without spending treasury funds on polygon it can be achieved on zksync too." I think this is a misunderstanding of how the Lens V3 vision works. While the chain executes the ultimate transactions, the protocol can still be deployed anywhere and as a volition it can put data anywhere giving the users and application developers full autonomy and so, until Lens has a significant user base and UX being the main hinderance for apps using Lens historical - it would make so sense for Lens to be financially inable to subsidize fees for at least likely human users at the protocol level in the immediate term. Polygon's fees and zk's fees are not equivalent. Right now fees are so low because EIP-4844 only set increases due to demand in WEI terms which leads to dirt cheap blobs that we will not have in the future - and zksyncs advantage in fees scales with users doing similar transactions not linearly with transactions. "Instead of infrastructure expenditure the treasury funds which have been almost entirely raised from profile mint revenue should be allocated entirely towards the community and ecosystem and how it can be supported and grown. To that end I would propose 50% of the treasury be allocated towards $ZK tokens, creating a delegate and voting bloc for zksync governance that wields this voting power at the behest of the Lens community." Lens already has about 5.6 million ZK, according to nominal values that is already 50%. I do not see the need for that to be increased and I certainly do not think flows should be spent on ZK as opposed to store of values and essentials for fee subsidization as while Lens Chain is in the hyperchain it is still soverign from the ZK team and 5.6 million is certainly enough for high volume collects on zkPorter chains. "The other 50% should go into $BONSAI. A portion of those funds can be used for incentives on Lens Network to make sure the launch goes off with a bang, a portion can be used to provide liquidity support for tokens being launched in the Lens ecosystem, whether that is a possible $LENS token or to support a new or existing pair on zksync such as a USDC of ZK market or to provide liquidity support to any other new tokens that are launched in the Lens ecosystem that are deemed worthy. These could be creator tokens, utility tokens or something else entirely. I would also really like to see more secondary markets being created for Lens collects and it might be worth considering some kind of SudoSwap style AMM for collects to support these markets as they begin to grow or experiment with other such models to make more active trading become successful. Lastly, any remaining bonsai can simply be held as a strategic reserve for any future plans, experiments or even creator/builder grants." Pure cool aid. Bonsai can't even handle a 15% with its liquidity 50% of the current treasury and or flows would not only be irresponsible, but also could create a bearish long term positition for the protocol and bonsai as investors want liquid returns and that bonsai you QEed would eventually lead to a massive QT crash, which is extremely bad for the whole space.. I think grants in bonsai is frankly a terrible idea as well. That's like if we paid ethereum core devs in dogecoin salary... or SHIB. "It is a somewhat less diversified proposition so I wouldn't be opposed to a 30/30/30 ZK/ETH/BONSAI split also for risk management reasons but overall I think the treasury will be much more productive overall when deployed with a growth mindset toward its users and builders, especially since Lens itself is still so small and early." I agree with ETH at the very least - but I think ZK should be a late stage protocol treasury add and BONSAI should be smaller, but a constant flow so multiple waves of users can be incentivized to participate in the economy and Lens. |
|
@ZKJew, if lens already has a sizable amount of $zk that might not be necessary. My thought was more that this voting power would be more accessible to the community. I don't see a delegate list on zknation but if Lens is a delegate that's wonderful however the Lens treasury having its own voting power that is more directly owned by the community could be powerful. Maybe some form of voting contract perhaps. As for supporting deployment on other networks that has been possible for two years now and no one has shown any interest in it yet which shows a lack of demand. If V3 changes something that makes this option more attractive then there could be a good reason to support this but there's no reason to assume that yet with current information. My understanding of the architecture is that simple social posts can be settled on an extremely cheap Validium network while financial transactions will go on a more secure (and expensive) rollup. Asking users to pay for their financial transactions is a non issue imo, if you're already spending 10 USDC on something then having the paymaster spend an extra 1-3 cents of USDC for the gas cost is not gonna scare anyone off. 30% of the treasury in eth to subsidize txs for early growth is most likely a non issue given what I understand of Validium costs. There's not necessarily any reason why this has to be paid by the protocol itself either - Lens apps should be able to make money on their own by providing a quality product and can implement their own paymasters for their own users. Lens protocol subsidizing gas costs is a short term growth tactic. Generally this applies to any Chainlink usage also. LINK/ETH chart suggests eth is better long term hold here also. Mostly I don't see any other relevant tokens to diversify into just yet besides $zk, $eth and $bonsai. With $zk the interests of Lens users can be more represented in the ecosystem. Eth is pretty stable and is broadly the default token everywhere so its a simple choice to include. Bonsai is of course the current default transactional currency. I think that the Lens economy would be stronger if there was assets being created since trading, mints and swaps are the primary use case for blockchains so far, eth and bonsai holdings serve to support the creation and liquidity of more assets and pairing with a common, well distributed token. This generally leads into the treasury holding and supporting more Lens native assets that don't exist yet. Your point about Bonsai liquidity is valid of course in current market conditions and there should be strategies to account for this. Overall I don't see "paying for infra" as the problem that needs to be solved. Growth in the user base and transaction volume is far more important, once there are millions of users then the treasury fee (5% currently) + sign up fee will be able to support infa requirements. 5% of 0 isn't any good though so I believe the most value comes from getting that number up and that means revitalizing collects, secondary trading, swaps and financialized open actions. I'm also not proposing a continuous allocation at these levels, just how best to deploy the current funds in a way that will lead to more protocol revenue long term. |
I agree with a lot of this I think you missed the other part of V3 which is bridging data from other chains to Lens Chain via chainlink's CCIP. This is what enables integrations with other chains which is why there is no development currently because putting all the data in one place for front ends would be really difficult is my read. I completely agree with Lens needing to be a delegate with large voting power in zksync, but I also don't think it's that big of a deal considering Lens's current allocation according to zksyncs airdrop disclosure.
I agree with the second point long term, I just think in the immediate term until there are other actors that want to subsidize transactions the protocol should continue to provide this service for growth and adoption as UX is extremely important. Slowly raising the ceiling when their are other actors to subsidize transactions seems like the best plan to me. I could understand the argument because of how cheap it is to delegate a portion to this and a larger portion to bonsai or a store of value for the purpose of purchasing either subsidation or bonsai. But, I would rather the protocol have 30% subsidies 10% bonsai to distribute and 60 % eth to DCA into these other usecases just for the reduction of risk and volatility. I proposed an overly cautious allocation to subsidies because of the likely possibility of users and fee costs at the same time as happens with blockchain fee markets, but that was just napkin math yk if the validium 100x in demand then what happens to fees? I agree ETH is good long term, but we should also be prepared for short term fee volatility sort of like how Arweave charges for 200 years of storage imo my numbers were pretty arbitrary though which is why i took them out.
I fully agree with the last point - however I would also make the point that if a user has to sign more than one transaction or collects have latency of greater then 500 ms we won't have any users to get that 5% so until other actors are willing to step up and subsidize transactions, the protocol should to it for growth. Holding > 10 % of bonsai imo is weird for lens to do, but distributing 10% - rebalancing to 10% rinse and repeat is what I think is best.
I just think people will be turned off if they think they have to pay to post especially if theres an instance of fee spikes and volatility. But I see where you are coming from. |
well alright, holding a little $link can be fine. I still think 5-10% is more than enough tho
We can for sure go higher than 10% $bonsai. Now I'm starting to think some $btc would be even better for risk/volatility reduction however.
Yea, latency is already a problem and subsidies should exist for maybe 6-12 months for growth. Covering these costs from the treasury still seems unnecessary but allocating $150k of existing reserves towards this could be a reasonable padding. If the profile minting cost stays at $8-10 and there's a bump in mints + continued growth from Lens Network launch I could see new signups extending this runway much much longer.
Totally, no one wants that. A valuable protocol + social graph ought to lead to apps running their own paymasters in time + most posts still go to Momoka afaik and for stuff that has to go onchain like financial interactions I think in many cases its not a big deal to pay a little bit of gas. The UX could look like "1000 $bonsai to collect this post" and then there's a 0.1 $bonsai fee on top of that goes to the paymaster to cover the gas cost. In fact, now that I think of it - the fact that zkSync allows paymasters and gas fees to be paid in any token means that collecting posts could be much more economical if the gas cost is denominated in the same token and simply shown to the user as a "platform fee" or whatever language makes sense for the app's user base. Would never be more than a couple cents and everyone understands you have to pay for stuff at some point. The majority of onchain interactions that require gas is probably going to continue being collecting and collects are largely priced in $bonsai so simply tacking the gas cost on there and paying in $bonsai could be the most sustainable, long term solution with the least UX friction. At least if I was building a Lens app right now that's what I would do. |
|
Yeah I totally agree, I guess the reason 'I have bonsai on the conservative side is if there is a big spike in usage ex 200k to 5 million profiles having enough funds for users 10-20x the side is nice to have instead of being a forced buyer. Lens will probably be the biggest buyer of Bonsai due to this proposal and the numba can always go up which is why I had it conservative, so it can always be increased with little risk yk. I agree 100% with the last paragraph. It'll be interesting to see what allocations the team comes up with considering I am probably more conservative then everyone else. |
|
The idea of a self sustaining contract with fees going to paymaster via app fees would be a great proposal for you to write once Lens V3 is established @c0rv0s |
|
Since the launch of Lens native tokens, such as Pointless, Bonsai, and others, these tokens have rapidly become the main currency within the Lens protocol. This evolution, particularly highlighted by LIP:16, marks a significant shift for the protocol, moving beyond merely enabling users to own their content and connections to also fostering social commercial activities. LIP:16 emphasizes the necessity of building a sustainable circular economy that benefits all participants within the ecosystem. It is within this context that I argue the Lens Treasury must also reflect this pivotal change. The Lens Treasury, as currently structured, has grown primarily through the pay-to-play model, where users purchase profiles and handles. While this model has effectively built the treasury, it does not necessarily drive or support the broader economy within the protocol. The real economic drivers, which empower users to monetize their activities, are open actions like collects, which have increasingly relied on native tokens such as Pointless and Bonsai. For instance, data indicates that 145,000 profiles, or 25% of all users, have either collected or created a paid collect publication. This accounts for 47% of the total machine learning quality scores profiles, clearly showing that economic activity is vital to the protocol’s health and sustainability. $BONSAI immediately took over the WMATIC as the most used token for collecting. Despite this, the current treasury allocation remains heavily invested in WMATIC, which, as noted in the proposal, has proven less satisfactory when compared to its competitors. Additionally, WMATIC’s usage within the protocol is minimal, primarily supporting potential farming activities of limited number of publications. Profile scores, which are instrumental in distinguishing sybils from genuine users who create valuable content, further demonstrate the ecosystem’s shift towards native tokens. The adoption of Lens native tokens as the default currency across the platform underscores their central role in the protocol’s economy. Given the Lens protocol's intention to migrate from Polygon and the subsequent need for diversified payment tokens, the proposed treasury diversification is not only timely but necessary. However, this diversification should also include a significant allocation to the native tokens that are already driving the protocol’s economy. By holding a substantial portion of its treasury in Bonsai and other native tokens, Lens can directly stimulate its economy, incentivize new users, and reward high-quality content creators. This approach aligns with the broader vision of creating a sustainable and thriving economy on Lens, ensuring that the treasury not only supports infrastructural needs but also empowers the user base that drives the protocol’s success. In conclusion, while I support the diversification of Lens’s treasury as outlined in the proposal, I strongly advocate for including a significant allocation to the tokens that power the protocol’s ecosystem. This strategic move would ensure that Lens is not only prepared for its future infrastructural needs but also remains aligned with the economic realities and opportunities within its own ecosystem. All queries and data referenced are sourced from the public BigQuery. |
Thanks for snagging this data! I think this really supports the consensus view that $BONSAI should have most generous spot in the treasury. If it can be done with current liquidity or if needed to do OTC with the team at first to jumpstart this relationship would be a great topic of discussion to stem off this one imo. I think if Lens supports bonsai with flows or acquires a large amount bonsai at V3 launch, having well-calculated amounts of burnt liquidity as advised by models that take into consideration multiple variables and their changes will be important for longevity. As well as allowing future processes to be decentralized by having enough liquidity where an OTC with the team is not needed for acquisition. |
|
It's difficult to talk about what token(s) should be held when there has been no official indication of what the treasury is intended to be used for. Perhaps that discussion should happen first? That said, I'm highly skeptical of converting to a token that is down 95% from ATH and hasn't even been around a year. Without knowing more details on the plans for the treasury funds, I'd argue that if there is any swap, it should be to USDC and/or ETH, and that's it. If a new Lens-native token launches tomorrow, and it performs better than Bonsai in the next week, we'll see the same gold rush to use that token for collects. I believe it's shortsighted, at best, to hold any substantial portion of the treasury in a self-proclaimed memecoin. |
|
Absolutely, we should discuss the purpose and intended use of the treasury, and this was also what the LIP author outlined in a detailed plan for diversifying it to support various infrastructural needs, such as data availability and storage. What I strongly advocate for, however, is focusing on what’s happening right now. The reality is that, as it stands, the treasury isn’t contributing to or driving the broader economy within the protocol. What’s the point of having a treasury if it’s disconnected from the actual activity within the ecosystem? Right now, the treasury is simply losing value without providing any utility or support to the ecosystem. We can debate specific token allocations all day, but it’s clear that the current state of the Lens treasury is out of sync with what’s really happening within the protocol. Let’s be honest—ETH and USDC might be useful when the protocol needs to pay for external services, but they aren’t the forces driving the ecosystem forward right now. To clarify, I’m not advocating for converting the entire treasury into $bonsai and $pointless. However, I strongly believe that a significant portion should be allocated to the tokens that have been powering the protocol and its “creator economics” narrative over the past several months. This isn’t about chasing the latest trend; it’s about ensuring the treasury aligns with the economic realities and opportunities within its own ecosystem. |
|
Unless I missed a post from the core team on what the treasury is intended for, I think it's rather presumptuous to be talking about what we think it should be used for. I have no reason to consider it to be a community treasury, and Avara has largely footed the bill for the protocol by sponsoring transaction fees. From my perspective, only the core team has any say over what the treasury should be used for; at least as far as the profile creation revenue goes. I believe it'd be entirely appropriate for them to simply withdraw it to be used for future development and transaction sponsorship, or to simply pay back the tokens they've already spent. That would largely make this conversation (and LIP) unnecessary. The cool thing about Lens is that users can transact in any token they want, and the treasury takes a 5% cut from that activity. In this way, the treasury will always naturally be composed of the tokens that it should be, and it requires no swaps or subsidies to accurately align with the activity happening within the ecosystem. |
|
I think as the developers in the trenches - we absolutely have a say in what the protocol treasury should be used for. Lens Protocol would not be where it is if it weren't for its builders and creators. The combination of apps with good UX, a currency with a large holder base, and creators with amazing creative output - is what's working for Lens. So why not double down on what's working? If I remember anything from my economics class, it's that incentives matter. I think this LIP is super necessary and thank you @ZKJew for proposing it. Also, I thought the point of a LIP was to discuss as a community on improvements for the ecosystem? Not sit back and let the Lens Protocol core team decide everything in a bubble. That being said - I'd love to see them weigh in here so this month-long discussion can either be put to rest or put to action. |
I think that's presumptuous, especially when Lens has been extremely supportive and generous with things like grants.
Absolutely, but without proper context it's a waste of time and resources. We're not talking about protocol improvements, we're talking about how the Lens team should spend their money. If the Lens team believes the community should be deciding what the treasury should be used for then, of course, this conversation makes sense. But, unless I missed it, that has not be stated anywhere. |
LIP-30: Treasury Reorganization
title:
description: <Diversifying Lens's Treasury>
author: < (@ZKJew), >
discussions-to:
status: Draft
type:
category:
created: <(2024-08-09) >
Abstract
Lens protocol has undergone a vast amount of growth over the past year. This is showcased in Lens’s treasury holdings which boast over $500,000 dollars in value accrued from mainly Lens profile and handle mints. The goal of this LIP is to foster discussion and a layout a plan for proper treasury management.
Motivation
Currently, the majority of Lens’s funds have been stored in MATIC as it is the gas token for the polygon POS chain that Lens currently inhabits; however, Lens’s current V3 visions will see a migration away from polygon to “Lens chain” and will need various different payment tokens that is not just matic. In addition, matic has been seen to be a less than satisfactory investment when compared to its competitors. Furthermore, treasury diversification should be done in order to support Lens’s long term needs in terms of subsidies of gas for high quality users.
Specification and Rational
Lens protocol should diversify its treasury into assets for the following needs when revenue is produced: It should have an allocation to buy data availibility as a validium or layer 2. It should have an allocation to purchase data bridging services from Chainlink as proposed in Lens's V3 vision. It should have an allocation to pay for permanent storage of data like on Arweave. Some matic should be saved to continue to fund transactions on the old infrustructure (Momoka). Some should be allocated to giving Lens a stake in ZKsync's governance which is where Lens Chain will be hosted. And finally, a certain portion should be allocated to holdings of Lens's defacto currency "Bonsai" to stimulant the Lens Economy via airdrops to incentive new users to join and reward current high quality users. A "test" of this could be conducted on Lens's V3 launch to see if it's effective in directly stimulating growth. To manage this, Lens will DCA into these holdings when the revenue meets a certain benchmark for revenue produced by all old profile mints and will retroactively DCA revenue for all the new mints in a responsible manner.
Backwards Compatibility
No backward compatibility issues found.
Copyright
Copyright and related rights waived via CC0.
When opening a pull request to submit a new LIP, please use the suggested template: https://github.com/ethereum/LIPs/blob/main/lip-template.md