Governance Discussion: Re-distribution of ENS Token Allocation

Governance Discussion: Re-distribution of ENS Token Allocation

Introduction

On Nov. 8th, 2021, Status was allocated ENS tokens as a thank you for the early integration of their naming system into the Status ecosystem. For those that are unaware, our built-in (SNT purchased) naming system leverages ENS, and registers a subdomain of stateofus.eth for unique and searchable naming purposes. A user can also import any ENS name as well. For more details, a full write-up around the feature and its economics can be found here (TODO: the interactive portion of this article needs to be fixed) and you can see the analytics of the history of its use on our public dashboard.

Here are some of the relevant details to this proposal:

  • airdropped tokens: 46,296.3 ENS (~3.7 MM USD @79.85 USD/ENS)
  • registered ENS usernames: 5,009
  • unique username accounts: 1,927
  • ENS snapshot date: October 31st, 2021
    • note: no new ENS username registrations since this snapshot

The public ENS airdrop distributed 25% of the 100 million ENS tokens (25 MM) to on-chain ENS users. You can read more about the entire distribution in their announcement article. I am also in the process of performing some deeper analysis of distribution, particularly around how the other sections compare to the airdrop, and overall “fairness.” I will update this post when it is published.

You can also use this tool to check if an address is eligible to claim ENS tokens, and if so, claim them here. Fees will range from around 90-200 USD depending on current gas prices.

Cursory analysis shows that we as Status hold a very large amount of ENS when compared to the average ENS user that received tokens from the airdrop. The following table shows the distribution of ENS tokens broken up into buckets of “exponential group,” that is people with < 1 ENS, then < 10, …, until you get <= 10,000 ENS tokens.

exponential group group size (%) airdrop token amount (%) total token amount (%)
$\le 10^0$ 1.766299 0.001335 0.000334
$\le 10^1$ 1.302936 0.032919 0.008230
$\le 10^2$ 31.395391 10.96204 2.740512
$\le 10^3$ 65.442410 88.4395 22.109874
$\le 10^4$ 0.092963 0.564 0.141050

(Data source: airdrop.json)

Note that the maximum an account received from the public airdrop from owning ENS names is 1143.54 ENS. This means the last bucket is only a few folks when compared to everyone that is eligible to claim tokens. The mean airdrop amount was 181.56 ENS.

Our token allocation is ~46x the maximum any single account received from the public airdrop, and ~254x the mean.

Since the metrics of who was eligible for the airdrop did not include subdomains of the 2LDs registered on ENS, none of our ENS username registrants under stateofus.eth are eligible for claiming ENS tokens. An argument can be made that we should in some way distribute our allocation to those who created and used the system for the following reasons:

  • The developers of features that incentive use the use of SNT should be rewarded commensurate to the growth of the feature. This is a fundamental idea behind development and reward in Web3.
  • The users of an incentivized feature (particularly early and earnest ones) should be rewarded for their contribution and engagement.
  • As ENS is primarily a public good, the distribution of its governance token should be maximally distributed across its users, thus our oversized allocation as an organization should not be wielded by only a few individuals.
  • ENS usernames in Status are fully owned by their registrants while their SNT is locked up in the smart contract. It can be argued that the allocation does not fully belong to the Status organization, but also to those that have used the username feature, as the airdrop did not include subdomain accounts. That argument is hinged upon whether not the ENS team feels it is the responsibility of the feature implementer to equally handle that distribution, as all subdomain use across ENS is not equal and outside the scope of the ENS team to decide.

This post is around exploring the various options we have in what we should do with these tokens.

Options and Some Numbers

Status HODLs as an Organization

As per the ENS announcement, it stands to reason that our token allocation is for our early and substantial integration into their service. Thusly, it is a desire from them that we wield these tokens to help govern the system’s future.

Our allocation accounts for 46,296.3 / 1e8 * 100 = 0.0462% of the total supply. If we look at just the circulating supply of the system (half of that), it’s 0.0926%.

Status currently holds a few “governance tokens” like this, and we are currently working on a proposal to setup a proper process and multisignature wallet around deciding how these tokens are tracked, used, and managed within the organization. One of our own, Simona Pop is an active participant in these ecosystems, and our token allocations allow us to boost her relative weight in their governance processes which helps us carry weight within the development of the systems we care about in the broader community. We are not building Web3 alone, and an argument can be made that having weight in the broader ecosystem is in the greater good of Status.

Status Core Contributors that Created the Feature

Looking at the ENS Usernames Swarm Repo, we can see the primary individuals involved with delivering this feature. There are clearly others that had some involvement but this is just what I can find that is recorded. How the distribution would occur across those involved isn’t obvious as the workload wasn’t equally distributed. If this is something that we choose to go with, then those involved will need to weigh in with their opinions on developer distribution.

This option helps establish a precedent of enabling those that develop a feature within the ecosystem of Status to benefit from its growth and use. After all, in the end, we want people to build on Status, and this ENS allocation is arguably a direct “thank you” for that development.

Only ENS Username Accounts

If we evenly distribute ENS across ENS username account holders, we arrive at:

46296 ENS / 1927 accounts = 24 ENS/account

which at current prices equals ~$1,922 USD per account with an ENS username.

This will be slightly driven down by the fact that we have to develop and deploy a secure method for users to claim their “share.” This cost Status resources, and it will require fees to deploy whatever smart contract involved

I think it stands to reason that distributing per registered username is a faulty way of doing it, both from a fairness and economic perspective.

Here are some tasks that will have to be performed if this option is chosen:

  • Smart contract development for users to claim whatever is decided around their distribution
  • front-end development around interacting with this smart contract, whether stand-alone application, or integration into the Status clients
  • marketing/messaging/tutorials on how all of this is happening, and how to do it

We should add here some additional cost/resource analysis of this over time.

There is additional “marketing” and boon to Status here outside of direct financial gain in the ENS token allocation. It broadcasts that our users grow with us, and is an additional message that we stand behind our Web3 principles firmly.

A Mixture of the Previous Options

Of course, any mixture of the above can be taken. The problem with mixing is that it weakens the pros of every option to the individuals involved, and strengthens the cons. The more we distribute these tokens, the more in overall value we lose to Ethereum fees and consumed Status resources, which are substantial.

Something Else Entirely

I’m sure there are other options I have missed, add them if you can think of something reasonable.

Some Discussion

In my opinion, if some form of redistribution is not taken, then we owe our community a very strong reasoning as to why. My initial thoughts of why these options are unreasonable is the potential development and cost effort of doing them over-shadowing the reward in a way that makes these options obviously infeasible.

I have only outlined a gross view of each of the options and there are no doubt more subtleties involved with each one. But I wanted to get the conversation started, so here we are. It’s started. I can only hope that others who have received similar allocations in the ecosystem are having a similar conversation. If not, I hope this motivates them to do so.

Please comment and add your perspective on this; Correct things you think I’m wrong about. After all, this is a decision that should be made by all of us, not just me or a handful of people. I will work to keep this post updated as discussion continues.

10 Likes

Here you can follow who are the delegates of ENS. We as Status would delegate to @Simona, adding a significant amount of weight to her decisions.

4 Likes

the easiest and simple way is to equally redistribute based on registered accounts.
maybe can think about redistribute based on users registered date, the more earlier will get more distribution.

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I think distribute like 80% based on registered accounts (can use registered date to weight) and then 20% to Status Core Contributors that created the feature.

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A 50/50 split between core contributors and stateofus.eth subdomain users after dev costs would still be a non trivial amount and reward both groups. Recipients could be encouraged to delegate to Simona.

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I think it’s fair to distribute a significant majority (around 80%) to people who registered stateofus.eth names by a certain date.

Imo it’s best to choose by username, as those who bought more usernames in Status have had more conviction in, and usage of SNT and status.

I think airdrops like this are made to be distributed. Both to people who have used the internal service, and to Status Core Contributors.

3 Likes

I think it’s important to note there is potentially a decent # of inactive stateofus wallets. Would prefer rewarding users still active. Weather that be (1) Giving .stateofus.eth users x # of days to register to receive a portion of the ENS distributed or (2) distribute to active wallets which have transacted this calendar year. Personally think it’s important to reward those still using the product.

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Thanks for spearheading this @petty, and great suggestions from all so far!

As we have a mandate to progress into a DAO, it is imperative that we distribute the majority, if not all of the ENS tokens to Status network participants. Naturally these are ENS tokens have a strong overlap with Status’ ENS Usernames.

There are several weightings we can apply to define a proportional weighting for allocation:

  • Having a Status username
  • Active Accounts
  • Account Age
  • SNT held

If there’s anything else we should consider please let us know, and we’ll draw up a plan and get it going

5 Likes

This is certainly an interesting one. Thank you for raising the question.

Although this couldn’t be possible without the hard work of the core contributors who built this integration, I would argue they were rewarded for this work already through salary/SNT distribution to the swarm.

If the Status network participants did not engage by setting up their ENS names, Status would not have received this allocation, so stands to reason to share this back with the community.

I do think Status as an org in this current state is likely to participate in the governance of ENS, but I would also assume that those members are already participants in that 1927 accounts and would be granted an allocation anyway.

The other thing to keep in mind that users may not hold all their assets in the same wallet. My personal SNT holdings are in cold storage, so if the allocation will take those elements into the account please give participants the opportunity to adjust - but I do realise this is not fool proof.

3 Likes

another consideration: users had to lock up SNT to get these subdomains, and unless there’s an easy walk through somewhere i’m guessing most weren’t able to unlock those tokens afterwards.

i assume this cost went largely to the dev team since there wasn’t any other overhead i’m aware of. is that right?

The locked SNT can be withdrawn, it works like a shopping cart at the supermarket. You put a coin in to unlock the cart, and you get it back when you return it. If you no longer want to own the name, you withdraw.

As someone who worked on this feature I would be fine with 100% going to the Status Network in whatever form that entails. I would be interested to hear @ricardo3 thoughts as the main contributor of the feature.

We could do a soft poll on snapshot to see which of the preferences SNT holders lean towards.

These are all valid criteria and when combined would be less subject to sybil farming than distributions done in other protocols. One thing to consider is many username owners will likely not hold the majority of their SNT in the same address for privacy reasons. It would be aligned with our principles if we could allow users to prove ownership of usernames and SNT by combining signatures from multiple accounts in zero-knowledge. Having such a tool developed would also be something the greater Ethereum community would benefit from. Perhaps @barrywhitehat has some ideas on how this could work.

1 Like

I don’t think using No of SNT held is a great metric and don’t think it should be used either. The initial distribution was distributed using Account age and I guess that’s the best route we could take.

Do something similar to what ENS name, having multiple status usernames doesn’t give you more $ENS allocation and what matters is how old your status username is.

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Using SNT as a measurement method can enhance the market, as far as I know, I have friends around me who gave up and left STATUS because of the uselessness of SNT, which is a failure if the early encryption users can’t be retained. But as @barry said:

One thing to consider is many username owners will likely not hold the majority of their SNT in the same address for privacy reasons.It would be aligned with our principles if we could allow users to prove ownership of usernames and SNT by combining signatures from multiple accounts in zero-knowledge.

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I think we should do the same ENS did, distribute based on the oldest registered name by that address. In my opinion Status developers should NOT get a part of that airdrop, because they were already paid for that work, and they will also be part of the airdrop if they registered.
This would be the easiest and would be fair, I think everyone will be happy if all goes to users that registered a username in Status.

About SNT held, I think this becomes too hard to calculate, as berry mentioned, people sometimes use cold wallets to store their funds, and we want to congratulate who used the feature of usernames.

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100% agree with the sentiment and distribution from @ricardo3 above.

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i’m a early user with snt domain and also hold a mount of snt token in my software wallet till now, although there was no any stake/farm/Dao rewards, just for like status, like their consistant and unchanged original intention and concepts, it’s very precious nowadays.
So snt tokens’hold or unhold, is not a measure dimension to judge failture or sucess. To some extent, the original intention and the “heart” is the most key factor to the bright future. (the real magic of qutantum which people cannot manipulate is it can read the motive, far above the “technologhy (inc. AI)”.)

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I think it’s fair to distribute a significant majority (around 80%) to people who registered stateofus.eth names by a certain date.

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I agree with you, contributors + subdomain users and maybe some other category :slight_smile:

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agreed, @ricardo3 was member of status team(don’t know whether still work for status). He got the most likes, so the final solution should favor him

1 Like