Summary
TIP-25 outlines a proposal for TreasureDAO (“Treasure”) to reallocate a portion of MAGIC originally assigned for LP and staking rewards to the Ecosystem Fund (“Ecofund”) and to be earmarked for new contributor allocations.
Background
The MAGIC token was initially launched with a modest goal: creating an economic resource for Loot ecosystem projects. The token distribution for the token was established in the first month of the project when the market cap of the entire project was less than $1 million. We have since managed to build a formidable ecosystem with numerous product verticals – Bridgeworld, Smolverse, Trove, the Game Builders Program, the Treasure Game Studio, and soon MagicSwap v2 – without deviating from the token model established in the project’s earliest days (not to mention an ever-growing ecosystem of third-party game studios and partners). Moreover, the DAO has resisted adding new tokens to the ecosystem in an effort to strengthen the value proposition of MAGIC.
Since its start in September 2021, the Treasure council of core contributors has grown and changed significantly, bringing in top talent across each of its verticals despite the majority being under-incentivized with MAGIC. Remaining a one-token ecosystem has had its advantages for stakeholders but has made the DAO’s job much more difficult in providing meaningful “skin in the game” to new contributors who have joined since the ecosystem expanded exponentially. As such, the DAO is proposing an allocation be carved out for team members who have not previously received long-term MAGIC incentives.
Rationale for Change
**Long-term alignment and upside for both currently under-incentivized team members and future contributors. **Many of the current team members left prestigious roles, well-known companies, and other promising opportunities to join Treasure full-time to realize our ambitious vision. The majority joined after the initial contributor allocation and are currently under-incentivized at the level needed to ensure that we retain them for the long-term. The DAO also lacks sufficient MAGIC to incentivize the development of the Treasure Game Studio in particular, which poses a real risk to the long-term incentive alignment with these contributors.
These tokens can be distributed from existing treasury funds without requiring an additional mint of MAGIC. These funds can be covered using MAGIC originally assigned for LP rewards and staking that are no longer necessary as they will be tapered down over time.
Decreased need for previously allocated MAGIC for LP and staking rewards. Thanks to listings on the premier centralized exchanges (“CEXs”), healthy protocol owned liquidity (MAGIC-ETH SLP) and direct fiat onramp via Trove (using Moonpay), LP rewards set aside in the original token design are not needed to nearly the same degree. We can drastically reduce incentives for this pool given that the majority of our volume (recently exceeding $150 million per day) comes from exchanges like Binance and Coinbase, with Sushi representing between 5-7.5% of total volume in recent times. Moreover, as ratified in TIP-20b (“Amendment to MAGIC LP Incentives”), LP rewards in Sushi have started to taper down over the course of 2023 with the goal of further decreased LP incentives in 2024 and eventual terminal incentives in 2025. The reduced volume from Sushi in addition to the DAO’s aim to cross over the boundaries of traditional gaming and bring in new gamers to web3 means LP incentives are increasingly less important.
**Transition to a more sustainable growth model. **TIP-23 (“Atlas Mine Cataclysm Sunset”), ratified by the community, established a new direction for the DAO in using MAGIC to target builders and reduce passive staking rewards. A core rationale behind this change was that yield-earning users cannot help the ecosystem grow and drive continued value to MAGIC in the same way that new projects and builders can. By this logic, it is important that the DAO allocate MAGIC towards crucial contributors to the DAO itself, including Treasure team members working across its many verticals.
**Incentivization for ecosystem growth initiatives (eg. attracting top third-party game developers). **Further MAGIC that can be used to bolster the Ecofund and used for potential future grants, community and builder initiatives, and token divestments. With respect to games, the Ecofund can be used for bringing in new partners and helping new games bootstrap themselves. Our recent partnership wins with The Beacon, Kuroro Beasts, Bitmates, and others demonstrate the importance of incentivizing the Game Builder Program, which will help to turn the dream of building a leading cryptonative game publisher into a reality for Treasure.
As we continue to survive the bear market and remaining sufficiently capitalized, the DAO is in prime position to continue our explosive growth of recent months and become top gaming ecosystem in web3. We have brought in some of the top minds and developers currently working in web3. Ensuring that these employees are committed to Treasure’s long-term success is vital for continued success. This proposal comes at no cost to stakeholders and is reasonable given the CEX listings and the DAO’s transition away from passive yield to builder support. Supporting builders starts first with the DAO’s core contributors of Treasure. There is no limit to how big our ecosystem can become. Keeping all of these contributors aligned on the goal of driving value to MAGIC will be a make or break decision for whether Treasure eventually reaches its full potential.
Proposal
Transfer a portion of the MAGIC in the DAO’s liquidity and staking fund (26,954,101) towards the Ecofund and contributor allocations, with the remaining balance retained:
5,293,251 MAGIC to the Ecofund to be used for potential future grants as part of the Game Builders Program, community and builder initiatives, and token divestments
17,385,850 MAGIC (5%) to be earmarked for contributor allocations.
- Used to support (i) hires who joined Treasure after the initial contributor allocation; and (ii) be earmarked for future key hires of Treasure and its game studio, Darkbright Studios, to ensure there sufficient long-term alignment and incentivization.
- The contributor allocations will be subject to vesting terms that will be marked to industry standard practices while balancing long-term alignment with the DAO and competitiveness to attract and retain talent (example: 1-year lock/cliff and 2-year vest with MAGIC unlocked linearly on a monthly basis).
- Any contributor allocations granted will use Liquifi as the token vesting solution. Through Liquifi, tokens will not be fully locked in a vesting smart contract and any vesting that commences can be paused or withdrawn if the contributor were to leave the team.
4,275,000 MAGIC to remain in the liquidity and staking fund. This balance will be sufficient to maintain LP incentives and fund potential future liquidity initiatives.
Current and planned Sushi LP incentive schedules (2,775,000 MAGIC):
- CY 2023: 1,575,000 MAGIC required (schedule can be seen in TIP-20b)
- CY 2024: 1,200,000 planned MAGIC required (100,000 per month)
- CY 2025: 0 planned MAGIC required (0 per month)
- Note: LP incentive schedules for 2024 and 2025 are indicative and will need to be ratified by the DAO at a later date
Allocation reserved for potential future liquidity initiatives (1,500,000 MAGIC)
Polling Period
The polling process begins now and will end on Sunday, March 12, 2023 at 4:00 PM UTC (see local time). If quorum is reached, a Snapshot vote will be put up shortly thereafter.