TIP-29: MAGIC Reconciliation Mint and TIP-25 Token Schedule Assignment

Summary

TIP-29 outlines three proposals for TreasureDAO (“Treasure”): (i) mint tokens identified as being unminted from the genesis event and subsequent minting events following a reconciliation conducted by the council and r3gen Finance teams (financial ops partner selected to produce the DAO report as part of TIP-26 and published here on August 15, 2023); (ii) reallocate the minting balance to the Ecosystem Fund (“Ecofund”); and (iii) assign a vesting schedule to the minted tokens as well as the tokens re-allocated from the Staking/LP fund in line with TIP-25. The reconciliation identified a total of 8,068,497 MAGIC remains unminted which was attributed to an overestimation of the original MAGIC Farm on Ethereum L1 which resulted in a current max total supply of ~339,645,510 instead of 347,714,007 as set forth in the original tokenomics framework.

Rationale

Minting Unminted Tokens to Match Original Tokenomics

It was uncovered during a reconciliation conducted by Karel Vuong and Gaarp that the August 25, 2022 minting operation as announced on Discord to mint the remaining balance of the total MAGIC supply (previously not fully pre-minted) to the DAO council multisigs had been under-minted by 2,804,084 MAGIC which was meant to be in the Staking/LP fund.

Upon a secondary review of the circulating supply of MAGIC (by r3gen Finance as a third-party for good measure), the reconciliation uncovered a total undermint of approximately 8,068,497 attributed to the original MAGIC Farm on Ethereum L1. The original farm in September to October 2021 was forecasted based on farming rates across each farm over 30 days. Since stakers could unstake at any time during the genesis farm, and the team had no effective way to track exactly who remained staked at each point in time, the forecasted figures (which assumed everyone remained staked) produced an overestimate in comparison to the actual amount of MAGIC that original stakers earned. This resulted in a current max total supply of ~339,645,510 instead of 347,714,007 as set forth in the original tokenomics framework (see MAGIC on Etherscan for max total supply). The % of MAGIC supply that had been allocated to the various buckets (Ecofund, Mining, Staking/LP, initial team tokens) was based on the 347M figure which was higher than if the actual farm number had been used. We therefore propose this unminted balance be minted to match the max supply as stated in the publicly accepted tokenomics framework. For the avoidance of doubt, the supply schedule for MAGIC remains unchanged and these tokens remain unminted due to the complexity of the early MAGIC farm and an oversight by original team members in the early days of the project. Passage of this proposal will not result in any net new tokens but instead rectify this mistake from 2021 to match the original MAGIC tokenomics.

Reassigning Unminted Balance to Ecofund

In line with the rationale presented in TIP-25, the 2,804,084 MAGIC tokens should be minted and reallocated to the Ecofund from the Staking/LP fund to be used to further bolster ecosystem development and growth initiatives. Additional mint events described above to bring the total supply cap to match the original tokenomics should be minted and also allocated to the Ecofund. This represents 5,264,413 MAGIC and will be vested linearly in line with the below vesting schedule. Together with TIP-25, this would result in a total of 13,361,748 MAGIC introduced to the Ecofund.

Assigning Vesting Schedule to Reallocated Tokens

In TIP-25, it was ratified to reallocate a total of 22,679,101 MAGIC tokens in the Staking/LP fund towards the Ecofund (5,293,251 MAGIC) and a Contributor Allocation fund (17,385,850 MAGIC). However, a vesting schedule for both allocations was not designated and included in the TIP-25 governance proposal. In keeping with the original tokenomics model (while adjusting for actuals based on prior divestments and ratified Treasure Improvement Proposals), a new schedule should be assigned to these tokens. Importantly, the proposed schedule should enable Treasure to be sufficiently funded enabling greater ecosystem development in its earlier years, optimizing for continued growth of games, partners, and the overall community within Treasure. As a reminder, the use of the Ecofund is subject to a DAO vote.

The remaining 4,275,000 in the Staking/LP fund at the time of TIP-25 will continue to be used for Sushi LP incentive schedules (2,775,000 MAGIC) and to enable fast-bridging via Hop as part of TIP-27 (1,500,000 MAGIC; has since been actioned per this announcement).

Proposal

Mint 8,068,497 MAGIC tokens that were previously unminted; split 2,804,084 allocated from Staking/LP to the Ecofund and 5,264,413 from the genesis mine to the Ecofund. Steps to action:

  • Mint 8,068,496.682024080 (exact non-rounded figure to be minted) using the MAGIC contract on L1 (eth:0xb0c7a3ba49c7a6eaba6cd4a96c55a1391070ac9a) to the L1 Treasury (eth:0xEc834bD1F492a8Bd5aa71023550C44D4fB14632A)
  • Bridge over to MAGIC on Arbitrum One
  • Move into the Ecofund (address: arb1:0x482729215AAF99B3199E41125865821ed5A4978a - see DAO multisig list)

Together with the 5,293,251 MAGIC from TIP-25, this would result in a total of 13,361,748 MAGIC introduced to the Ecofund. For the avoidance of doubt, the Staking/LP multisig would retain 4,275,000 MAGIC at the time of TIP-25 (now 1,795,000 after three distributions of 210,000 MAGIC and two distributions of 175,000 to the Sushi LP Rewarder, and 1,500,000 MAGIC distributed to the Ecofund).

Note: the keys to mint MAGIC are proposed to be maintained and not burned to allow the DAO to continue to govern over MAGIC and any potential proposals that may be made to the Treasure community.

For the newly allocated tokens in the Ecofund (13,361,748 MAGIC), align these to a linear monthly emissions schedule from June 2023-2029 (Y2-Y8).

  • Note: The original Ecofund was allocated 50,998,054 MAGIC (14.67% of total supply). This proposed revision would increase it to 64,359,802 (18.5% of total supply). For context. Treasure’s year resets in September with year 2 representing September 2022-2023.
  • This allocation would mean 185,580 MAGIC would unlock each month beginning June 2023 (Y2) until June 2029 (Y8), resulting in a revised Ecofund schedule as follows (Yellow = original schedule | Red = revised schedule):

  • Accounting for MAGIC divestments conducted as part of TIP-6 and TIP-16 where future year Ecofund balances were unlocked early, this revision would result in the following schedule (Yellow =** **original balance | Red = updated balance)

For the 17,385,850 MAGIC tokens reallocated as part of TIP-25 for Contributor Allocations, align these to two vesting models - (1) Actuals and (2) Unallocated Tokens:

  • Reminder: the Contributor Allocation pool was carved out to be used to support (i) hires who joined Treasure after the initial contributor allocation; and (ii) be earmarked for future key hires to ensure there sufficient long-term alignment and incentivization. Any contributor allocations granted will use Liquifi as the token vesting solution. Through Liquifi, tokens are not fully locked in an immutable vesting smart contract and therefore able to be forfeited and clawed back by the organization if the contributor were to depart.
  • (1) Actuals:
  • Following TIP-25, early contributors who joined Treasure after the initial contributor allocation have been granted competitive and fair token awards with accompanying vesting schedules. These token plans have been designed to account for role and department, when a contributor started, impact made to-date, the nature of their role (full-time or part-time), and experience level. Optimizing to ensure long-term alignment to continue contributing and creating value for the entire Treasure ecosystem across product, engineering, marketing, community, partner and publishing support, Bridgeworld, Smolverse, and more.
  • The token plans are subject to vesting terms marked to industry standard practices while balancing long-term alignment with the DAO and competitiveness to attract and retain top talent - eg. 1-year lock/cliff and [2-4]-year vest with MAGIC unlocked linearly on a monthly basis but this may be longer (or shorter) on a per contributor basis.
  • Due to confidentiality agreements associated with individual compensation and token award grants, precise numbers on an individual basis will not be broadly shared.
  • (2) Unallocated Tokens:
  • For the sake of simplicity in the vesting schedule, the unused balance of tokens have been assigned a linear vesting schedule over 6 years beginning from June 1, 2024 (Y3) until June 1, 2030 (Y9).
  • The theoretical maximum emissions schedule for Contributor Allocations can be found below:
  • Red = updated schedule for Contributor Allocations in line with this proposal
  • Grey = in line with TIP-6
  • Blue = original linear schedule

Polling Period

The polling process begins now and will end on August 21, 2023 at 2:00pm UTC (see local time). If quorum is reached, a Snapshot vote will be put up shortly thereafter.

Appendix

Staking/LP Multisig Reconciliation (analysis conducted after April 3, 2023):

  1. Total Staking/LP allocation: 59,111,381
  2. Balance in the Staking/LP multisig to be redistributed via TIP-25: 26,951,101
  3. MAGIC implied to have been used: 32,157,280 | (1) - (2)
  4. MAGIC actually used:** 29,563,197**
  5. Implied MAGIC balance after TIP-25 redistribution: 29,548,185 | (1) - (4)
  6. Delta: 2,594,084 | (5) - (2)
  7. Adding back the April 3, 2023 deployment to Sushi LP Rewarder: **2,804,084 **| (6) + 210,000 per TIP-20(b)

Minting Operation Reconciliation (conducted on August 25, 2022)

  1. Tokens used in the Staking/LP allocation then: 23,147,958
  2. Tokens that should have been minted: **35,963,423 **| In order to match the total Staking/LP allocation of 59,111,381
  3. Tokens actually minted: 33,159,339

Delta: 2,804,084 | (2) - (3)