Governance Proposal UP1.2: Community-Enabled Analytics

Past discussion:

Temperature Check | Snapshot
Consensus Check | Snapshot

Current Proposal:

Live On-Chain Governance Proposal Here

Uniswap Governance is at a major crossroads, struggling with how to deploy larger tranches of capital from its treasury with effective oversight.

It is in the DAO’s best interest to define and deliver on a model that activates more substantial grants appropriately while maintaining decentralized protocol management.

As such, we have constructed a grant proposal that:

  1. Establishes a “No Negative Net UNI” ethos, whereby the initial grant amount is maintained
  2. Uses Uniswap’s own yield mechanisms to sustainably self-fund the program

These two items enable a much more substantive value-alignment mechanism. It ensures assets remain close to the ecosystem itself, and can be monitored directly. It also sets up the long-term capacity for the program to fund itself.

In addition, we have structured the proposal to include an Oversight Committee, whose sole responsibility is to ensure the program delivers value. In the event it is deemed ineffective, the Oversight Committee may return the initial grant to the governance process for reassignment to other opportunities.

Grant Request - $15M Year 1, $10M Year 2

With community member feedback, we have updated our $25M recommendation to a $15M grant in year 1, with a $10M additional grant triggered at the first anniversary with program success. With $15M of UNI the model can be proven at near-break even; if successful, the remaining $10M will allow for a longer-term commitment. Note that all commitments must be reviewed for efficacy [EDIT: annually] by the Oversight Committee [the Committee can call for a review at any time].

Assuming a 30% yield target is achieved, the $15M will generate approximately $2,250,000 in yield each year, or $187,500 per month. The application of the $187,500 will look as follows:

50% of this will be delivered to ecosystem community members as bounties ($93,750 per month)

Flipside’s value proposition begins with analytics, but its true purpose is to drive ecosystem acquisition and retention:

Ecosystem acquisition:

Utilizing a series of educational programs (see Terra scavenger hunt, SQL training solutions), and a hands-on community and analytics team, we activate new members into the ecosystem. This teaches new users how to actually use a complex protocol, how to think about the underlying mechanics, and even how to start becoming adept at using SQL to build queries and public-facing outcomes.

For our pilot Uniswap program, 69% of bounty recipients had never held UNI before (37 / 54).

Using this baseline data, this larger scale program will continue to deliver new participants to the Uniswap ecosystem at a projected rate of more than 900 per year [out of 1300 total].

Ecosystem retention:

The guiding metric for bounty flows is the percent of distributed tokens that are not sold or swapped after they are received. This reflects a traditional retention metric: the community member has chosen to remain involved in and supportive of the ecosystem.

Across our pilot program for Uniswap, 77% of the bountied UNI remained within the ecosystem (2,026 / 2,631).

Using this baseline data, this larger scale program will retain $900K UNI [50K Tokens] out of $1.125M UNI [64K Tokens] bountied per year.

Of the $93,750 in bounties per month, $25-$50k would be utilized to drive acquisition and $40k-$75k to motivate sophisticated analysts to drive substantive outcomes. This latter portion is critical as historically speaking, "power users’’ of analytics have kept the most impactful insights to themselves. Enabling sophisticated solutions to enter the public domain - like the Uniswap V3 Fee Calculator - enables ecosystem health and growth.

All bounties are delivered through weekly programs: Flipside sources questions from the Community and Uniswap Labs, prepares a bounty construct, releases to the community, QAs all results, and distributes bounties to the most effective outcomes. This is a complex and very time consuming process, but the return is significant: extremely directed results that serve community needs with immediacy. Bounties range from $40 to $650 each, determined by the complexity of the request.

Bounties for Flipside + Dune Analytics, TheGraph and others

Another significant clarification from our initial proposal is that bounties may be constructed for engagement of analysts across other analytics platforms such as Dune Analytics, The Graph and others. We believe strongly in the overall analytics ecosystem. We are excited to contribute to effective analysis wherever it may occur. We will deliver a variety of programs that emphasize the ultimate development of results wherever users are interested in congregating.

As it relates to the Uniswap Grant Program, these bounties would be focused solely on analytics solutions, while the UGP would provide grants for a broader array of opportunities.

Year 1 Program Expectations:

Given the pilot program data, the expected results from a year of bounties would be as follows:

  • ~ 900 new community members [acquisition]*
  • ~ 49,500 UNI retained in ecosystem [retention]
  • ~ 350+ dashboards and visualizations [+premium interactive solutions]

*recognizing that the entire program is funded by yield, there is a $0 CAC on the acquisition. If you use the yield rate, the CAC is ~$1,250 per analyst.

The other 50% ($93,750 per month) is Flipside’s Fee To Operate the Program:

Again, this fee is paid by the yield, not by the grant itself. This aligns with Flipside’s belief that the grant is meant to support the community, and the assets are the community’s tokens. In that way, Flipside’s role is to hold these assets on behalf of the DAO and to distribute the yield to the community, per the terms of the Program.

Program costs are approximately $100k-$115k per month, excluding taxes. This includes:

Salaries:

  • One Data Engineer (100%)
  • One Data Scientists (100%)
  • One Full Stack Engineer (100%)
  • One Business Intelligence Analyst (100%)
  • One Community Manager (100%)
  • One Marketing Manager (100%)
  • One Content Manager (100%)
  • One Designer (50%)
  • One Product Manager (10%)
  • Head of Engineering (10%)
  • Head of Marketing (10%)
  • Head of Data Science (10%)
  • Head of Finance (10%)
  • Financial Controller (10%)

Tech Infrastructure

Additionally, our cost estimates conservatively include a 10% allocation of our projected infrastructure costs, inclusive of node management (ETH), compute / storage needs (AWS), data warehousing (Snowflake) needs and a variety of other software / architecture tooling requirements to sustain and make the Flipside Velocity database freely available to analysts of all levels.

Taxes on Yield

Note that Flipside will also be covering 30% tax rate on all yield, which also impacts the final margin.

It Does Not Include

Any fee for the IP developed to provide historical state-ready analytics.

Also note that no general G&A costs are included in this (ie: human resources, operations, employee benefits).

Margin

At the $15M grant level, Flipside is operating at a near BE margin. We are willing to operate at this level to prove the model in year 1 (note that we expect to compound our fees to generate additional yield, which should help us to mitigate margin pressure).

In year 2, with a $10M additional grant, Flipside’s margin would be able to increase to 18%.

Automated Investment Strategy

We outlined an approach in our temperature check that will generate perpetual yield for a continuous CEA program while mitigating negative effects on the UNI token. Based on feedback from key community participants, we have made slight revisions to our strategy, and recommend the following:

  • 100% of the UNI be deposited into AAVE protocol as collateral
  • Borrow against 50% of the collateral in the form of ETH
  • A DeFi Saver Smart Wallet will be used to manage the position
  • 50% of the borrowed ETH to be swapped into UNI, and both assets will be deposited as liquidity in the WETH-UNI 0.3% pool symmetrically
  • A custom Visor vault developed with Gamma Strategies will be used to manage the liquidity position

To optimize yield and minimize risk, we will partner with Gamma Strategies and Visor Finance to automatically manage our position in the Uniswap V3 pool. Automated position management ensures we can optimally realize & compound rewards to maximize yield for the program, while minimizing risks of human error.

Each time that the LP position is rebalanced, 50% of the accrued fees will be distributed to a wallet designated for bounties, while the other 50% (due to Flipside) will be compounded back into the LP for the first year. This will result in additional yield generation for the program over the course of time through the power of compounding.

Concurrently, we will be utilizing DefiSaver to automatically manage our leveraged position on AAVE. In the event of meaningful divergence between UNI and ETH prices, DefiSaver will minimize any risks of liquidation by optimizing for collateralization via programmatic debt paydown using AAVE’s flash loans. Any fees incurred for utilizing flash loans will be more than offset with the yield generated from the LP.

While the overall yield generated through the use of collateralization is less than investing the entire grant position outright directly into the LP, we believe there are numerous benefits to this approach:

  • No requirement to sell UNI, since we will be borrowing ETH against the UNI collateral. In light of recent events, we believe this is a desirable outcome for the community
  • Deepens the liquidity of UNI on AAVE, a major DeFi protocol

Finally, the risk of obtaining the most effective yield - and the bounties for participants and fees for Flipside - are entirely the responsibility of Flipside. In the event the yield contribution is below expectations, the fees and bounties will reduce symmetrically. In the event there is consistent reduction, the Allocation Committee (as noted below) will be able to evaluate other investment strategies for consideration, and approve changes.

Fiduciary Responsibility and Accountability to the DAO

It’s critical that assets are managed effectively and are delivering value to the ecosystem. In the event the assets are not delivering value, they should be repurposed for other initiatives to enable ecosystem stability and growth. Full details on oversight in the Consensus Check.

Three components provide effective checks and balances to ensure maximum accountability to the Uniswap ecosystem:

Allocation Committee: whose purpose is to oversee fund execution strategy utilizing Gnosis Safe’s industry standard multi-sig technology to ensure both effective management and protection/safety of funds (longer-term, we would aim to migrate to Tally’s Failsafe solution once enabled, which is built on top of Gnosis).

The Allocation Committee will be comprised of:

  • Will Price / DeFi Citizen; Data Scientist
  • Nathan Howard, Index Coop
  • 2 Individuals from University Blockchain Orgs. To be Identified and Announced Post On-Chain Vote so as to not influence voting.
  • 3 Members of Flipside’s Team

Oversight Committee: whose purpose is to ensure that the grant proceeds are applied in a manner consistent with its design.

The Committee will meet and take a vote annually to evaluate the continuation of the program.

On the first anniversary of the program, the Committee may take a vote to remove the trigger of the second $10M grant. The $10M grant will reside in the Gnosis Safe address where funds are delivered following governance execution, and will require requisite approval to facilitate a transfer of the assets into the contemplated strategies. Funds will be redirected towards other uses through the standard governance process should the program prove unsuccessful.

In the event the Oversight Committee determines the program to be ineffective, at any voting junction, the $25M grant would be submitted as a proposal to Uniswap Governance to be evaluated and re-assigned to other programs.

The Oversight Committee will be comprised of:

Transparency Dashboard: Tracking fund performance and transaction activities will be broadcast live via a custom dashboard for the Uniswap community.

Summary: Community-Enabled Analytics for Uniswap

The purpose of the grant is to utilize yield to acquire and retain new community members, by funding a sophisticated education and analytics platform. Full details in the temperature check.

  • Provides free historical state-ready, transformed Uniswap v3 data for SQL analytics - as well as visualization and API solutions.
  • Produces educational content for analysts of all levels to activate within the Uniswap ecosystem. Beginners can learn SQL, advanced users can optimize results to deliver sophisticated solutions like the Uniswap v3 Fee Calculator.
  • Sources analytics requirements from Uniswap Labs as well as the community, and turns them into bountyable requests, which may be offered on multiple platforms including Flipside, Dune, The Graph or others.
  • Runs structured bounty programs activating analysts to produce outcomes. Includes quality control of results to ensure the data is effective and correct.
  • Delivers bounties rewards (in UNI tokens) into the hands of community members, activating new members and retaining participation.

All of this is funded through yield generation, maintaining the initial grant and ultimately delivering no negative net Uni.

Official On-Chain Governance Proposal can be reviewed here

5 Likes

This project is good and I like

I’d say, 25 million 1st year 40 million year 2, 100 million year 3. I need a programmer I can trust. I have read that only 25% of what you see on the internet is real… I assure you transparency is key. Core values , human rights, equality are my main goals

I am a bit confused.

This proposal is live for voting on the uniswap voting portal, but it is radio silent on engagement (twitter etc.). Also, is there a reason that 1 of the 3 oversight committe member’s is the CEO of the company running the proposal?

Is there clarification on what this salary schedule means?

Program costs are approximately $100k-$115k per month, excluding taxes. This includes:

Salaries:

  • One Data Engineer (100%)
  • One Data Scientists (100%)
  • One Full Stack Engineer (100%)
  • One Business Intelligence Analyst (100%)
  • One Community Manager (100%)
  • One Marketing Manager (100%)
  • One Content Manager (100%)
  • One Designer (50%)
  • One Product Manager (10%)
  • Head of Engineering (10%)
  • Head of Marketing (10%)
  • Head of Data Science (10%)
  • Head of Finance (10%)
  • Financial Controller (10%)

I think the structure of the proposal is intresting in how it is using the treasury. But I am intrested to hear how Flipside is contributing to the Uniswap treasury in the long term. Is flipside providing equity commitments back to the treasury in the long term in the case of success?

Hi @Naught - thanks for the questions.

We will be putting on twitter, etc. tomorrow. Figured people would want their weekends.

On the Oversight Committee, Flipside is intentionally in the minority, and is available to help clarify any components of the program in the event of a required vote. Note that I have zero interest in maintaining this grant if we aren’t delivering effectively — my votes will be in favor of what’s best for the community.

The salary schedule is what it costs flipside to run a program at this scale; these are resources specific to the Uniswap Community-Enabled Analytics execution.

This program is arm’s length from Uniswap; so an equity relationship isn’t established. It’s a valid ask, although the program benefits the Uniswap ecosystem and community members (who receive bounties, etc.) significantly already.

Hope that helps.

Hi, Steve here from Blockchain @ Berkeley

Thanks Dave for the update and clarifying the amendments. I also appreciate the pointers to data that has guided the structure of the proposal. We are largely supportive of this proposal. It would be appreciated if you could you speak to the following however:

  1. Quality management / usability of analytics
  2. Oversight committee review frequency

For the discussion point 1, it would seem that this would be an opportune time to set a good example for how to utilize blockchain infrastructure to provide reproducibility of data analyses. Are there plans to allow the data and analysis models to be crosschecked by the community as well (e.g. IPFS data and model hosting)?
I see “quality control” was mentioned in the 4th bullet point in the summary at the end, so it would great to know what this entails.

For discussion point 2, in the context of the rapid dynamics within the DeFi space, is the annual Oversight Committee review frequent enough to effectively adjust the direction of the project? Also, I may not be understanding fully the clause “Note that commitments must be reviewed for efficacy at the 3 year mark by the Oversight Committee[the Committee can call for a review at any time]”, so maybe clarifying this statement would help.

Thanks!

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Thank you for the response, for clairification the salary schedule has percentages (%) for the breakdown of the monthly salary ($100-150k per month). The first few percentages say 100%, is this implying that the data engineer, data scientist etc, make more than the head of finance?

Hi @Naught - the %s represent the total amount of their salary committed to the initiative. So 100% is a dedicated individual, 10% is someone who is assigned 10% of their time (like the head of finance) to the initiative. In this case, the top 7 people are entirely dedicated and everyone below is partial time.

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Hi @stvnshpd, thanks for reviewing!

On 1. this is a great call out and core to how we’ve designed our data layer, query builder, and visualization studio. A few highlights:

  • All of our analysts build in public - meaning all queries & analyses they produce are accessible to everyone and can even be shared/collaborated on by multiple analysts at a time.
  • As well, all the models that we use to build out datasets are publicly accessible: https://github.com/FlipsideCrypto/sql_models
  • Moving forward, we’re actively working on frameworks that will allow users to build their own deeper models, which will scale this process even further.

On 2. the Oversight Committee votes annually, which is a build from our earlier phases (note: we edited this section at the top of the proposal, which was a legacy statement). Other key points:

  • The CEA program is designed to scale and evolve with community needs & demands, and the honus is on the Flipside team to be nimble and effectively adjust direction as the space changes rapidly.
  • As such, the Oversight Committee is set-up to ensure Flipside remains dedicated and attentive to this end.

Let us know if we can provide any further clarity!

1 Like

I have gone to the flipside website to get a better idea of what analytics have been built, customer engagement (i.e. the data set behind the user retention), and how bounties work. In order to see community built analytics it is requiring a login and it looks like bounties are structured through discord (which I dont have). Is there a more accessible way to view what flipside does, analytic examples, and how bounties are connected to these analytics?

I had imagined that flipside operated more like trading view with tools at hand to create insights.

1 Like

Hi @naught, sure thing:

  • You can see a list of our active bounty programs here.
  • Access results from all bounty submissions across partner projects here.
  • Sign-up for access to our full dataset, query builder, API, & visualization studio here.
  • Check out an awesome community-sourced Uni V3 dashboard here.
  • Highly recommend getting Discord and checking out our thriving community here.

Thanks!

2 Likes

as an analyst, I started off a few months ago with zero SQL skills, and this is all thanks to compoud, uniswap, terra, polygon, yearn and flipside. This is success by its highest metric. While I think all the money should go to me personally, flipside will do a better job at bringing new talent, community engagement to the space. Shoutout to Avi, Brandon, GJ, Angela, Meg, all the analysts and the rest of the staff who have been amazing and data hungry.

and DATA

Cross-posting my question. Thanks.

yj

Hi @uniyj - thanks, great question.

The structure of the program flexes with the yield. In the event the yield drops below 30%, the amount of bounties that are to be delivered also drops, as does the fee for running the program on a 1:1 ratio basis.

Net, we share the risk together.

In the event the yield drops for a consistent period of time, we have structured to present the 7-member Allocation Committee with other scenarios to deliver additional yield - we specifically want to drive yield that is as beneficial to the community as possible (larger yields are possible, often at the detriment of other stakeholders).

For the initial recommendation, we evaluated countless strategies. Currently the yield for this strategy is slightly higher than 30% - we believe it will come down as the program progresses, so we’ve taken that into account.

Hope that helps

Thanks for your reply. In that case, I think there isn’t really much “opportunity cost” in providing the UNI from Treasury to attract yield to fund the program – sounds good to me. All the best.

yj

I may be missing something here, but what happens to the $25M that is generating the yield after the 2 year period here is over?

My other first comment here is that it seems like having the oversight committee review the program and report key findings would be helpful to do more frequently than annually. I think even after 4 or 5 months, there’s probably a lot that could be analyzed and published.

“In the event the Oversight Committee determines the program to be ineffective, at any voting junction, the $25M grant would be submitted as a proposal to Uniswap Governance to be evaluated and re-assigned to other programs.”

hello unicorns and flipside team,

would like to say that I really like the idea of a yield fund, and really appreciate all your hard work you guys have put into this proposal, feedback you have providing and for being flexible to change on various community suggestions, and initially was thinking on voting yes on this, but in recent light of dune analytics pointing out a fatal flow in this proposal, as pointed out in this tweet

Hence I suggest at this point we reject the proposal in current form and start a discussion of an analytical yield fund, where all teams providing analytical services, LPs providers (in ur proposal it was too only visor), etc could participate and would be able to discuss and compete on strategies to fund, generete yield, etc.

I also acknowledge that there has been a lot of work put into this proposal, and it is very time consuming and requires a lot of coordination to put and move along the DAO governance, so if this community sees this as experiment and a starting point to kickstart such initiatives I got no problem with that, as I also wouldn’t want this to get buried in endless discussions, but I really do agree here with dune, that fundamentally this proposal should be focused on establishing an uniswap analytical yield fund, just like our grants fund.

Maybe something like a community board that decided which strategies/teams would get liquidity to generate yield, some control mechanism for the liquidity provided and a backlog of proposals that will get funded by those yields (or maybe liquidity + yield could be a combo, just like in ur case)

Any how as I said previously, I like the idea, but think mechanism to provide liquidity should be more decentralised and free marketish, but also understand that this could be just a starting point and we could use this precedent to then provide liquidity to others, as I have not enough time to comprehend everything at this point, since I only found out about this proposal yesterday, ps maybe flipside themselves are willing to postpone the proposal in light of flaws pointed out by dune team, have a nice day everyone!

P.S. I sugest we could discuss mechanism of such general yield fund further in this proposal discussion

@jcp love that idea. We actually will have a real time dashboard that will show all outcomes: " Transparency Dashboard: Tracking fund performance and transaction activities will be broadcast live via a custom dashboard for the Uniswap community."

Love the build of a formal report every few months. That’s a great idea. I think @wijuwiju commented on how the funds are returned to governance if the program isn’t delivering. We think is VERY important for the ecosystem’s checks and balances. There needs to be a way to return grant money if not being used effectively.

I ended up voting no here. My thinking is below:

  • I don’t think we need $90k / mo in bounties for analytics right now. Many great dashboards are being built openly by the community
  • I don’t think we need to pay $90k/mo to run this kind of bounty program. UGP is awarding grants on the same order of magnitude with much lower spending
  • The “no loss” funding strategy is interesting, but risky to the amount of funds available for both bounties and labor
  • Credible neutrality is lacking. Other analytics platforms like Dune have had strong traction, and I think any analytics bounties program should be run by a credibly neutral party.

What I do like about this proposal is that it puts forth an interesting idea around using yield to fund new programs. Additionally, I believe the authors here have been diligent about the process of receiving feedback from the community throughout the process of bringing this to a vote.

We do need to take seriously the idea of putting treasury funds to use in a more aggressive way, so I hope to see more proposals like this one in the future. In that sense, this is a model proposal! Thanks Flipside for putting in such considerate thought and discussion here. I’d personally be interested in seeing something along these lines continue to be discussed and maybe re-proposed.

3 Likes