OceanDAO Is Going Fully Decentralized and Autonomous
1. Introduction
Bitcoin, Ethereum and others have shown how you can reward those who add value to the ecosystem in a highly automated fashion [1]. The trick is to auto-dispense rewards to those who contribute to a precisely-defined objective function. This is an efficient, scalable approach to allocate capital towards growth.
Good news! Data Farming turns this into reality for the Ocean ecosystem, with the “maximize data consume volume” objective function. veOCEAN’s ve-based locking mechanics and protocol revenue to ve holders round this out to make OceanDAO much more automated (beyond grants).
So, OceanDAO’s been evolving. Where might it further evolve? DAOs of other Web3 projects have chosen to have general governance over protocol parameters and treasury spending. We had been seriously considering growing OceanDAO’s scope similarly. However, something nagged at us. We felt uneasy since we knew heavier governance meant larger attack surface. But, was that all just worrywart theory, or could it actually happen?
Recent events point to the latter. First, a regulatory agency ruled that members were liable for their DAO’s actions. Second, small groups of 1–3 actors control many large DAOs, such as Coinbase in MakerDAO (capture).
Furthermore, any governance also keeps Ocean away from its network goals to be censorship-resistant and trustless. Finally, the core team spends large time & mental effort every month in making DAO grants happen; this has opportunity cost to other traction initiatives.
Given the risks and costs, does OceanDAO actually need governance? Let’s explore. First, as of V4, Ocean’s core smart contracts are highly flexible; they offer a vast space to explore business models. Ocean doesn’t need DAO governance for its core functionality. Second, as discussed, veOCEAN and Data Farming provide a means to reward those who add value to the ecosystem without governance or grants.
Overall, Ocean will be more resilient, more scalable and more capital efficient if it is fully decentralized and autonomous (D&A).
Therefore in coming months, we will make this happen.
This means:
- We will wind down OceanDAO grants.
- We will automate & decentralize the rest of veOCEAN and Data Farming (DF).
- OceanDAO grants’ budget will shift fully to Data Farming. There is now 503.4M $OCEAN allocated to DF rewards.
The rest of this article is organized as follows. Section 2 elaborates on OceanDAO grants wind-down. Section 3 describes how we will make veOCEAN and DF to be D&A. Section 4 concludes.
2. OceanDAO Grants Wind-Down
2.1 Timeline
OceanDAO Grants Round 22 will complete. This has $65K USD worth of OCEAN available, including $10K to Algovera grants program. Proposals are due in early October, with voting the week after.
OceanDAO Grants Round 23 will complete. This is $45K USD worth of OCEAN available, including $10K to Algovera grants program. Proposals are due in early November, with voting the week after.
Then, OceanDAO Grants will stop.
2.2 Funding Redirection
We will shift the remaining 3% of the 51% from grants to DF. This increases the total $OCEAN available for DF rewards from 481.8M $OCEAN to 503.4M $OCEAN.
2.3 Grants FAQs
Q: Will veOCEAN be used for voting in grants round 22 or 23?
A: No. It’s not worth implementing, given that it would only be used for such a short period.
Q: Will OceanDAO Core Tech WG continue?
A: Yes. Its emphasis will be around technical collaboration within the Ocean ecosystem.
Q: Will the monthly 10K $USD to Algovera-curated grants continue?
A: Yes. It will come directly from OPF to Algovera.
Q: I really rely on grants! What should I do?
A: See the next section “Your sustainable Ocean project”
2.4 Your Sustainable Ocean project
If you’ve been getting or considering grants via OceanDAO: consider this as us redirecting you to the other ways to earn in the Ocean ecosystem.
- Rewards via Ocean Data Farming and veOCEAN. Lock OCEAN into veOCEAN for passive rewards; for even higher rewards, actively allocate your veOCEAN to assets with high data consume volume. The more you lock, the more you earn. The longer you lock for, the more you earn. The higher the consume volume, the more you earn. Details.
- Ocean Shipyard program, which gives grants for builders. Shipyard is curated and managed by the Ocean core team. Details.
- Sell data or scripts/algorithms. Ocean’s designed to reduce friction on this, and we keep improving it! This could be raw data, scripts to clean data, cleaned data itself, scripts to compute feature vectors, feature vectors themselves, scripts to build AI models, AI models themselves, scripts to run predictions from AI models, or predictions themselves. Each of these can be an asset in Ocean.
- Use Ocean data/algorithms to make predictions, to make money. For example, to help in DeFi trading.
- Use Ocean in your startup’s stack. You may be a business selling data/algorithms; building a dapp or service; or building your own decentralized protocol. For all of these, Ocean tools can help you ship sooner with more functionality. Then, use the usual startup financing: investors, revenue, etc.
3. Making DF/VE Decentralized & Autonomous
3.1 Review of DF/VE
We recently launched veOCEAN, where one locks OCEAN to get veOCEAN. Locking for longer means more veOCEAN, which in turn means more rewards. One can earn more rewards yet by curating data assets that have high data consume volume. veOCEAN holders also get a cut of protocol revenue, which increases with data consume volume (DCV).
These mechanics incentivize growing DCV, and form a strong backbone for Ocean’s sustainability loop.
3.2 D&A Status of DF/VE
Here are key components of DF/VE, and their D&A status.
- veOCEAN core. The contracts to lock OCEAN into veOCEAN are deployed on Ethereum mainnet. They are already D & A.
- Passive rewards. The contracts to compute & dispense passive rewards to veOCEAN holders are deployed on Ethereum mainnet. They are already D & A.
- Active rewards. Data Farming is currently run as a python script that reads on-chain data (veOCEAN balances, asset DCV) and computes rewards, off-chain.
- Funding rewards. Every week, the Ocean core team manually triggers on-chain actions to fund both passive rewards and active rewards.
The first two components are already D&A.
Now, for the remaining two. The Ocean core team has made detailed plans to make these D&A as well. This includes (a) Building an exponential-vesting smart contract, including a way to support 10/25/50% multipliers; (b) Minting the remaining 51% OCEAN tokens, to be sent to the vesting wallet (c.) Making DF rewards calculation run on decentralized compute infrastructure.
We will be executing on these plans in the next few months.
4. Conclusion
OceanDAO’s going fully decentralized & autonomous (D&A). In practice, this means winding down OceanDAO grants, and fully automating veOCEAN and Data Farming.
Once this completes, OceanDAO will be shaped like CurveDAO: ve-based locking mechanics, protocol revenue to ve holders, and rewards to ve holders that drive an objective function.
Notes
[1] Bitcoin had zero grants. Yet a thriving Bitcoin ecosystem emerged. How? First, Bitcoin has always had a rewards program for those who contribute to its objective function (network security); specifically, it rewards BTC to those who contribute hash rate to maximize security. Second, startups discovered viable businesses models in the Bitcoin ecosystem, from BTC exchanges to BTC wallets.
Similarly, Ethereum had zero grants for years. Yet, a thriving Ethereum ecosystem emerged. Ethereum has a rewards program for those who contribute to its objective function. Second, startups discovered viable business models in the Ethereum ecosystem, from ETH exchanges to ETH wallets, and especially, smart-contract-powered startups (dapps and protocols).
The Token Engineering I, II, and III blog posts have further detail on this “objective function” approach.
