Proposed distribution method for 0.5% emergency LUNA allocation

Governance & Proposals
1

Title: Proposed distribution method for 0.5% emergency LUNA allocation

Introduction

This proposal is being made on behalf of a diverse group of Terra community members (including representatives of community members, validators, TFL, and others), and is intended to supplement the Terra Ecosystem Revival Plan 2 (the “Plan”)

Over the past few days there has been fervent dialogue around how to appropriately distribute the 0.5% emergency LUNA allocation. As a reminder, the Terra Ecosystem Revival Plan 2 specified 10% of LUNA supply to be earmarked to incentivize developers on Terra 2.0 as follows:

  1. Emergency allocation (0.5% of total supply (the “Emergency Fund”)): immediately after network launch to provide for runway while they build out product. Commit to returning funds if product has not been launched in 1 year.
  2. Developer Alignment Program (1.5% of total supply): Protocol teams that were live in Terra Classic divide this allocation weighted by the last 30 day TVL from Pre-attack snapshot - 1 year cliff, 3 year vesting thereafter. Accommodations will be made for apps where TVL is not applicable.
  3. Developer Mining Program (8% of total supply): Essential app developers earn a share of the mining program proceeds pro-rata to the amount of TVL every quarter for 4 years.

While the Plan was descriptive of how the “Developer Alignment” and “Developer Mining” funds should be distributed, it did not specify how to allocate the Emergency Fund. As a result, guidance is needed from LUNA governance to determine an appropriate determination of this aspect of the Plan.

There has been ample discussion regarding the Emergency Fund, and taking the community’s feedback and input, this proposal represents what we believe to be the best path forward.

Goals

As we see it, there are three cohorts eligible to receive the Emergency Fund:

  • Projects who launched on Terra Classic and achieved product-market fit and TVL
  • Projects who launched on Terra Classic and achieved product-market fit but have no measurable TVL
  • Projects (pre- and post-launch) who have not yet achieved product-market fit (pre-PMF)

We want to ensure that projects who achieved product-market fit have the support and incentives to continue to build on Terra 2.0. We also want to ensure that the long-tail of projects who have not yet achieved product-market fit have support to continue building until an opportunity to secure funding from traditional means arises.

Proposed distribution

As the name “Emergency Fund” suggests, we believe it makes sense to start bottoms-up by figuring out what smaller projects need as their runway. In order to do this, it’s important to define: 1) a minimum amount that all eligible projects should receive and 2) a target number of projects that should receive this amount.

Polls taken within the community chats indicate projects require between $100-300K for 6 months of runway. Looking at the various lists compiled such as this, there are around 50 projects looking to qualify for this emergency funding.

As a result, we suggest a distribution of $100-300K of LUNA to eligible pre-PMF teams. Eligibility and allocations would be determined by a council consisting of longstanding Terra community members: Karma, Panterra0x, Cephii, Seb, and GJ. Each individual has vowed to recuse him or herself in the event of any potential conflict of interest on specific projects.

In addition to this, we suggest that teams who had launched and achieved product market fit or added value to tooling and infrastructure receive an additional $500K – $1M in LUNA. As an initial suggestion, we put forth Coinhall, Terrascope, Setten, SCV, Terran One, Random Earth, Knowhere, Leap Wallet, and TFM to be in this cohort.

To summarize, 1.5M LUNA would be distributed across the long tail of pre-PMF teams, an additional 1M LUNA would be distributed across teams with PMF but no TVL, for a total of 2.5M LUNA. This would leave precisely 50% to distribute to projects who had achieved product market fit and TVL on Terra Classic and are committed to building on Terra 2.0.

For these projects who achieved PMF and had TVL, we suggest pre-depeg Terra Classic TVL as the best metric in defining their value to the network and resulting share of the Emergency Fund. We suggest the 2.5M LUNA is distributed pro-rata based on contribution to TVL, with a max cap set at 25% of the allocation for any individual project and any remainder above that cap being uniformly distributed to the other projects.

Based on the above criteria and our current understanding of Terra 2 builder commitments, we currently anticipate that the TVL-based allocation of the Emergency Fund would look like this:

Raw Weight TVL Based Comp Astro Cap Distributed New Totals
Terraswap 10.2% $1,403,720 $197,335 $1,601,055
Spectrum Protocol 5.2% $710,148 $197,335 $907,483
ApolloDAO 1.6% $224,153 $197,335 $421,488
Nexus Protocol 2.8% $385,287 $197,335 $582,622
Astroport 39.4% $5,410,850 $3,437,500
Stader 18.9% $2,593,136 $197,335 $2,790,471
White Whale 0.9% $123,180 $197,335 $320,515
PRISM Protocol 14.3% $1,964,006 $197,335 $2,161,341
Edge Protocol 0.6% $88,090 $197,335 $285,425
Risk Harbor 4.32% $594,509 $197,335 $791,844
Aperture Protocol 1.84% $252,922 $197,335 $450,257

In summary, 5M of Luna would be distributed as follows:

  • 2.5M of Luna across projects who launched on Terra Classic and achieved product-market fit and TVL (PMF and TVL)
  • 1M of Luna across projects who launched on Terra Classic and achieved product-market fit but have no measurable TVL (PMF but no TVL)
  • 1.5M of Luna across projects (pre- and post-launch) who have not yet achieved product-market fit (pre-PMF)

Performance Conditions

As stated in Terra Ecosystem Revival Plan 2, each team will be required to sign a pledge committing to:

  • Use its portion of the emergency fund to help fund development on Terra 2.0 for at least one year
  • Launch some product on Terra 2.0 within 3 months of receiving the allocation
  • Provide transparency to the community in the form of quarterly public reporting on Agora on its progress and use of funds

If a team fails to fulfill these requirements, it is expected that they will return the LUNA received such that it can be allocated to other builders.

Acknowledgement of this proposal’s imperfection — and call to action

This proposal represents best efforts to incorporate widely ranging feedback from over 300 contributors to Terra space, including Validators, Teams, and community representatives.

It attempts the impossible - to distribute value among a diversified range of projects and contributors, in unprecedented circumstances, and under heavy time constraints.

The proposed framework has one goal, which is to retain builders on Terra. It does so by:

A) providing monetary incentives to high TVL projects that have already received competitive offers from other ecosystems

B) providing capital for mid- to smaller size teams to redeploy, repivot or change PMF and introduce their projects to Terra.

While we are open to feedback and constructive improvement suggestions, we urge everyone to remain mindful that many improvement attempts would require a framework of evaluation that doesn’t exist yet. While we are hopeful this grants & evaluation framework will materialize, it will take time to establish, whereas many smaller teams are in imminent danger of collapse or departure.

For this reason, we suggest distributing 50% of the funds now - optimizing for speed of execution and getting a baseline distribution out now - and 50% after 2-3 months, to ensure that teams receiving the funds have made meaningful progress on product development.

22 Likes
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Given the urgency of the situation, the proposal seems fair to distribute 50% of the allocation immediately to ensure that there are sufficient runway for the builders. The final 50% can be further debated or fought for if needed, what is required is the emergency funds required by teams.

2 Likes
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Completely agree. Time is of the essence. We have little to gain from further deliberation and much to lose. Market is generous and has given us a second chance, with its valuation of LUNA. Let’s not blow it.

The market is watching. Further debate would decrease the value of the LUNA we seek to distribute, whereas agreement will increase the value of LUNA.

There are a few points I would like to raise later, but for now release half the emergency allocation as soon as possible. Let the builders continue to build.

8 Likes
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Following the Emergency Allocation Roundtable earlier this morning, attendees were asked to put forward any ammendments for 24-hour consideration window, after which any successful ammendments would be incorporated into the proposal, and the final version put forward on Agora.

There are currently two proposals:

Proposal One: Revising the allocations
Proposal Two: Call for greater transparency (ie. posting all chat logs online, etc)

Proposal One (Currently with 78% voting yes)
Revising allocations between “TVL” and “Essential Non-TVL” allocations.

CURRENT BUCKETS:

$27.5M of Luna distributed as follows:
$13.75M of Luna across 12 projects who launched on Terra Classic and achieved product-market fit and TVL (PMF and TVL)
$3.75M of Luna across 8 projects who launched on Terra Classic and achieved product-market fit but have no measurable TVL (PMF but no TVL)
$10M of Luna across numerous projects (pre- and post-launch) who have not yet achieved product-market fit (pre-PMF)

SUGGESTED BUCKETS:

$27.5M of Luna be distributed as follows:
$10M of Luna across 12 projects who launched on Terra Classic and achieved product-market fit and TVL (PMF and TVL)
$7.5M of Luna across (larger number of voted-on projects) who launched on Terra Classic and achieved product-market fit but have no measurable TVL (PMF but no TVL)
$10M of Luna across numerous projects (pre- and post-launch) who have not yet achieved product-market fit (pre-PMF)

(Total value may change based on price fluctuations of Luna. Changes are in bold)

For reference, increasing that middle bucket isn’t about giving more funds ‘per project’ that is already in that bucket. Instead, if we’re adding more projects to the “PMF but no TVL” bucket (which we really should given the arbitrary nature of the 9 selected), the bucket needs to be bigger or there won’t be enough to go around.

While not perfect, the method proposed was a quick vote between project builders (requiring a high pass-mark to avoid collusion) based around their market adoption and project integration (ie. how many other projects need them for their own project to work properly - like LunarAssistant, Andromeda, etc).

Disclosure: I voted ‘Yes’ for this proposal. My project is “pre-PMF” and is not impacted by the result either way, as such I do not feel there is a conflict of interest.

Proposal Two (Currently with 88% voting yes)
Regularly releasing the full chat logs from Rebirth League TG/Discord online to ensure complete transparency.

Proposal calls to either:

  1. Export chats from telegram and post in an open forum for the community to view, this could either be posted on Twitter, or on Agora for “official” comms
  1. Move discussions over to Discord and open it up to the wider community, with read only roles for the general community that join, with builder roles having the ability to message/publish proposals etc.

Disclosure: I voted ‘Yes’ for this proposal.

3 Likes
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This looks really solid. Overall, very well-thought-out. A few random questions in no specific order:

I presume the elite eight’s allocations would also be ultimately determined by the steering committee and the recommendations put forth are not binding, right?

What happened to the vote bribery? Could we get more details on that? Who exactly was engaging in vote bribery and have they been removed from the process? Those who engaged in this sort of behaviour should be named so people can be warned.

Would it make sense to move the 0.5% allocation from LUNA into USDC ASAP (while discussions are ongoing) to preserve its value, since LUNA will be extremely volatile over the next few days and may even drop further? The funds could be held in a multisig treasury in the interim before disbursement.

Despite these minor queries I am very optimistic overall and I’m glad efforts are being made to move in the direction of transparency. Thank you to everyone for their hard work on this proposal & the overall governance process - long live Terra 2.

14 Likes
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Will this me legally enforceable? If so, would TFL be committed to go this route?

In general, there should be a sound oversight governance framework on any allocation. I am not seeing this in the proposal, and to my understand, prior attempts at oversight of community fund spend have been weak.

Whilst I understand the emergency nature of this funding, it would be hard to communicate to the public that new funds are being spent while at the same time retail users are sitting on millions of losses due to the UST/Luna1 collpase.

2 Likes
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While i recognize the importance of porting projects committed to Terra to the new platform, i have two comments:

  1. some of the LP protocols seem reliant on external capital to provide attractive yields that make them viable long term projects. Given this interest, wouldn’t it be expected that vc capital would provide the greatest launchpad onto Terra 2.0? Or, if not, how will these source their yield, once launched with these emergency funds?

  2. white whale seems to provide a unique value but is disproportionately low in disbursement. As opposed to some other protocols with what we might say are competing products. Does it make sense to support differentiating products more (those that provide unique value to the chain).

1 Like
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@CapriciousSage Which projects would you add to the “PMF but no TVL” list?

Regarding your transparency suggestion, it is admirable, but ultimately I don’t see that it would achieve much. People would begin to discuss important matters in smaller rooms. Would give the false impression of transparency.

@FatMan Regarding the USDC idea, not all projects may wish to liquidate their LUNA immediately, as many already have significant funding. Let them decide for themselves. Also, governance would have to approve liquidation via public vote. People would front run liquidation.

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I don’t have the right to cherry pick those names myself. No one person should have that call.

Instead, I’d like to proceed with the plan that has been voted on among the builders - for those participating to all have a vote on who should be on that “PMF but no TVL” list.

I’m building on Andromeda, I’m part of the Angel Alliance, and I’ve got a bajillion JPG’s on Talis… They’re gonna make my vote. Do you live on Discord? Maybe LunarAssistant is more your jam. Were you one of the people that signed up for Astral’s credit card? That’s probably gonna be at the top of your list then.

Either way, it shouldn’t be up to one person…

2 Likes
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Note: I’m not involved in any of these projects, just a v1 and v2 user.

Proposal mostly seems fine, except for the how the TVL group is allocated. TVL seems fine for grouping, but bad for determining actual allocation. Some types of projects naturally have more TVL (i.e. dexes or staking), but that doesn’t correlate to operation costs. Plus, some projects like Stader aren’t competing with their main competition (Lido) and their allocation is much higher than it would otherwise be.

Also, some of the projects that have the most TVL already deployed and have competition from competing projects (Phoenix for Astroport/Terraswap, Eris & Steak for Stader), so very large allocations for those projects seem less important.

If it were up to me, I would ensure that every project gets a base level of allocation. Half the TVL group funds would be distributed equally to all the projects in the group, with the remaining allocated a different way (which I assume at this point would still be TVL-based). If the same metrics were kept for the second half, the new calculation for each team would be 4.54% of total + 50% of previous, which puts the range between 5.59% (Edge) and 17.04% (Astroport).

This still gives those with higher TVL more, but seems like a better allocation for an Emergency Fund.

5 Likes
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I personally do not agree with splitting the buckets.

By doing this and creating a “vote” of who qualifies, you get back to the issue mentioned my @FatMan - project inside voting.

I do not know who was colluding on this, and I agree if there was malicious attempt to fix votes then that is a really bad sign. Should they be removed from allocation? I don’t think that’s necessary, some Teams are panicking due to lack of runway, sometimes people fight for survival.

For this reason it is best to retain the current buckets for:

A) Speed of allocating funds
B) Fairness, in terms of voting etc

A more detailed divide should happen with the larger portion of development funds, via a grand process, which should be completely open for governance via Agora or similar.

I believe that the community and builders would agree on or come to a consensus on the essential infrastructure

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Why is this down to TVL when the community are the people who made up the TVL and lost out the most, the biggest TVL had some big whales invested, most of the projects who had the highest TVL also had the top 10 wallets making up the majority of the TVL, its a ridiculous way to go about it, how come other ecosystems are offering incentives that other builders are happy to accept, which covers operational costs, while Terra builders remaining are looking for compensation, that inevitably leads to selling 10% of the supply on the Terra community while also getting their team tokens ontop of all this, this is an embarrassing proposal to say the least, go look at what the Builders who went interchain have received to see this is a blantant cash grab on us the community members who are here supporting you all. The proposal should be to cover operationals costs like every other blockchain is offering, and tbh, if its not worth it to you, and you are looking for compensation/bribe, maybe V2 isnt worth it, the 10% should be for projects now, and into the future.

Some nice screenshots of some TerraBuilders applying and being accepted on Juno for example.

2 Likes
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This proposal is just for 0.5%. Not 10%. The criteria for the remaining 9.5% is still up for discussion as far as I can see.

I’d be interested to see a breakdown of what projects are getting to go to other chains. Would you not also class that as a bribe to get teams to move to a different chain via monetary incentivisation?

3 Likes
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Check out DaoDao.Zone (Juno) for a few, Kado 30k Juno (2 parts), Leap 30k Juno (2Parts), WeFund $68,000 USD, Sub Query tools $74,550USD (2 parts) , CoinHall $50,000USD , Aqua $25000 , im sure if there is a proposal up for others we can find them, though all are done as operational costs, 6mil total put towards the Terra Devs, (Shared screen shots on my thread) the total of the 10% could and should be used for Past, Present and future projects, instead of builders filling their bank accounts organising how to split the 0.5-10% amongst themselves, its clear whats happening here, if they need to be paid/bribed/ compensated to stay? What are we all doing here? The discussion should be focused on Operational costs, cause if a project cant offord to launch, why give them even 2 cents to “runaway” with?

3 Likes
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Could you link it to me please, there are 10 different DAO’s going under the name of JUNO.

So what you are setting out is how the Grants worked prior to the crash. This is something I am keen to advocate to bring back to Terra, that way as you said, the funds can be distributed to teams/projects that are dedicated to building on Terra, covering their operational costs.

This is great input for the remaining 9.5%, but unfortunately there is not enough time or runway left, hence the proposal for 0.5% is being pushed now as an emergency fund.

2 Likes
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And yes i understand the emergency for the 0.5%, though still i belive it should be based off who actually needs it to launch, so count out Astro/Stader etc (operational costs paid later), it should go to the builders who need it to launch, and if they dont have the required amount to launch, then maybe they will need to wait till the 9.5% (where it can cover their operational costs), as there is no point in having idle money if they actually cant afford to launch due to not enough funding as it obviously cant be done, the disscussion should be based off that, and nothing else, the rest is just “wants” not “needs”. Thats where the list should start. If a team needs 150k to launch, and one team needs 50k, it is what it is as each team has differnt operational costs! And it shouldnt be an argument , they all know what it will cost them like the teams i mentioned above do. If each builder can work out their operational costs to launch so we all know and can see. We will have an idea of what each requires, and will be able to work from there. I havent seen any of this from the teams, and its where it should (Imo) start. I belive the disscussion so far have taken up way to much time arguing who deserves what. I have supported multiple projects on the community side im an unbais community member and say it as i see it. Im here for the future of Terra, i dont see the airdrop as compensation, its our voice in the future of Terra. As i dont belive any of this should be discussed in anyway shape or form as such.

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My suggestion is
List of teams (Done)
Operational costs
Time to complete
Discussion on whats viable.
Vote!

Without this information, its not clear what each teams needs, we are only seeing what each team wants, and what they belive they deserve. That will ofcourse become toxic with people just giving up.

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Confused on why Terra created protocols are getting allocation?

Like they don’t have plenty of assets to hold themselves over?

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so Terraswap, created by Terra gets most of the allocation?

How many other protocols have Terra investment and at what percentage? Remove the % of that from their allocation and not allocate Terra any.

The lack of thought and drive for simplicity these allocation proposals are getting is alarming. Everything is seeming like more marketing than hard math.

Most people have stopped reading by now which is an issue. This is simple explanation that no one wants to even go into due to minor complexity…

Allocation for UST holders made no sense, plenty of people got out a .7-.9 UST/USD value but got the same allocation as someone who kept it until .2 or sub.

ie. 500,000 UST sent to binance at .9, got 450,000 USD in value back vs someone with 500,000 sent to binance at .2, got 100,000 back.

Although, these two wallets were allocated based on 500,000 UST? Sense? None. Math? None. Simplicity to allow large holders with thousands of wallets to profit? A lot.

Sure it would cost 20-100k to make that a reality in coding/gas/time involved, but the people who deserve the most allocation would be made more right than a VC that got out at .9 UST/USD and then got allocated the same percentage as someone who had their life savings and didn’t get out until under .2 UST/USD

1 Like
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You can’t give away money like that, we will only attract teams with money and risk losing control of Luna 2. We know that bad people now also have a large amount of Luna 2 after the airdrop. We should not give away moon 2. The repeated mention of the urgency of discussion and adoption should alert us and put this issue on pause. Those who believe in Terra will remain.