edit: My post was made before I watched this video: What Does $UMA Protocol Joining The DeFi Accelerator Mean For $XIO and Blockzero Citizens? - YouTube but the questions posed still have some relevancy, I feel.
TLDR at the bottom.
The idea of being careful with uma token distributions is important to consider as it’s a governance token. I hadn’t considered that and is very true especially as uma is distributed through the actual governance (voting) process (from my understanding).
With that in mind, I can see it actually being a detriment to provide uma tokens based on xsi-type work as it would muddy some of the intention of the governance part of the protocol. I understand why the pushback would be there. Totally makes sense. It also kind of reinforces the idea of what xio is doing with xsi: by providing an incentive for citizen work to help the other token without a large or significant impact on the token, an underlying protocol, market cap, or their functionality.
BUT… the amount that is being put into the index fund is $50,000 worth of UMA. At that rate, that’s a relative value of 0.0005 XIO per xio being put into the index fund (Ignoring any change in UMA price). Said another way, you would burn 1 xio to get 0.0005 of xio in index relative return.
So it has a 0.05% IRR (index relative return):
(Dollar Value of token added to index fund) / Total XIO (100m)
Which isn’t a large incentive or benefit for the index fund.
Right now, there isn’t really an incentive for citizens to want UMA to succeed. Sure, citizens could go through the motions to receive xio through xsi initiatives, but would that really ‘accelerate’ the partner in the long term? Especially after xsi no longer run for a particular partner? I argue that it wouldn’t. Citizens would be doing things to get the benefit of and for blockzero/xio.
ANOTHER BUT!.. if there was a type of incentive that benefits both uma and xio equally then I would argue that citizens would be more engaged and the accelerator program, and the partners, would benefit exponentially more.
The obvious route would be: more money/tokens in the index fund or as part of the xsi! But as mentioned above, sometimes that can’t happen. We don’t want to accidentally break something we are trying to accelerate.
It will be interesting to see how and where a balance occurs that provides an incentive that benefits both blockzero labs/xio, and the partners/their tokens.
- UMA’s IRR (index relative return mentioned above) is probably too low to be used as an incentive for citizens to really get involved with UMA’s community just doing it for the xio
- An incentive system that somehow benefits both UMA and XIO would benefit everyone in the long run, especially if more partners wanted to join the accelerator (us showing that we not only do things to benefit blockzero but our partners in the long run as well), and could potentially create a larger community
- For a fully decentralized version of Blockzero labs, especially as the xsi pool empties, there needs to be some type of structure or incentive that ties a citizen to the success of whomever they are trying to accelerate, even if a little bit. (Which doesn’t necessarily have to be a higher IRR)
Any suggestions of incentive systems? Or arguments against any type of incentive system and that receiving xio is its own reward?