[DRAFT] SIP-00XX Support for the Origins Subprotocol

Hello Sovryn Community,

I’m Shebin John, one of the Sovryn Contributors. Perhaps some of you may know me as Franklin. I was one of the contributors who worked in the new Origins Platform, and today want to present a Draft SIP with you to get constructive criticism.

In the recent community call, it was mentioned that Origins will be one of the first subprotocol coming out from Sovryn. And I along with a small team are proposing to help develop this subprotocol to make it a success.

To those who don’t know, Origins can be described in short as:

“A launchpad and platform which allows projects to kickstart their communities, raise community funding, and do so in a way in which they can raise bitcoin natively.”

The recent sale of BabelFish was held on a completely decentralized version of the Origins Launchpad and it was sold out in 30 minutes.

I know there are a lot of things that we can improve, and that is where my major focus will be in the upcoming months.

Proposing this to the Sovryn stakeholders to garner support and feedback on this initiative in harboring new products by which Bitcoin is their focus.

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Draft SIP

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I think it would be good to have a paragraph that answers the question: Why create another token instead of just using SOV?

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Its a good question - so yes, I agree.

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Instead of complicating things with multiple tokens, one for Origin, one for trading, one for lending, etc. and diluting SOV in the community and potentially confusing people, any thought to having delegation pools? So, for example, I could be involved in trading and vote there but delegate my SOV token in an Origin delegation for decisions to someone else who is more involved than me in Origin decisions? That way I benefit for the whole project and am involved in areas I want and have others decide for me in other areas?

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Fully agree with this point, current draft doesn’t answer this for me.

I see unnecessary fragmentation of the community and of the value of SOV. I also see unnecessary complexity. Any added complexity in governance structure means that it is less accessible. It’s already pretty hard to find your way around as a newcomer. Any added complexity on the protocol side means that there are more moving parts that need to communicate, and bloated tech is never good from a design perspective (higher risk of failures, harder to change, etc.).

I’m sure these are obvious points, but I currently see nothing that addresses them.

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Will there be a competing SIP that supports all of the above but using the native SOV token?

Given that the Origins Launchpad already exists and the governance surrounding the BabelFish launch was carried out using SOV via Bitocracy I’m unconvinced of the merits of another token / parallel governance system. This feels like an erosion of the utility and value of SOV to me, for reasons as yet unclear, and I’m surprised this is now being addressed / added as an after thought rather than being the absolute core issue explored via the SIP.

Fantastic work on the Origins platform Franklin, what you and the team have built in such a short space of time continues to make me giddy with excitement. There’s an entire distributed financial system being built here that practically nobody has even noticed yet.

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As an aside, and I know this is nitpicking, but “OG token” really doesn’t scream decentralised governance to me. This feels at odds with what we likely want to convey.

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i agree with all above. i dont see the added value of an ‘OG token’

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Here are my thoughts:

  1. It would be helpful to add information in the SIP to help size up the opportunity. Is it 100 coins a year at $10,000 fee= $1MM/yr, for instance? I know it’s not knowable, but any kind of guidance would be helpful to guide the decision. (With $1.3MM of annual organizational cost, it will need to bring in multiples of this to justify all of the additional administrative burden.)

I believe the true value of listing all of these projects is the trading fees and any ancillary activity driven by those who come for the coin and stay for the rest of the platform. As I understand the SIP, that value will continue to accrue to the SOV stakers & liquidity providers, so the SOV token should benefit.

  1. I am unclear on the proposed sale.
    My starting assumption is that prior to any spinoff, 100% of Origins revenue (net of expenses) would accrue to SOV stakers. Origins has always been part of the Sovryn pitch, so I’ve assumed it is Sovryn IP.
    Post TGE, if I understand correctly, only 20% of Origins revenue will accrue to SOV stakers.
    In an efficient market, the SOV token price should go down at TGE by whatever the market values 80% of the future Origins revenue. So it seems to me that SOV token holders need some amount of OG dividend to make them whole, instead of the right to purchase with new money. If the issue is that OG needs funding, then maybe a sale is conducted after the SOV ‘spinoff’.

I will qualify this with - there are a lot of moving parts here with sales and boding curves and different tokens, so maybe I didn’t fully understand and the SOV holders are kept whole already through some mechanism.

In any case, this Origins project will be a great tool for bringing new projects into the Sovryn ecosystem and accretive to SOV!

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At first i was sceptical of creating even more tokens but after reading through the bonding curve system introduced by John Light ([New utility for SOV: minting subprotocol tokens] i really started to like the concept and i think it would improve the decentralized system.

The token is tied to SOV and locks up SOV when created so i do not consider this an “altcoin”.
Sovryn is growing so fast and already has so many facettes that it will get difficult to do proper governance on all aspects for a pleb like me.

I do not know if this system will be successful or fail but i think we definitely should give it a try.
For me, it is very important that SOV stakers still get rewards from Origins. As this is the case in the proposed SIP, i might vote for it.

I have a question to the proposed revenue:

  • 20% of the revenue goes to SOV Stakers through Staking Reward -check
  • 10% of the revenue goes to buy OG from the Bonding Curve and then burning bought OG Tokens to increase the reserve and make OG Deflationary. (What’s the point in making a governance token deflationary? We want decentralized governance, not increasingly centralized governance?)

I’d also like to see a bit more clarification on the bonding curve. How do vested/locked tokens and the bonding curve interact with each other?

Thanks!

Thinking about this some more, so I’ll reply to my own post!

Today, the SOV value is based on All Sovryn revenue (let’s call that Sovryn + Origins revenue)

In order to keep all SOV holders whole, doesn’t the entire Origins project need to be spun off TO exisitng SOV holders, so that 1 minute after the transaction, SOV holders are in the same economic position they were before the transaction, (owning 100% of SOV and 100% of Origins revenue)? Or proceeds of any sale go back to Sovryn as consideration for value sold?

If someone can clarify that piece, it would be really helpful.

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While I am not sold on the new token vs. maybe “staking pools” as described above, this makes sense to either airdrop OG tokens to existing SOV holders (staked and not) or distribute proceeds to SOV holders. Otherwise it dilutes the SOV value and could feel like a money grab, for lack of a better term. Just want to qualify this statement that I don’t mean it like it may sound.

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I don’t see any value in making a separate token just for the launchpad, I think governance over the Sovryn origins launchpad should be with Sovryn holders.

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While i see the benefits of further developing and expanding the Origins platform,

i dont see need of creating another token for it.

In fact quite the opposite.
As the (basic) Origins platform is already built by Sovryn’s team and SOV sales as well as FISH sale went by it;

Imo it makes more sense to take care of it like we do on other parts of the protocol.
Hiring devs for dedicated parts of the ecosystem but with the overall mission in mind.

I dont see why bitocracy shouldn’t be fully responsible for this subdivision just like budgetary questions, or other enhancements.
At least myself would like to see my voting power reflected directly on this “rather big” part of the protocol, instead of having veto rights and such.

it also doesn’t strikes me well, that after many users went into staking for the max period,
to be enabled for getting a share of all current rewards and future developments (also on new token listings, as it was proposed many times), this SIP would fade away like 80% of that. So it´s a core equation/assumption of this path generating substantially (5x) more, than without having the proposed setup.

Also, if this sub-protocol SIP is approved; where does it stop?
Will every part of the current system and future developments get spun into it’s own token ecosystem? So in 2 years we may have 20 new tokens, divisions and things to manage that the current bitocracy could take care of as well? (like with eg voting pools - which is a very interesting approach to govern local vs global)

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Why does Origins need a token?:

  • The token allows for governance of what things can be launched on Origins, vetting mechanism to prevent scams and bad actors
  • Also governs the Origins treasury & how funds will be used for Origins sub-platform
  • Provide a mechanism for allowing people access to participate in sales in a fair way with a queueing mechanism to avoid gas wars and ensure fair, even distribution.
  • Can’t have every OG proposal go through Sovryn governance
  • OG token will have time-based staking.

How is the SOV token involved in the beginning?

  • Origins is part of the Sovryn protocol
  • For the Sovryn protocol to scale, it’s creating a native system of governance, where sub-protocols can have their separate system of governance
  • Origins is not separate from Sovryn
  • Percentage of tokens goes to voluntary SOV stakers
  • Percentage of revenue from Origins will be distributed to SOV stakers
  • SOV governance can overrule sub-protocols if they introduce bad things to the Sovryn ecosystem. If Origins decided to fund a pyramid scheme or a pure scam that would damage the sovryn community. SOV Bitocracy can veto / overrule that.
  • Sub-protocols would raise in SOV because the SOV gets locked up in bonding curve, acting as a sink for SOV, and providing utility (use case) for the token…

How does the Origins Launchpad grow the Sovryn ecosystem?

  • Fund sub-protocol development and governance
  • Fund project development and governance
  • Kick start communities

How is this bullish for SOV?

  • Tokens launched on Origins will be tradable on the Sovryn exchange, become collateral types, allow for lending/borrowing/margin trading.
  • Will provide utility for SOV as a coordination token to fund further development of the Sovryn protocol,
  • Provide more granularity and capabilities to governance,
  • introduce new projects, which grow the system
  • sub-protocols, will frequently have their own governance token turning bitocracy to governance platform and create new ways to use SOV.
  • SOV held in bonding curves of Sub-protocols.
  • Will further decentralise governance.
  • OG token will raise in RBTC and SOV and XUSD.
  • SOV raised in the initial Origins sale will be held by the Origins Bitocracy Multisig primarily for the Bonding curve won’t be liquidated. XUSD or RBTC raised will be used to fund operations.

(How) are sub-protocols limited on their influence (voting power) over Sovryn?

Thinking of a huge largely successful sub-protocol launch and their participation in Sovryn governance…

I am not in favour of another token for launchpad…!

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Great summary by @exiledsurfer. As long as the user interface is going to be seamless in the app, it doesn’t bother me.

i have edited for mistakes in my understanding - Subprotocols will not be participating in Sovryn Bitocracy Governance with SOV, not possible with current tech / smart contracts. It was my misunderstanding.

In response to some of the above questions:

Fragmentation Of the Community - Or Scalability of the Community
@Martin_Adriaan asks if this will create community fragmentation.
This does represent a way to create new Sovryn communities and that does entail some “fragmentation”. I see this as a feature, not a bug. Why?

One of the biggest problems any community faces is the tension between having a large community (strength in numbers) and a small community (strength of the individual). Larger communities are stronger and together can accomplish more ambitious goals. However, as communities get bigger the voice of each individual gets diluted and diversity of values and opinions become harder to express.

How can we build ‘social scalability’? There is the Bitcoin way, where the rules are simple and few and they do not change. Fewer rules and less change means that they can work for almost anyone. However, the system as a whole becomes far more limited.
There is the Ethereum way, where every project is its own thing and unity of purpose disappears.

With sub-DAOs I think we have a better way of achieving social scalability - through layers. Sovryn is built on Bitcoin Layer 2. Origins will be Bitocracy Layer 2.

Why not just do this with the SOV token? Why create a new token?
@KCoin, @rundll, @jonnypickles and @Bitcoin-Thunderfury ask why create a ew token at all?
There are three reasons:

First - Representation of Specific Interests
Tokens are an abstraction layer - they wrap together abstract functionality and become a tool to give these abstract functionalities a ‘physical’ representation. This is a powerful concept, since you can create different tokens that wrap together different ideas and functions. You can get quite specific with this - and empower token holders to have more specific interests.

For example, some people will be mostly interested in Origins, and much less interested in the other aspects of the Sovryn ecosystem. Their ability to hold and stake OG, without having to consider the broader implications for SOV means they can express their views much more cleanly.

Second - subDAO incentives
Each subDAO needs to be able to attract talent and a community, fund its development and manage its own governance. The incentives to allow for this need to be in place. We know, just by looking at the entire crypto space, that tokenizing a DAO and its revenue stream can accomplish this.

If we wanted to do this through SOV, this create near term inflation in SOV. SOV would need to be granted to th subDAO to sell in order to fund its operations and SOV in sufficient measure would need to be granted to the community and the developers to incentivize their future efforts.

But it’s even worse than that - the incentive structure would still be misaligned. The subDAO community would be able to sit on their SOV, doing nothing of value, and simply benefit from the hard work of the rest of the Sovryn community.

By having a separate token - tied to SOV via the bonding curve, the subDAO can be properly incentivized and raise funding. At the same time, the Sovryn community benefits from the value created by the subDAO, because as the price of the subDAO token rises, there is greater and greater demand for SOV in the bonding curve. That is to say, people will acquire SOV, in order to acquire OG from the bonding curve contract.

Third - Ecosystem Growth and Sovryn DeFi
Finance, done right, is a system to fund innovation and provide market feedback to Entrepreneurs in the form of asset prices (stocks, debt or tokens). Having a separate token, which can be traded, can exist for margin trading or futures trading - allows for the Sovryn financial system to provide ongoing funding and feedback loops for subDAOs. This is how we fund the future we want.

It is also how we bootstrap an economy around Sovryn. Each of these assets adds to TVL, to trading fees, to lending opportunities, to liquidity mining. The model is powerful and it bootstrapped altcoin economies. There is an opportunity to do this also for Sovryn and Bitcoin - without the same fragmentation, systemic risk and creation of infinite “altcoins” that we have seen elsewhere.

Value Capture
@magicmike and @TM1 ask about how SOV/Sovryn capture value from Origins - if Origins becomes a subDAO?
Q. Doesn’t Origins belong to Sovryn? Why shouldn’t the OG tokens be initially owned by Sovryn?

Sovryn is not an entity. It is not a company. So the question becomes, who should receive these OG tokens? The treasury? The Stakers? All SOV holders? I don’t think any of these is the correct answer. They all create unfair distortions of one kind or another.

Instead, by having the bonding curve and the revenue share, the value accruing to Origins accrues both directly and indirectly to Sovryn. Origins will remain part of the Sovryn protocol and you can participate in the value created by the Sovryn protocol in many ways. You can hold SOV, you can stake SOV, you can be an LP, you can lend. OG just adds one more mechanism - which is specific, like LPing or Staking, to its particular use case.

From the perspective of SOV holders - this now becomes a new source of demand for SOV. From the perspective of users, OG token generation becomes just one more thing you can do with SOV.

Does having more tokens add complexity?
@KCoin is concerned about more tokens adding complexity.
No. Additional tokens do not add complexity. The Sovryn protocol growing and adding functionality, adds complexity. The token wraps that additional complexity into a token and makes it simpler to participate in Origins or whatever subDAO most interests the specific user. I view more tokens as part of a solution to additional complexity.

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