Cooperative Kleros PNK Allocation

Cooperative Kleros PNK Allocation

Note that this proposal does not change the expected token allocation but mints tokens as a part of the token allocation plan (those tokens were always expected to be minted and are part of numbers displayed in both sale materials, we didn’t mint all from the start to avoid the cooperative controlling the supply and all sale materials in both sales were really explicit about the expected supply). The proposal does not propose to change token numbers but merely ask the Kleros DAO to validate part of the token emission schedule.
The cooperative does not have financial problems but in case the planned scheduled is not respected, it will have problems paying its expenses in PNK (PNK being used in reward programs, PNK part of team member compensation and OTC sales).
This proposal does not increase founder tokens. Founders have the same economic incentives as the rest of the community and Cooperative Kleros is not allowed to distribute dividends.
This proposal doesn’t propose to market sell tokens.
This proposal does not propose to extend the total supply to more than the 1B target set up in 2017 but is just a technical request to carry on the emission plan described in both token sales.

Introduction

Background

Most projects minted their entire supply at the beginning and only did one large round of token sale. However this model provided little community oversight to the large proportion of the tokens and funds allocated to a company/foundation. In 2017 we decided to go in a more transparent and responsible way. We did planed an expected number of 1B PNK (1,000,000,000 PNK) allocated as follows:

  • 18% for the initial funding and team member compensation.
  • 12% for Kleros cooperative reserves (daily PNK expenses).
  • 4% for token airdrops (tokens given as part of airdrop, reward program and to people building on top of Kleros).
  • 66% to be sold and used in juror incentive programs.


Extract of the first sale documents

The reason for not minting everything at the beginning was to avoid the cooperative from having full control over Kleros. Since PNK is used both for governance and for getting drawn as a juror, this would have resulted from the cooperative being able to pass any governance decisions and overrule all the other jurors.

In the early days, before the governance was available, we just minted PNK “as we go” when they were needed. Recently we did implement the Kleros governance and we are asking token holders to vote on any action which would involve the use the governor key. The governor key itself is also to be decentralized and replaced by the governance contract making Kleros fully decentralized. The governance contract is actually live in a non-enforcing version (since it is a critical piece of infrastructure and has control over all Kleros, we are letting it be non-enforcing for a few months with high bug bounties on it, before giving it control of the governance key).
The first minting proposal was made before the 2nd sale round.

Recent minting and cooperative funding

As you know, we recently conducted our second sale round for 150,000,000 PNK (15% of expected supply) which took place January 20th - February 20th 2020 selling out with 12 days remaining. The full outline of our recent development and financial transparency report can be viewed here.

This sale generated 7790 ETH for the Cooperative with further funds 2,270.85 ETH and 194,750 USDC generated in OTC sales direct to buyers.

In addition to this, Cooperative Kleros won the “Programme d’Investissements d’Avenir” (Future Investment Program) by BPIFrance Financement. The prize consists of a total of €718,017, of which €478,678 are a non-refundable grant, and €239,339 are a refundable loan under the terms and conditions of the program.

Both these successes have allowed for a more comfortable runway and the ability to expand development, communications and research activities.

Basically, due to the success of our sale, OTC buyers (sold at market price see the token page) and liquidity provided as part of the second sale objectives, we are edging closer to having zero PNK left in the reserve for the daily operations of the company.

So why do we need to execute a minting now?

As of 22/04/2020 the Cooperative Kleros PNK reserve currently sits at 1,136,450 PNK which is hampering our efforts to provide certain key aspects of daily operation.

For example, we are unable to:

  • Provide liquidity to exchanges.
  • Pay bounties or marketing partners in PNK.
  • Conduct OTC sales.
  • Incentivize new team members.
  • Conduct Airdrops and Reward Programs (such as Storytelling Reward Program or Token² Curated Registry Bounty Program).

Running out could hamper our efforts in both development, bug bounties and community building programs. Rewarding people who are building and participating in the Kleros ecosystem ensures that they can be jurors (thus get a good understanding of the system) and that they have aligned incentives in the success of Kleros.

Proposal

The Kleros DAO will mint 200,000,000 PNK to the multisig address 0x67a57535b11445506a9e340662CD0c9755E5b1b4 as part of the current token allocation plan.

Those 200,000,000 PNK will be used for purposes such as:

  • Cooperative reserve (payment of contractors in PNK, exchange liquidity, development bounties, OTC buyers).
  • Airdrops pool (allocations to users, contributors, people building on Kleros).
  • Team allocation (incentivization of new team members).

This proposal just acts to validate a part of the PNK allocation scheduled planed in 2017 and displayed in all token sale documents since then.

Q & A

Why is there a request from minting?
Contrary to most projects who minted everything at the beginning (leading to the developing entity owning most of the supply), only a small proportion of the token allocations were initially minted letting the remaining be minted across time with governance votes.

Why do you need cash?
We don’t need generic cash, we need PNK which is a completely different need. It’s important for reward programs to be in PNK and for a part of team member compensation to be in PNK in order to align incentives.

Are you taking PNK for yourself?
Founders already got their PNK and this proposal would not increase the amount of PNK they’ll get.

Are those PNK gonna be dumped on the market?
No, they are not to be sold on the market but are to be used as part of reward programs, new team member compensation, liquidity and to accommodate large OTC sellers.

Is there an increase of the rate of PNK being spent?
With the successful sale, the team is expending, team members get the majority of their compensation labelled in $ and a smaller part in PNK. The spending of PNK stays almost constant as even if some team members are joining, the PNK price is higher so the effects more or less compensate.

Is there a conflict of interest?
No, this proposal does not increase the amount of PNK given to the founders. Founders have the same incentives as any PNK holders and if we make this proposal it is obviously that we believe it to be positive.

What will happen if the proposal is denied?
It is possible to make another one asking for a smaller amount to mint. If it is rejected too, reward programs would stop and we would have to negotiate with team member of change of their PNK part of compensation to fiat which would decrease their incentives to work well on Kleros.

Extract of the transparency report

Kleros Total Token Allocation

Founders and team members commit to work on the project for 3 years (from the time they started). While this amount is fully locked for the first year, after one year, they can claim the amount of tokens corresponding to their first year working at Kleros.

Cooperative Reserve Tokens

Coopérative Kleros has an allocation of 120,000,000 PNK which are mostly used for the payment of bounties, marketing activities and to provide liquidity in exchanges.

Airdrop Tokens

Sale Tokens

Community feedback

Due to some people expressing concerns about the proposal. We gathered some community feedback and alternative proposals. It was proposed to:

  • Mint less tokens at once.
  • Mint all the tokens right now (the justification being to avoid potential FUD created by minting events).
  • Mint tokens over time to ensure the cooperative doesn’t have large amounts of PNK at any but constant resource allocation.

After gathering alternative proposals. We ran two polls about the proposal to evaluate community feeling about them.


The first poll indicated that only a minority (13%) were against of the minting of tokens according to the 2017 plan. And that most people supported the minting of 200M PNK, in one time, in 4 times or to mint the whole 1B PNK at once.

To find a consensual proposal, we ran a second poll asking people to rank (see Condorcet methods) the proposals which were on top of the first poll.
We found that proposal A. “The Kleros DAO mints 200M PNK to the cooperative.” (initial proposal) was the consensus proposal (according to the poll, the final decision is to be made by the Kleros, the polls are just there for us to get early feedback) at it would won all its duels against other proposal:
A VS B: 58% for A.
A VS C: 73% for A.
Therefore it seems that the initial proposal is the most consensual and the one we will submit to vote first.

12 Likes

This is horrible.

Hahahahahahahahahahahaha. Ive run out of money too but wait i’ll just print some more lmao sirs.

If the new exchanges are not one of Coinbase, Binance or Huobi, than we dont need new exchange.
There are enough liquidity in the current DEXes.
Why OTC sales and not buy from the open market?
I do not see any benefit from story telling reward program, i do not think it catched people attention. /biz creating memes are doing much more for free.
I dont support airdrops. It would mostly go to people who already familiar with Kleros.
Only thing i see worth it is new hiring.

I do not support 200 million minting. I would support at max 50 million.

Having seen all the messages here r.e PNK minting I think a few things need cleared up.

We’re not in need of funding (or even close)

There are no further supply changes (there was always going to be 1Bil tokens and getting to that final amount sooner rather than later is a good thing IMO). Not everyone feels that way of course.

The minting of further coins is in our case, positive, we sold out of all tokens from the sale + large OTC deals which were additional to the sale. You can see this in our transparency report.

At this moment, the cooperative has next to no PNK left due to selling nearly all of them. This is not the same as having no money.

If for example, we were asked to list on a large exchange tomorrow and provide PNK liquidity, that would be next to impossible at the current amount we have left thus, hindering certain operations in some way.

It seems there is anger towards being diluted when minting of new tokens towards final supply was always going to happen. Max supply is 1B PNK as stated in the original outset of the project, nothing changed there.

These aren’t going to be used for a sale anytime in the near future (we have years of runway at current rates).

Also, it’s a decentralized vote.

You have the power to vote against it (providing you have PNK ofc).

I get when people see ‘minting’ it creates all sorts of uncertainty but in our case, I believe it should be seen as positive when you’ve ran out of all your stock and need more (from a pre-determined total supply).

The difference here is, this is actually very healthy for Kleros. We’re not minting for any personal financial gain (sale / funds) the PNK will remain in the cooperative with small amounts used for exchange liquidity, bounties (remember we pay the storytelling and other community bounties from PNK).

Now, had we 100m PNK in the co-op and needed more, I would fully understand the doubts here, but actually we have 1m PNK left due to the demand and success of Kleros in general.

I don’t want to say this is a ‘bullish mint’ as it borders on oxymoron, but it actually kinda is (in my personal opinion).

To Conclude

This is just a proposal and ultimately, you the PNK holders have the voting power. If you don’t think this is a good idea for the reasons stated, you can vote against it. If however, you do think PNK is useful for the cooperative as stated in the reasons above you can vote for it.

As another option, if you think 20% (200mil PNK) is too much and that a smaller amount should be proposed, that is another route.

At the end of the day, Kleros is an open protocol governed by its holders, this proposal can only pass if there is general consensus from the whole community, if not, it doesn’t have to pass or can be changed to a different proposal for voting on.

There is no ‘Next IICO’ in this conversation. We don’t need these tokens for a further sale anytime soon as our funding is more than secure.

Essentially, you’re voting on how YOU the holder wants to take Kleros forward, if you don’t think this is the correct way and that we shouldn’t mint more of the original total allocated supply, you can vote that way.

The points above are my personal opinions and not that of the cooperative.

3 Likes

“We are not broke. But we use our centralized power to create a short term benefit on our side while disrespecting our early investors and the community that created the actual liquidity by social media presences and memes.”

Theft is exactly the reason why socialism does not work. You need to start to be responsible for your fuck ups. They stated they got 700k € that A nice bunch to fund a small dev team for at least one year. There is no need for flying to big crypto gatherings anyways. Since they are all banned anyways.
If you mint those tokens, this pretty much means that kleros requires funds for the expensive “lifestyle” choices of the creators and not for actually developing a working project. Just work on the fucking project and don’t try to roll off your fuck ups on the community and investors!

“If for example we were asked to list on a large exchange tomorrow and provide PNK liquidity, that would be next to impossible at current amount we have left thus hindering operations in some way.”

centralized exchanges should not be the focus. They are the biggest treat to cryptocurrencies at the moment and a double sided sword. Uniswaps volume is good enough and it will be more in the future. We should learn to stop using centralized exchanges or crypto will not reinvent finance but turn it into the Orwellian nightmare.

Im probably out and not coming back.

But we use our centralized power to create a short term benefit on our side while disrespecting our early investors and the community that created the actual liquidity by social media presences and memes.

We’re not using anything, this is a proposal to mint tokens which were always part of the supply. The proposal is in you (the communities) hands, not ours.

Theft is exactly the reason why socialism does not work. You need to start to be responsible for your fuck ups. They stated they got 700k € that A nice bunch to fund a small dev team for at least one year. There is no need for flying to big crypto gatherings anyways. Since they are all banned anyways.
If you mint those tokens, this pretty much means that kleros requires funds for the expensive “lifestyle” choices of the creators and not for actually developing a working project.

Quite the opposite. We spend very little on anything of the sort and funding goes to development of the platform. As you may have seen, we’ve built a number of dapps on mainnet for a very small outgoing. Kleros is and always has been, a very lean project.

I don’t understand where ‘theft’ comes from either. We are proposing to mint tokens that were always part of the supply. No one is being stolen from.

centralized exchanges should not be the focus. They are the biggest treat to cryptocurrencies at the moment and a double sided sword. Uniswaps volume is good enough and it will be more in the future.

On this point, I fully agree. The community is not only made up of people who think this way however, we have to cater to all mindsets. Again, this is why it’s open to vote from everyone. Just because we may agree with the above point, doesn’t make us ‘right’.

I’m probably out and not coming back.

That’s very sad to hear, especially considering I think this whole proposal has been misunderstood (not well communicated from ourside) but of course, you are free to do as you wish and thank you for the comments.

2 Likes

You are inflating the market with 200.000.000 new Tokens which is equal to an 25% inflation rate. That this is not “understood” to be theft is actually very concerning. People made their investment decisions based upon the token supply.

Having this fundamental definition of your product changed is the proof that you do not trust the value of your own product / token.

Inflating implies we’re creating new tokens on top of the predetermined max cap. We’re actually minting tokens which were always part of the allocation schedule.

People made their investment decisions based upon the token supply.

I would like to think they made their decisions based on proper research which would have shown the total supply was always 1bil and further minting proposals were expected to reach that supply. This is not the first time we’ve minted as was always specified.

Having this fundamental definition of your product changed is the proof that you do not trust the value of your own product / token.

Quite the opposite. Nothing has changed in the fundamentals, actually, we are following the fundamentals as set out from day one.

2 Likes

In this case avoid using “minting” in proposals instead of “unlocking” … jesus.

Technically, “minting” is correct as they are not created (and could never be created) if the proposal votes never pass.

“Unlocking” implies they have been created, exist and can be opened up on a specific date for a given use.

If this proposal (or subsequent) never pass, the previous statement will never be the case.

I understand there can be some misconceptions from that term of course.

1 Like

How many tokens could be technically and hypothetically “minted”?

One billion as stated everywhere since 2017.



Just a few.

2 Likes

Anything up to 1bil PNK can be technically minted although, that could also be less as the minting proposals are done using fully decentralized governance.

Coop Kleros can’t mint tokens itself. Token holders have to vote in favour or it won’t happen.

Note: 1Bil PNK was always the max supply from the inception of Kleros and is clearly stated in our comms.

The big difference here is that it might even be less than that if the community votes against it.

That is a fundamental difference to most projects who mint their total supply in one go.

Technically, this method puts more power in the holders hands rather than a centralized team who mint in one go and hold all the tokens.

Technically the Kleros DAO has full control of token minting. This means it can deny minting of tokens of the initial plan and mint less or mint more than 1B.

4 Likes

I have PNK staked, how do I vote on this?

It hasn’t been put to vote yet and it is still gathering community feedback.

I am still trying to wrap my head around how you guys are proposing to completely sabotage your development, loss your community trust/credibility, and fall off the rather of almost all your existing and future investors. Look at other companies who succeeded in crypto and how they created value for their coins/tokens during their price discovery days then you will know that the only thing this proposal will accomplish is that it will enrich you guys pockets in the short term and mess all your investors up. My proposal is mint Zero PNK (In fact, the issue of minting should not even be talked about in a very long time), reduce rewards and compensation drastically, watch PNK value rise. PNK value rise, which means the very tiny rewards and compensations you are giving will worth more money in the hands of the receivers.

2 Likes

We don’t need generic cash

If there is no shortage in generic cash, I think it is not in the best interest of the community to devalue the token for any purposes. One of the main targets should be bringing jurors onto the platform and you can’t be attractive with an inflationary currency that did not even get of the ground.

If you already have enough cash or eth (est. over $1 million) why don’t you use buybacks of PNK to finance your reward programs and team member compensation. Just minting the PNK you need seems like draining the community your project very much depends on.

It’s not just a claim, you can look at the Kleros multisig.

The minted PNK are not going toward the founders neither directly nor indirectly. The proposal just asks to confirm the scheduled issuance of tokens which are used to pay for daily PNK expenses.

The cooperative has almost no PNK left and the community holds way more PNK than team members.

People don’t work for free and compensation is really reasonable and would be below market prices if it didn’t include the PNK part. When compensation fails too drastically (like what happened during the bear market), people leave and go work on projects paying more.
PNK is not a “store of value” token. But a staking one which allows starkers to get paid to arbitrate disputes.

Since the cooperative has almost no PNK left, even those rising value wouldn’t help. The choice is either to reward people in PNK or in ETH. A part of the reward being in PNK aligns incentives.

I’ve been in crypto since 2013 thanks for your concern. PNK is not a store of value token and has really different economics. Its value is derived from arbitration fees paid to token holders / jurors. If the extra com/integration enabled by the tokens increases the amount of arbitration fees collected by the system by a factor greater than the dilution, PNK value should increase.
Note that the proposal doesn’t change the expected minting scheduled but is part of a schedule which has always been public since 2017.

1 Like