KIP-81: Strategic PNK Sale to Kleros Cooperative

[0xAlex]

@zebras.glimmer3o

i want to see a list with the pnk transactions + description of the cooperative to understand how the cooperative spent all the pnk

While we can’t disclose an exhaustive list of transactions for privacy reasons, the Kleros Cooperative spends the vast majority of its PNK on:

1. Contractor incentives
2. Compensation for rebalancing of LP positions on CEXs
3. Other incentive programs ( Curate, Fellowship, Schelling Game for Conference etc.)

@zebras.glimmer3o

the cooperative has so much eth why not pay incentives just in eth? no pnk sell pressure and if users want to buy pnk they can do so

We believe it’s critical to incentivize all Cooperative contractors by paying a substantial part of their compensation in PNK. This approach attracts and retains talent through a three-year vesting schedule with a one-year cliff—a standard industry practice that aligns long-term incentives and allows contractors to join the juror pool if they choose.

@zebras.glimmer3o

give more power to the dao. let the dao make the decision to pay the pnk incentives and how much.

power to the dao!

This is already happening: the major PNK incentives for the Juror Incentives Program was approved from the DAO (via KIP-66: Long-Term Juror Incentive Program and KIP-78: Amendment of KIP-66 Long-Term Juror Incentive Program) with PNK minted from the DAO (instead of from Cooperative Treasury as it used to be in the past.) With this proposal, the DAO will be able to give incentives in ETH for any proposal that is bringing value to PNK holders (pass the Futarchy test)

@zebras.glimmer3o

why can’t the dao manage all the funds? gnosis dao is doing it already

We closely monitor developments across the ecosystem’s various DAOs, with the ultimate goal of achieving full decentralization for the Kleros Protocol—provided it never compromises the Cooperative’s core mission.

From its founding, the Kleros Cooperative has operated as a non-profit dedicated to a single purpose: building and advancing the Kleros Protocol. We recognize that true protocol resilience demands decentralization, which is why this proposal progressively shifts greater authority to the DAO.

That said, Kleros is not yet prepared for complete decentralization. We still need broader adoption, and the only safe path to full decentralization is a gradual, progressive transition. This is a long journey, and we are actively engaged in all the key forums and expert associations in the field, such as BlockchainGov and SEEDGov.

Moreover, substantial work lies ahead, particularly on Kleros v2 development and game theory research where the Cooperative and its contractors remain the most efficient structure for driving progress.

@greenlucid

This deal makes no sense for PNK holders.

If the Cooperative wants PNK, they can just buy it like everyone else, through a TWAP or market orders, not mint themselves a discount. That’s what they’ve been doing historically, and it worked fine. Why stop now?

As PNK prices rise, market purchases become increasingly unsustainable for the Cooperative. Securing a large PNK allocation now ensures operational stability for the next several years for the Cooperative.

We firmly believe that sourcing PNK from the DAO—rather than open markets—empowers the DAO and enables a broader range of stakeholders to propose initiatives that grow the Kleros Protocol and so increase value for PNK holders.

@greenlucid

The futarchy.fi market signaling a better price would break the assumption that this proposal is a negative, although truth is, that price can be manipulated by whales or “strong responders”, as it’s a niche product.

Any whale attempting to manipulate Futarchy markets creates immediate arbitrage opportunities for traders. This is precisely why prediction markets are powerful tools for price discovery.

@greenlucid

The DAO already minted PNK for the Coop once, but the DAO doesn’t have real governance capabilities to hold the Coop accountable for anything. Why would the Kleros DAO gift the Cooperative an allowance again?

This isn’t a gift or a grant, as it used to be in the past —it’s a purchase of PNK

@greenlucid

If the Cooperative wants to fund waste, they need to assume the costs themselves, not export it to all PNK holders.

It’s the opposite: the Cooperative recognizes that the DAO can serve as an effective decision-making body for funding certain activities, such as growth initiatives.

If the proposal passes, future Curate incentives will be funded with PNK purchased from the DAO using ETH. The Cooperative retains full sovereignty over its treasury. At the same time, we acknowledge that stakeholders hold diverse perspectives. An ETH-denominated DAO treasury could fund alternative incentives or complementary growth programs.

@greenlucid

This proposal is creating a private ask of freshly minted 100M PNK. If anyone wanted to dump 1000 ETH into buying PNK at the time I write this, you’d only get 45M PNK. For 3.5M$ worth of ETH. This KIP idea means the Coop wants to buy 100M PNK for 2.9M$.

The intent was never to mint PNK for the Cooperative at a discount. The TWAP mechanism was proposed to simplify execution, as market prices fluctuate between proposal posting and on-chain execution.

Any sophisticated actor seeking 100M PNK would not execute a single market order but would instead use strategies like TWAP to minimize slippage and price impact. To eliminate any perceived “discount,” we now propose executing the PNK purchase using the price of PNK when the proposal is approved by the Cooperative during the General Assembly (and ofc only if the DAO vote and Futarchy test pass). We will updated the proposal in that sense and this price will be shared in this Forum, by doing this the Cooperative will acquire 100M PNK at a similar price than any sophisticated stakeholder trying to source it from regular markets. Again this isn’t a grant or a gift but a purchase denominated in ETH.

@KlerosJuror

Past token mints in Kleros history were used to bring external capital and new participants into the system. This proposal would be the first mint that introduces no new backers, no new strategic contributors, and no new demand-side liquidity.

Past token mints were granted to the Cooperative without involving new participants (if we exclude ICOs where tokens were sold by the Cooperative for ETH). This time, it’s a purchase—one that confers strong legitimacy on the Kleros DAO and equips it with real agency through an ETH treasury.

@greenlucid

But, that PNK shouldn’t be necessarily awarded in a private ask only the Cooperative can access. If the DAO wants to dump PNK to fund itself, it should be done in a TWAP so everyone (Coop and other PNK interested buyers alike) can buy

Any other stakeholder interested in a similar kind of deal can submit a proposal in the Kleros DAO; there is no blocker about this.

@greenlucid

I would support an alternative proposal:

• Mint less (maybe 20-30M PNK to start with)
• It’s sent to a wallet that can initiate a TWAP operation, selling 1/60 of the bag daily, over 2 months.
• Then the Cooperative has to compete against other potential buyers, and the DAO gets a better price (which will benefit the Kleros DAO, and thus, PNK holders)

Thank you for suggesting this alternative approach. However, we don’t believe it’s viable. Purchasing such a small amount of PNK wouldn’t secure the Cooperative’s long-term operational needs, nor would it build a Treasury large enough to fund meaningful growth initiatives for the DAO.

@greenlucid

Cooperative has already been in a privileged position, and it has virtually all the resources already.

The Cooperative has been building this industry since 2018 and when it comes to the DAO it holds no special rights. Any PNK holder can propose that the DAO mint new PNK and transfer it to their wallet with a grant setup or a purchase as is the case here.

PNK holders naturally hold differing views on this matter. Those who believe it makes no sense are free to vote against the proposal—that’s precisely why we’re bringing it to governance for open discussion.