IIP-23: The Marshall DAO

Summary

This IIP proposes the creation of The Marshall DAO, a Decentralized Autonomous Organization (DAO) that will employ a vote-escrow on-chain governance model. The purpose of The Marshall DAO is to enable IoTeX stakeholders to make proposals regarding how to allocate $IOTX incentives to grow the IoTeX ecosystem, including onboarding reputable DePIN projects and funding network-wide initiatives. Additionally, this IIP suggests that The Marshall DAO be formed by merging previously passed IIPs (e.g., IIP-15) and IoTeX programs (e.g., Burn-Drop), as well as making use of newly available network tools (e.g., IOTX staking via NFT buckets). It is important to note that The Marshall DAO is an upgrade / extension of the original MachineFi DAO concept, which was originally proposed and discussed in August 2022. As such, this proposal gives MachineFi DAO NFT holders the ability to boost their voting power by 0.1% for each MFI NFT owned, up to a maximum of 100 NFTs per wallet, adding up to a potential maximum boost of 10%.

Motivation

Over the past year, the DePIN (Decentralized Physical Infrastructure Networks) sector has come to life with many promising projects being bootstrapped across several industries. However, there is a lack of transparent and effective incentive programs that align projects, investors, and community members with the goal of funding new DePIN projects/initiatives and growing the DePIN sector as a whole in a concerted fashion. As a market leader in DePIN, IoTeX is motivated to launch a world-class incentives program that will be governed by DePIN stakeholders via a transparent and fair vote-escrow on-chain governance format.

We believe that by establishing The Marshall DAO (named after The Marshall Plan of 1948), we can effectively allocate $IOTX incentives to projects and teams that wish to utilize IoTeX’s various product offerings (e.g., L1, W3bstream, DePINscan, ioTube, ioPay, device SDKs), contribute new technologies to the IoTeX Network (e.g., wallets, DEX, identity), or even launch new initiatives (e.g., liquidity boost, launchpads, integrations). By putting decision-making power regarding which initiative and projects receive funding/incentives into the hands of $IOTX “true believers”, we believe a transparent and meritocratic incentives program can be created to drive the IoTeX Network and DePIN sector forward.

Typical Scenarios To Support

Here are five typical scenarios that The Marshall DAO aims to unlock. We will enable IoTeX community members who are passionate about on-chain governance to create, discuss, and approve proposals that determine how to allocate $IOTX from the DAO to various projects (specifically, “gauges”) periodically.

  • Scenario 1 (Liquidity Boost): utilize $IOTX from the DAO to incentive liquidity of $XYZ-$IOTX pair on a DEX such as mimo (i.e., liquidity mining), where $XYZ is the token of a community-approved DePIN project

  • Scenario 2 (Launch): allocate $IOTX from the DAO to sponsor an early-stage DePIN project to help them get started (from 0 to 1). Ultimately, this will increase the velocity of new DePIN project creation and potentially grow the treasury in the DAO.

  • Scenario 3 (Grow): allocate $IOTX from the DAO to accelerate the growth of a DePIN project that already has its devices or machines launched (from 1 to 100). For example, this can be done by allowing devices or machines to “dual-mine” $IOTX in addition to their tokens.

  • Scenario 4 (Grant): allocate $IOTX from the DAO to sponsor a project that creates a public good (e.g., blog post series or documentary on DePIN or even something more meme-like such as inscription) or offers network-wide tooling/utilities (e.g., covering gas fees for a public oracle, bug bounties for network tools).

  • Scenario 5 (Donate): one wants to donate assets such as $IOTX, $USDT, $BTC, $ETH or other DEPIN assets to build a flourishing DePIN ecosystem and encourage the use of IoTeX technologies. They should be able to send the tokens directly to the smart contract address of the Marshall DAO and optionally have their name displayed on a “Hall of Fame”.

Other scenarios and ideas for how $IOTX should be allocated to grow the IoTeX Network and DePIN sector may also be facilitated by The Marshall DAO – the scenarios above are simply illustrative. The goal is to enable long-term “true believers” to propose their own ideas for how $IOTX should be allocated.

Terminology

Off-chain Governance vs . On-chain Governance

Off-chain governance (Existent) On-chain governance (This IIP)
where https://gov.iotex.io/ https://dao.iotex.io/ (to come)
who - People who stake $IOTX via staking portal to vote for Delegates / secure the network - People who stake $IOTX to the vote-escrow smart contract to participate in Marshall DAO
why - Protocol-level changes
- Smart contract or parameter-level changes
- Network policies, processes, and rules
- Spend DAO treasury via specifically scoped projects
- Creation of new gauges (see below)
process difference - Propose+vote on snapshot - Propose+vote on dao.iotex.io

Project vs . Proposal vs . Gauge

  • A project, as its name implies, refers to a specific initiative.

  • A proposal is what is submitted to the DAO for potential acceptance or rejection.

  • A gauge (following the convention of curve.fi) is a smart contract that belongs to the project team and is a component of the proposal. It receives the allocated $IOTX tokens.

Staking $IOTX Options

There are currently two ways to stake $IOTX: Native Staking and Staking-as-NFT (more details here). The Marshall DAO will first support “Staking-as-NFT” upon launch. An initiative to convert “Native Staking” buckets to “Staking-as-NFT” buckets is being planned for late 2024 / early 2025, as protocol-level changes are needed to complete the conversion. After the conversion is completed, existing “Native Staking” buckets will be eligible to participate in The Marshall DAO.

Specification

Who Governs

Governance of The Marshall DAO will be centered around a new vote-escrowed version of $IOTX called $veIOTX. This can be obtained by staking $IOTX via the “Staking-as-NFT” method (options include 10K, 100K, 1M $IOTX increments with mandatory 91-day stake lock) and receiving an NFT that represents your staking bucket. These NFTs can then be deposited into The Marshall DAO smart contract to produce $veIOTX , which is a non-transferable and non-tradable token. $veIOTX grants its holder three benefits:

  1. Voting power for on-chain governance (as detailed in this IIP)

  2. Obtaining incentives/rewards from projects such as portion of transaction fees and/or new tokens.

  3. Boosted $IOTX staking yield by either having vote escrow contract to stake part of its NFT buckets to a liquid staking protocol or tune the DPoS parameters to grant a boost factor to $veIOTX holders (potentially covered by a future IIP)

Since all “Staking-as-NFT” buckets are required to have a 91-day stake lock duration, one’s voting power is proportional to the actual $IOTX staked. For example, if Alice has two NFT buckets (10K $IOTX + 100K $IOTX) then Alice’s voting power is 110K. If the total $IOTX locked in the vote escrow contract is 10M $IOTX, Alice accounts for 0.11% of all voting power.

Funding and Allocations

This section explains the source of funds for The Marshall DAO, as well as the destination of funds. It is worth noting that The Marshall DAO merges existing IoTeX programs (e.g., Burn-Drop) and previously passed IIPs (e.g., IIP-15) in an effort to create one holistic program.

  • Foundation: The IoTeX Foundation will allocate initial funds into the Marshall DAO, as well as replenishments over time.

  • Protocol Revenue: various forms of network revenues, including L1 revenues, gas fees, and potentially W3bstream revenues will be added to the Marshall DAO Treasury. This can be considered merging IIP-15 into the Marshall DAO design.

  • Donation : in multiple assets such as $USDT, $ETH, $BTC, $ETH and DePIN assets in addition to $IOTX.

  • Burn-Drop: Additionally, we propose that funds allocated to the Burn-Drop program be re-allocated to the Marshall DAO. Specifically, 300M $IOTX from the “MachineFi DAO” allocation of Burn-Drop will be added to the Marshall DAO immediately at launch. After Phase 5 (i.e., 31,000 devices), the remaining “Burn” and “Drop” allocations, comprising a total of 250M $IOTX, will be added to the Marshall DAO – note that Phase 5 is expected to be completed by end of 2024 based on the current rate of Ucam/Pebble registrations. More details on the remaining Burn-Drop allocations can be found here.

  • Other: additional sources of funding for Marshall DAO may be added by community vote later.

The destinations of the funds will be gauges contracts , including one-time gauges (i.e., receives emission once as a lump sum) and continuous gauges (i.e., receives emission every block). The table below illustrates how gauges will be applied to the example scenarios explained earlier:

Voting Mechanism Emission Supported Scenarios
One-time Gauge
- No weight, one-time vote for pass or reject lasting for N days specified by the proposer. Lump sum, e.g. 100K IOTX - Scenario 2: Launch
- Scenario 4: Grant
- Scenario 5: Donation
- Quorum Reached: The total number of votes cast must exceed the dynamic quorum. We start with 10% of participating voting power.
- Majority Vote: The proposal must receive a majority of the votes cast, i.e., 50% of participating voting power
Continuous Gauge
- Weight is proportional to votes received Per-block basis, i.e., 2 IOTX / block initially, adjustable through off-chain governance - Scenario 1: Liquidity Boost
- Scenario 3: Grow
- Higher gauge weights receive a larger share of the per-block $IOTX emission
- Periodic voting, every for 14 days

The Process

Since on-chain governance aims to facilitate well-scoped projects with specific goals and enable rapid, community-curated decision-making, we do not expect the need for temperature checks or heavy pre-discussion as is required by off-chain governance. We envision the high-level process below:

  1. Create a Proposal: a new portal at https://dao.iotex.io will be built enabling anyone with more than 100K $veIOTX to create a new funding proposal, which must include:

  2. Title, summary, and actionable proposal

  3. Smart contract address to receive emission, e.g., $XYZ-$IOTX pool contract

  4. Gauge type: One-time vs Continuous

  5. Any specific parameters e.g., voting duration

  6. Vote for a Proposal: the voting mechanism has been described in the table above

  7. Apply the Results: The Marshall DAO autonomously applies the proposal once its passed, as part of our vision for decentralized governance and permissionless participation.

What this IIP Implies

This passing of this IIP implies the community will give the green light to begin development of the Marshall DAO from a technology and process design perspective. It also implies the below action items:

  1. The initial governance parameters are as listed below. Any future adjustments of these parameters are possible via new IIPs:

    i. Minimum to propose: 100,000 $veIOTX

    ii. Continuous Gauge:

    • Voting period: 7 days

    • The initial emission rate is 2 $IOTX per block

    iii. One-time Gauge:

    • Quorum: 10% of participating voting power

    • Pass threshold: 50% of participating voting power

  2. “MachineFi DAO” allocation of Burn-Drop (300M $IOTX) will be moved immediately into The Marshall DAO as initial funding – note that the MachineFi DAO and Marshall DAO are ideologically similar, but the Marshall DAO includes more features like decentralized governance. After Phase 5 of Burn-Drop (i.e., >31,000 devices), the remaining “Burn” and “Drop” allocations (250M $IOTX) will be added to the Marshall DAO and Burn-Drop will be halted. Note that new forms of deflationary burn and/or airdrop mechanisms can be introduced via Marshall DAO – this enables the community to create several Burn-Drop like programs that are based on different metrics, not only # of devices registered.

  3. A portion of L1 revenues will be allocated to The Marshall DAO upon launch. Specifically, the 30% of L1 revenues approved as part of IIP-15 to be shared with Dapps will now be added to the Marshall DAO instead. The rationale is that a new gauge can be created via the Marshall DAO that mimics the “sharing of gas fees with top Dapps” goals of IIP-15.

Copyright

Copyright and related rights waived via CC0.

7 Likes

This IIP for a Marshal DAO presents an exciting vision for a community-driven governance structure that could propel the IoTeX ecosystem to new heights. However, the currently proposed architecture requires users to navigate a multi-step process: staking IOTX, minting stake bucket NFTs, delegating to nodes for APY, and finally depositing the NFT in the DAO treasury for voting tokens. This complexity acts as a barrier to entry for many regular IoTeX users, potentially hindering the DAO’s growth and inclusivity. Additionally, tracking individual APYs for each user adds significant technical overhead, further complicating implementation.

A Simpler Path: Inspiration from Lido and Rocket Pool

Instead of the current multi-step process, let’s take inspiration from successful staking pools like Lido DAO and Rocket Pool. Here’s how it could work:

  • Users simply deposit their IOTX directly into the Marshal DAO. Users wouldn’t need to navigate multiple steps or manage individual NFTs, They could simply deposit their IOTX and start participating in governance.
  • The DAO handles the conversion of deposited IOTX into staking bucket NFTs and manages their delegation to secure nodes. By staking all tokens from within the DAO, everyone would earn the same base APY, eliminating the need for individual stake bucket APYs and simplifying reward distribution.
  • Users receive veIOTX equivalent to their staking bucket’s value and representing their proportional voting power within the DAO. Users can then participate in the DAO governance to delegate the IOTX stake, held by the DAO, to node operators of their choice. This ensures equal APY for all participants and encourages diverse node support, preventing centralization.

Simplifying the onboarding process is not just about convenience; it’s about unlocking the full potential of the Marshal DAO. By attracting a wider range of participants, the DAO can become a truly representative and a powerful voice within the IoTeX community. Increased participation also strengthens the network’s security and governance, leading to a more robust and thriving ecosystem.

5 Likes

Hi. This is an interesting proposal that offers a governance model that aligns with IoTeX’s goals to grow the DePIN ecosystem, but has some open questions regarding mechanics and incentives. In addition, the proposal lacks details around dispute resolution and protection against malicious offers.

Comment and suggestion from @iChristwin on IOTX direct deposits will lower barriers to entry. It will attract more participants and strengthen governance. I agree fully that simplifying the user journey through direct IOTX deposits will make participating in The Marshall DAO more accessible. This helps decentralize power and enables more representative decision-making.

However, in allowing direct deposits, we must retain the vote escrow model to maintain long-term alignment of incentives. Users should commit to locking their IOTX for a predefined period to earn veIOTX governance tokens. The DAO smart contract can automatically handle delegating out the escrowed IOTX for staking yields. This abstraction keeps user complexity low while preserving voter accountability.

Additionally, with more participants comes increased potential for disputes. To plan for this eventuality, an on-chain dispute resolution mechanism should be implemented to avoid centralization of power. For example, if 21% of voters reject a proposal, a 7 day dispute period could be triggered. Challengers would stake a bond allowing both sides to make their case, and the collective voters render a final verdict whether to allow the proposal based on dispute arguments presented across both sides.

By combining simplified direct deposits with retention of vote escrowing and a decentralized dispute process, The Marshall DAO can achieve the best of accessibility and user experience while maintaining governance accountability. This balanced approach will ensure strong growth and stewardship of the IoTeX ecosystem in line with the original motivations behind this proposal.

5 Likes

This is going to take a couple read throughs but how do you see this affecting the Delegate staking? Will this create “competition”?
Will there be an initial team that oversees the creation of the DAO comprised of members of the DePIN community, project founders, etc…

3 Likes

This simplification appeals to me very much. And to give ‘convenience’ its due, you could also characterize it as reducing friction to participate. If we want less technically (or tokenomically, to coin a phrase) oriented people to be part of the governance process we should make it easy to participate. That’s my 2 IOTX.

3 Likes

Yet another slap in the face to long duration IOTX stakers who will not be able to participate until 2025! This Marshall DAO is for the ‘true believers’ you say? You cannot be serious!

Please simplify the process, I like the feedback on that above, but while you’re at it do not exclude native stakers. Find a way to include all stakers and if it is not technically possible, compensate native stakers accordingly.

What about MachineFi NFT holders? There was much talk, promises? even, about how these NFT holders would run the MachineFi DAO. You cannot pull the plug on that. If MachineFI NFTs are no longer part of the plan, compensate these NFT holders accordingly with IOTX from the IoTeX foundation.

Lastly, it was stated that ‘potentially’ Webstream revenue could be sent to the Marshall DAO. Until this ‘potentially’ word is removed and there is clarity on Webstream tokenomics, I would highly advise Marshall DAO participants to NOT vote for Webstream initiatives. There are VC investors with an equity stake in MachineFi Labs, the so called owner of Webstream, whose responsibility it should be to fund Webstream. That is, until there is a firm commitment by IoTeX founders on how Webstream will accrue value to IOTX token holders.

3 Likes

You raise some valid points! The Marshal DAO though is meant to be an upgrade of the MachineFi DAO concept, as we have highlighted in the summary. We’ll definitely release an update to define how this upgrade would work, and how to reward current contributors and members of our community.

1 Like

Hello IoTeX Community,

After reviewing the Marshall DAO Incentive Program (IIP-23) and reflecting on what we have seen in the industry, I’d want to raise a few points for discussion.

Simplification of Participation Process: This topic has been raised, but it is important to highlight that many protocols lack participation in governance. This stems from a usability barrier. If you can simplify the steps, would that help drive participation and demand for locked tokens?

Dispute Resolution: Another aspect of DAO governance that makes it less competitive to hierarchical structures such as normal businesses is that it can take quite a long time to reach an agreement. We like the aspect of automating proposal payouts. This is a step in the right direction. How could disputes be resolved more automatically?

Funding and then what?: Many projects are well funded, but still struggle to become successful. The landscape of pre & post-TGE is a tough one to navigate for most builders, who want to focus on their project. With your stated goal of growing the DePIN sector, you should consider giving even more support to projects to handle the capital market side (Tokenomics design, Growth Capital, Market Making, Exchange listing, and Business Intelligence etc.). Aside from funding, how else can you help grow the sector?

Would like to hear your thoughts!

Florian from Tokenomics DAO

This IIP proposes the creation of The Marshall DAO , a Decentralized Autonomous Organization (DAO) that will employ a vote-escrow on-chain governance model.

Voting is now underway:

Start date Jan 10, 2024, 10:00 PM

End date Jan 17, 2024, 10:00 PM

By passing this IIP, the IoTeX community empowers itself to drive its own growth. This is not just about allocating funds; it’s about building a future where $IOTX holders take the wheel, shaping the DePIN landscape and propelling the IoTeX Network to new heights.

Read the full proposal here and vote now

4 Likes