Summary - This proposal would accomplish the following: 1. A validator will be run on the Cosmos blockchain with the intention of providing a revenue stream for the DAO. 2. This proposal is scoped to one blockchain, Cosmos. This will not only strengthen the ShapeShift DAO, by providing a revenue stream, but also provide security to other decentralized communities through trusted validation services.
Abstract - We envision income from validating to be a core pillar of the ShapeShift DAO Tokenomics Workstream in the near future. There are many opportunities for the ShapeShift DAO to earn passive income through Proof of Stake activities on several blockchains. One such opportunity exists with the Cosmos blockchain. Cosmos is a Proof of Stake (PoS) blockchain built using the Tendermint core. A core function of the Cosmos blockchain is delegation and rewards for delegation. Delegation helps secure the network and participants earn rewards for their participation. More info can be found here: https://cosmos.network/learn/staking/. ShapeShift has been a participant in the Cosmos ecosystem since 2017. The Security and Information Technology team at ShapeShift have been securing the Cosmos network since the early days of the Cosmos blockchain and have become experts in the subject. The validator started as an R&D project and has since evolved into a steady stream of income for the business. This validator was done under an anonymous name. We believe that the DAO will benefit by continuing to support Cosmos in a more public manner.
Specification - We are proposing that the ShapeShift DAO continues to support and secure the Cosmos ecosystem by creating a ShapeShift validator. Setup and maintenance of the validator will be done by TaxiStake under the ShapeShift brand name. Rewards, in the form of USDC, would be distributed to the DAO to diversify the income streams of the DAO.
Last year, the Cosmos validator for ShapeShift earned about $250,000 with no marketing or branding. We are proposing that the validator commission be set at 10% and The rewards from the ShapeShift validator will be distributed to the DAO treasury and TaxiStake in a 70%(DAO)/30%(TaxiStake) split for a 12 month period starting Nov 1st 2021 thru and including October 31st 2022. Cosmos users who delegate to the ShapeShift validator will be supporting the ShapeShift DAO as well as securing the Cosmos network. For the setup and overhead of this validator, TaxiStake is requesting a 50,000 FOX upfront grant and 100,000 FOX subsequent grant in a Sablier stream over the same 12 month period. FOX in a Sablier contract would allow the DAO to “terminate” TaxiStake by canceling the stream if we are not living up to the standards of this proposal. Also, a Sablier stream incentivizes TaxiStake to send commissions to the DAO. Taxistake will work to convert the ATOMs into an ETH based asset USDC until Gnosis safe adds ATOMs support or some kind of synthetic ATOM on ETH exists.
On successful completion of this initiative, the DAO community or TaxiStake can propose other projects for future staking activities on other blockchains under the ShapeShift brand with similar commission sharing incentives. TaxiStake has purchased an existing validator, Velocity V1 (cosmosvaloper199mlc7fr6ll5t54w7tts7f4s0cvnqgc59nmuxf), from ShapeShift and is ready to move forward using this validator.
Motivation/Benefits - We have been operating validators on several chains professionally for several years. The ShapeShift validator, under our team’s supervision, secured over $60mil on the Cosmos Blockchain, at the market peak. With the opportunity to transition from ShapeShift employees to something else, we want to take on validating full time. We see this as a critical first step for the DAO to diversify and obtain an alternate revenue stream. Everyone would like to see the DAO succeed and we believe an essential pillar of its success is to have diversified revenue streams. The Tokenomics workstream is likely to be one of the largest of the DAO; we want to see validating as a crucial pillar. Right now, the DAO is 100% long FOX. A diverse portfolio of cryptocurrencies is crucial to the DAO’s long-term survival as well as meeting the values of a chain-agnostic open protocol that promotes self sovereignty.
Drawbacks - To be a validator in the top 100 requires a minimum of about 200,000 ATOMs delegated at time of writing (about $3,000,000 USD). However, we believe that the ShapeShift DAO community can easily move past this barrier.
Vote - If you vote “for” this proposal you are voting to fund a total of 150,000 FOX that will be distributed to TaxiStake for transition and maintenance of a ShapeShift validator. 50,000 FOX immediately and 100,000 FOX in a Sablier contract for a 12-month period.
If you vote “against” you are saying you do not believe this Cosmos validator should move forward. Or maybe just not in this way.
Original Forum Post: https://forum.shapeshift.com/t/operate-a-cosmos-validator-on-behalf-of-the-shapeshift-dao/392
Ideation Post:
https://app.boardroom.info/shapeshift/ideation/kjzl6cwe1jw148qumaq2r5iitbtx36u4z57p2l4xvtopwxtwnxp6dk90kjwx22x
