Call to Prayer #24

Call to Prayer #24 occurred on Sunday August 28th, 2022, at 6:00 pm EST.

For a tl;dr, you can check out this Twitter thread.  Subscribe to the new Codex newsletter to never miss a CTP summary!

Temple Flywheel on Balancer

We learned a lot from the FXS flywheel game that Temple has been playing for the past few months. We are taking those lessons to craft systems to profit from bribes on other platforms.

TSP-14 is about the treasury proposal to bribe Balancer via Hidden Hand. We started an 80/20 TEMPLE/DAI pool on Balancer to get a Temple flywheel on the platform. This would involve us bribing on Balancer and Aura, collecting rewards, some of which can be subsequently re-staked, some sold, and some used for bribes to get the next round going. We see this as a great investment opportunity to get a higher yield on some of the stables in our treasury and raise the APY for users who have staked in the CORE vaults.

You can follow the TSP-14 discussion on discord here.

FEI Changes

We have removed FEI as an option on the trade screen in our dApp and also removed it as the currency of choice for when Temple Defend is triggered. The router contract will now use exclusively FRAX.

The FEI/TEMPLE LP has also been liquidated completely, and we have exited all FEI positions. All funds are safe, and we felt this was the smart move to make now.

Decen gathers feedback

Recently there has been some division among community members about the product vision and direction of Temple, and some community members felt they weren’t being heard. So I thought it would be good to go and talk to people one on one and actually figure this out a little bit. I got a list of the most active people on discord and reached out.

I got in touch with about 20 people in discord and also had a few private chats on Twitter. These were some really high quality conversations. The first thing that struck me was that when we really take the time to sit down and talk to each other we're not that far apart. But interestingly the things that people were worried about were more varied than I expected. (I’m going to work on presenting some of these conversations with these members’ permission and in a way that protects their privacy, maybe by anonymizing their answers, stay tuned.)

Some categories I want to bring up are are:

Some people feel like they are either being picked on or silenced, and cannot raise reasonable questions. So we've kicked off a little process internally to clarify our moderation guidelines. We need to review how to make sure our mods can differentiate between those who are asking reasonable questions and when people are trying to lobby for a specific outcome. I just wanted to acknowledge that as an obvious problem we have right now that needs to be solved.

It feels like the lobbyoors are rattling the cage for three months and then finally get a bit of an answer and then it's quiet again for a few months. That's not a coincidence, because our development cycles are about three months long. So part of the problem is that from the outside you only see is something happening every three months, but from the team's perspective they've been steadily working and then finally deliver.  There's a gap we need to close in making it more visible from the outside.

Why do you still pay the team in TEMPLE? Originally, we were making decisions based on the mechanics we created at the outset (specifically safe harvest). There was no focus on book value. TEMPLE didn't have a book value in our original model. Intrinsic value WAS book value. It’s just that it included a whole bunch of extra TEMPLE. These extra TEMPLE tokens were always intended to come into circulating supply eventually, and that's the angle we viewed it from. But now others have come in and said they see this from a much different perspective. So I think we're going to have to find some middle ground here and that is hopefully where Temple ASCEND can come in.

The Tale of Two Paradigms

Temple’s original paradigm which I myself and the team have adopted goes back to the early fire ritual and OC days. Back then everything was about yield and IV. Once the yielding token market collapsed, and we moved to a revenue share model, we were still very much in the mindset of protecting intrinsic value.

Through that paradigm, we reached certain decisions that felt very natural. For example paying the team in TEMPLE tokens. From an organizational perspective, it's always been the case that we didn't want to just vest founders with a stack of tokens, because then the team couldn't grow. So the whole idea was to create something sustainable and ongoing. And that's why there wasn't a pre-mine, or pre-allocation of team tokens directly to founders. Every single team token that was ever paid was paid after a phase of actual contributions by that person and in in accordance with the value they created. So it's quite a different paradigm to the way that most protocols have been operating.

This led to the grand experiment around Enclaves and our representative governance models, I don’t believe that the snapshot model is effective for ongoing innovation, and I believe that a lot of DAOs do not structure their team payments in a sustainable way. TEMPLE hasn't got it perfect by any stretch but these are the kinds of things that we really hoped to make some progress on.

Then the price dropped. Low enough that people are buying in with a totally different paradigm. And that paradigm is very price focused. They came in saying things like, "I want the price to rise to book value, because I believe that I should be able to close this trade." And there's nothing wrong with that but it took me far too long to realize that there is this difference of two paradigms. And something that I think is the cause for a lot of the gap between the way the team has looked at some things and the way the price oriented community has looked at it. This brings us to Temple Ascend.

Temple ASCEND

This mechanic will perform two major functions for Temple, which are:

  1. Buying TEMPLE off the market to pay out the yield to the CORE vaults.
  2. Buying and burning TEMPLE tokens to some degree to help support the token price.

So those are the two functions ASCEND will serve.

Ascend is currently in the testing phase, starting with small amounts; we will continue testing on an ever-increasing scale until we are ready to launch this mechanic fully.

In my opinion, we're solving three things. On the one hand, we're trying to create a good yield-driven, mid-risk staking option. Second, as a new objective, we're solving to providing some degree of price support. I hope we have a one-off phase of putting a bit more money into ASCEND, which gives a one-off exit opportunity for people focused on getting a short-term price. And with the ongoing price support, it won't be a "dump at the top and rebuy at the bottom" bonanza.

So some team tokens will end up being burnt in this process because the only way we can support a price above IV is by burning tokens intended to enter the supply. This is a bit of a give from the team.

But the hope is that those that want to exit can do so, and that will give us the breathing room to continue developing and letting TEMPLE reach its full potential of being a mid-risk product that is between stables and high-risk assets, giving a great total return to its users and innovating in a sustainable way to bring a new model of governance and sustainable organization building in the DeFi space. That's still the goal. And it's not fully realized yet. But it is within reach.

We have already tested three LBPs and currently running a fourth. They are run on a very small scale, but they are live and in production. We will continue doing these tiny LBPS until we're 100% confident that everything is error-free in terms of the front end and the contracts. We'll announce when the first LBP at-scale will launch. It should be pretty soon.

Q: Can you expand on how the team thinks the LBP festival will end?

A number of things will determine when the LBP will end:

1) Budget constraint - We won't let the treasury shrink to unsustainable levels.

2) Sell pressure - If it hits a certain price, and it keeps getting aggressively dropped back down. It tells me there are still people who want to exit. But in my mind when, at some point, we see the price beginning to hover, and it's not getting dumped back down, or if it keeps rising, then that's probably a sign that we've reached a point where the people that wanted to exit have done so. So we will be watching the data and assessing at what time this LBP phase should be over, and we can move to something more sustainable. And hopefully, at that point, we will have a bunch of people in the community that believe in the product we're building.

So to emphasize one element, the festival WILL end. So if you want to exit, I suggest you take it. None of us want to be repetitively asking and answering questions forever. We want this to be a real turning point.