Call to Prayer #27

Call to Prayer #27 occurred on Sunday, October 8th, 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!

The Road to full decentralization

The DAO game has gone fully live in the last 2 weeks. This is a critical ingredient in the plan to take Temple into the realm of full decentralization. This, of course, was not our main focus for a while, but those on the team who felt that it was a really important issue like Decen have kept it on their mind and it’s finally time to start implementing it.

We needed to build an organizational structure first, so that we can later plug a real bottom-up stakeholder-owned governance process into that structure. The real difficulty with implementing this, of course, is constructing the voting mechanics so that it can be fair for everyone, which is what we’ve been working on.

We’ve been in contact with a legal team to make sure that we’re implementing this in the right way. We know we’re not perfect, but Temple is a far more sophisticated organization than many other DAOs in DeFi.

Governance can make or break a protocol, and when you’re introducing a completely novel design, you really need to make sure you get it right. The implementation of the DAO game is a major organizational change happening behind the scenes in Temple, and that is the main reason that our comms have seemed to be a bit lacking recently. Soon, we will re-prioritize our comms towards our roadmap and strategy.

Is Decentralization Efficient?

Some discussions happened within the team about the benefits of decentralization and the fact that it slows organizations down. The Ethereum foundation is a good example. Anyone who has any connections inside there can tell you that it’s a very messy, chaotic organization which ships great products. Just look at how long it took them to implement the Merge, which was definitely a very complex feat of engineering but was delivered a bit slower than a lot of people would have liked.

There are a few big reasons to care about this topic:

Vitalik recently pointed out in his article that some DAOs tend towards either convex or concave decision-making processes. Some decisions are better taken with convex thinking. Committing to either A or B fully will give a better result. But others benefit more from concave thinking where lots of different views are considered before making a decision, leading to an outcome that’s more moderate and satisfies everyone.

This is especially beneficial when making decisions about what to do with such a large treasury. If those decisions were left to any one person, they may lead to more extreme outcomes for better or worse. A diversified and careful approach is the best way to protect the treasury in the long run and this is the path Temple has chosen.

From a purely practical perspective, the regulatory atmosphere in DeFi is a bit of a question mark as to its standing in the traditional legal system. Some degen protocols have decided not to worry about possible future legislation and simply build for the environment we have today. Maximally utilizing the technology we have available from crypto and the blockchain under the current legal framework and not trying to over engineer for the future.

If we are looking to the future, then one of the main things the SEC and others look for when deciding to go after a protocol is whether or not it’s fully decentralized. That alone makes this issue very important for DAOs and DeFi as a whole. We’ve seen some of the major ICOs recently driven through centralized organizations and then the SEC smacked them down.

Decentralization really lines up with Temple’s atmosphere of fairness and equal opportunity going back to the Fire Ritual days and the Opening Ceremony. The more we can make things permissionless and transparent, the less unfairness we’ll see in our process, whether that be nepotism, favoritism or groupthink. The level of groupthink in many of today’s largest corporations and tech companies will really hamper their innovation for the next decade. This should make you bullish on large sections of the economy moving to a more decentralized framework, because some of the largest traditional corporations are not going to be able to keep up with the level of innovation that is required to stay competitive the way things are going right now.

Post-Ascend

We are close to the end. The numbers on this is approximately:

  • Temple acquired 41.9M $TEMPLE tokens for 38M stables with average acquisition price being 91 cents.

Once the festival is over, the new mechanics will help maintain the price. This is our ‘soft floor’ mechanic.

There could be significant volatility of price movements. And this volatility is great in our opinion because it gives a little bit more trade, transaction, volume, speculation opportunity and also let’s Randy the bot buy randomly whenever it’s below soft floor price. When Randy buys, we can either mint new TEMPLE without lowering the soft floor, or raise the soft floor price. Either way this is delivering value back to the people that are still holding, increasing the total return.

Q&A

Q: What does capacity for Randy look like going forward?

Randy won’t have a limit to its treasury allocation. Randy will have a bunch of parameters that define the rate at which it randomly buys. At lower treasury value, the rate that Randy buys at will be slower. The way Randy’s "randomness" works is that if you picture that Randy rolls a dice every so often. If the dice is above a certain level, then it buys. And when it chooses to buy, it rolls another die, and depending on the outcome of that, it chooses a buy value somewhere in a range from the lower end of the number to the operative number. That's roughly the model of randomness.

Q: How does the soft floor deliver value to holders?

The soft floor level would be set such that it's kind of close to or around the LBP range, and so with that in mind, the soft floor is set around that LBP level, burn a stack of DAO reserve tokens, and deliver value to holders via

  • Yield premium
  • Growing the soft floor through volatility trading
  • Continuing to build and develop protocols such as STAX that return value back to our holders in your equity value on top.

Q: When do we get answer to the community led questions?

Decen put the brakes on a couple of responses to things to prioritize moving the DAO games forward. People want further decentralization steps, so we should really accelerate that piece of work. Apologies for that. We do believe that we're going to end up in a better place after this brief slowdown.

Q: Why does the LP Reserve have a claim?

This goes back to the old Temple mechanics where the medium articles explained that when TEMPLE was minted, a certain percentage went to the LP reserve, bonus rewards, staking pool, and the dollar reserve. All tokens were pre-minted upfront to avoid any kind of behind-the-scenes dilution.

Q:  Didn’t you say we shouldn’t expect growth in price past BV earlier on call?

The expectation is that we'd have soft floor level growth but that we would also have value coming from other sources above and beyond what the price is. So I wouldn't expect the price to end up multiples of the value, but I'd hope that the soft floor itself increases.