Call to Prayer #28

Call to Prayer #28 occurred on Sunday, October 23rd, 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!

Decen's Opening Statement

It really feels like people in the Temple community are starting to come together and that we’ve reached a place of agreement between the short term and long term token holders, team members, OC OGs, and RFVooors -and it’s very exciting.

There was a phase where most conversations happening in the Temple were coming from a place of trying to sway another side through propaganda, throwing fists in discord, and utilizing any piece of information available to support a particular argument instead of looking at things in a neutral way to try and further the Temple.

Now it feels like we’re in a place where many have put aside those agendas, and, as a result, I feel like we’ve finally reached a point where we can bring the conversation to a more transparent place, and that’s fantastic to see.

It’s exciting because it’s getting closer and closer to what we imagined Temple to be from the very beginning. You may remember that many CTPs ago we talked about this idea of a vision of DeFi where the community, the investors, the users and the team were all one and the same.

The vision was one of there being a way for users to slide naturally and seamlessly from passively engaged to more actively engaged. From community member to  team member, to heavily engaged team member (full time), core team member and even DAO leader (Master).

In any organization, you want to get the right people in the right positions, so there should be a way for good people, if they have a lot to add to the organization, to fluidly transition across the space, all the way from the bottom to the top. They should also earn a share of the protocol (team tokens) as they rise up and contribute.

Likewise, the reverse should occur if someone started off contributing in a very valuable way, and then is unable to contribute in the same way due to life changes or whatever other reason. This person should be able to smoothly transition down to a less active team member or just a member of the community as fits their circumstances.

This is a great vision for an organization which is super open and porous, where the lines between community and team are extremely blurry. We started off in that direction with the enclave structure, and ranks. The entire team actually has risen up through the ranks except for a couple of people.

We haven’t really been operating in that image in the last few months, but I feel like we’re getting a lot closer to it now.

So with that, onto the CTP:

Call to Prayer 28

STAX Hack

Any user affected by has been made whole. Our incident response team did a good job maintaining a level head and keeping the community updated. They conducted a huge audit of the entire protocol, reviewing all our contracts to make sure that that issue, as well as any other issue had not created any other vulnerabilities, and none were found. Here’s a link to the incident report if anyone cares to read more.

This happened due to human error, which was unfortunately not caught in time. Although we have done several audits of our other products, we made the decision not to audit STAX before main launch as this was an alpha release with a small number of users. This and other policy decisions made relating to this exploit are currently being examined.

We’ve also beefed up our review checklist to really minimize the chance that a basic error like this doesn’t get past us again.

Discord transparency project

People who are not on the Temple team may not be aware of this but there are a huge number of team channels that exist behind the scenes. These team channels are in various enclaves and there are private channels for all sorts of enclave functions like marketing, treasury, DAO operations etc. There are also channels for our products like STAX, CORE, representative governance and so on. We use threads underneath those channels to structure out communication around those products.

There are also a bunch of rank-based channels, those for acolytes, disciples, initiates, masters and so on. A lot of the work in Temple had previously been stripped out of the public facing channels and done behind the scenes. This was in large part because of the fear of information being leaked or used inappropriately.

Now we want to flip this on its head and make as much of our work process publicly viewable as possible. We will retain a bit of the rank-based channels to give people a safe space to float random ideas that they may not want thousands of people to read while making the vast bulk of our communications public.

The basic idea is when you get in our discord, you get the Templar role, which gives you read permissions on the majority of the public channels. If you want to post in the channels where the product discussion is taking place (anything outside of the most basic channels like #general and #support), you’ll need to complete the Echoing Whispers Ritual and join an enclave.

We have a ranking system for the channels, those with a “-m” at the end are where all members can post, “-t” can be read by all but only team members can post there, and “-p” are private and only viewable by team members. A few other channels will remain hidden except to members with the appropriate rank.

The final piece of the puzzle is that we’re introducing a new concept of “jam” channels. These channels will not be as focused as our product channels, but will be a way to bounce ideas off each other and see what’s relevant.

$TEMPLE Tokenomics

We are having discussions amongst our logic crew about the future of the TEMPLE token based on where we are now after the STAX exploit, Ascend, and the hard floor currently sitting at 97cents (at the time of writing this).

So what comes next? There are a couple of schools of thought among our Logic crew:

1) Leave the hard floor where it is until we build out a new bot RAMOS. This bot would be the lovechild of our soft-floor bot Randy and an AMO (Automatic Market Operating contract).

This AMO is special because it’s random, and instead of buying on the LP, it’s performing the function of an AMO. This would allow us to be able to move away from the current situation for Temple Defend which is where we have a hard floor which doesn’t give us any ability to profit from volatility around the floor level, and also we have a huge amount of stables sitting in the Defend contract which can’t be farmed.

Implementing RAMOS would allow all of the value to be kept in a liquidity pool on protocols like Balancer or Curve meaning we can relaunch our flywheel game with a vengeance.

2) Many in DeFi believe that the SEC may choose to target yield in the future for regulation. This is not by any means confirmed but it raises an interesting question for the future of DeFi obviously because a large portion of it is built on yield.

A way to protect against this possible regulatory threat is to accumulate protocol revenue and value into the price of the token. This would mean baking in price dynamics into the tokenomics of TEMPLE. There are not many tokens currently following this model, but it would be an interesting avenue to follow if we feel that trends are heading that direction.

It would be relatively easy, particularly with RAMOS in action, to transition Temple to this structure. Instead of paying out yield, whatever revenue the protocol generates could be used to drive up the price of TEMPLE to ever-increasing target levels.

This would have the implication of moving our CORE vault product from a multiple vault setup, to a much more simplified one because the main goal would be increasing the price of TEMPLE.

The Bull Case

In the future, we will likely see DAOs that are more single purpose, perhaps bigger and more complex than they are today but certainly with a more narrow focus than traditional companies. It’s much easier to spin up a DAO than it is a tradfi company, and it follows logically that if the cost of setting up an organization is lower, then its optimal size will also be lower.

We’re in a very early stage of DAOs, and navigating this space still requires a lot of time and effort even for experienced degens. What this means is that new things happening in DeFi tends to come through communities. People receive recommendations from people that they trust within a certain community. In this way you can build a web of trust among DAOs, and if you have a good reputation among a few of them the rest will trust you more.

This was the main reason we spun up STAX as a different product from Temple, we didn’t want a user to have to know everything about Temple before investing in STAX, it is its own product.

The aggressive bull case would be if we were able to set up a new DAO that sat as an umbrella above TEMPLE, STAX, and a bunch of other partnerships, which we’ve had discussions about but are not ready to reveal quite yet.

A good example of one of these protocols would be Open Hedge, a kind of omni-chain, souped up version of dHedge with some extra functionality. They have a top team and it’s a well-built protocol that could live under such an umbrella of trusted DAOs. This way the protocols could cooperate really closely together and give each other maximum benefits.

Having this umbrella over everything gives the user the ability to invest in a curated basket of DeFi protocols which have the best strategies behind them. this would be actively managed to make sure that low-quality DAOs are kept out of the group.

So if you wanted to buy the umbrella platform token, and be exposed to the potential huge upside of the value of the ecosystem of protocols increasing in the future you can do that, or else you can engage in the staking strategies on whichever platform you want without having to worry about whether it can be trusted or not.

This is not something that is common yet in DeFi. The benefits are quite enticing. The success of one protocol benefits all the others. And you can “swim” current users in one protocol across to a new one, immediately getting TVL and traction.

This conversation will be fleshed out further in the #bull-case-jam channel coming soon to discord.

Representative Governance

We want to contribute to DeFi by creating an organizational model that could actually be functional and sustainable long term. We see this is one of the most important, unsolved problems in Web3 today, because all protocols are built on their organisational and governance model.

Snapshot voting was a super simple product that got us going and that's awesome. But as we’ve often talked about, it has a few problems. Two relevant problems to this chat are that it encourages an extremely flat organisational structure, and it encourages a broad stakeholder base to engage on low level operational issues. This isn’t desired or effective.

Just because something is extremely decentralized doesn't mean that it has to be an extremely flat hierarchy. There has been experiments on org design and governance disruption going on way before DeFi and crypto, and for all of them they were extremely bottom up but had very sophistocated organisational structures. You can’t run a large organization with everyone at the same level. Decision making becomes a nightmare.

The two experiments that Temple has been running has been to build some actual organizational structure into the Temple with a hierarchy for effective decision making by the right person, and a pathway to fluidly transition between casual community member to engaged community member to casual team member to engaged community member to team leader, etc. We've made some really great progress on the structure compared to most other DAOs in the industry.

The second piece is the actual control of the decision making process. The control system that sits on top of the organizational structure. It needs to follow a few paradigms, completely controlled by the stakeholders and flows from top down. We innovate in two ways here. One is in the way we define stakeholders. Token holder is an obvious one, but the second category are “sweat stakeholders” or “impact stakeholders” - people who have given their time and effort to rise up the ranks in the organisation and hopefully as a result are indicative of being experts in particular areas.

These two stakeholder groups each have something to offer in terms of perspective and incentives, and by creating the right system to keep each other in check, we believe more effective, durable, and reliable decisions can be made to govern the DAO.

All organisations have moral hazard issues for decision makers. Two common problems are that investors might be too focused on their own short term gains, or a team might be too focused on its own reputation/compensation/otherwise. The ideal governance solution should be one that balances the tensions between the two stakeholder types, drawing out the best of each of their expertise, while having a check and balance by other other party against moral hazard.

Some may think that by the team earning tokens this should be sufficient representation in governance. Our view is that this is a fragile mechanic that rarely works. You get one of two situations:

  1. The founder / core team has paid themselves a massive chunk of the cap table. When there is a decision vote, they mostly abstain. But whenever they choose, they can swing the decision with their bags. This is obviously not good governance, its founder control in disguise. To retain control it encourages DAOs to pay out huge portions of the cap table to founders. And it means that other non-core team members have basically zero input if they’re only earning enough to sell for rent and life costs - but they may be experts that should have a really large voice.
  2. The team has a sufficiently small portion of the cap table that they basically have no voice. This may happen through sufficient rounds of fund raising, community raises, incentives, or otherwise. At this point the expertise and value of the team is lost to other stakeholder groups.

The design of Temple’s representative governance model, where councilors are elected from both the “sweat/impact/team stakeholder group” and the “token/financial stakeholder group”, and forced to compromise and resolve issues together, is a novel way to try to keep the governance structure at that sweet point between the two scenarios above, where the perfect balance between these stakeholders is achieved.

Governance models are a hot topic right now. Everyone right up to Vitalik himself are talking about new mechanics other than pure token holder voting on issues. He suggested we should work on a mechanism for “proof-of-humanity”, as a new way to define stakeholders. Interestingly, the Temple structure where community members can rise up or down the ranks is a form of “proof-of-humanity” because number of wallets don’t count, and it is extremely hard to have one person having multiple discord accounts all rising up the team ranks.

We’re excited to bring this further into production and to discuss it with everyone in the #rep-gov-jam channel.