Sanctum tokenomics proposal

[fplee]

Thank you for your thoughts!

@NYSoul

• Provide a minimum drop for all members as a welcoming gift as goodwill and good marketing.

As much as people would love to do Jito or Jupiter style airdrops, the situation looks very different now versus then. Having a flat welcome gift is very difficult to do due to the influx of professional sybil farms, who are smarter than most people give them credit for.

@NYSoul

1. Provide secondary season airdrops with follow-up season 2 and 3 for all those that re-stake the initial airdrop for the next year or two.

Potentially, yes. But I would like people to actively participate rather than just stake and forget.

@NYSoul

What can we do? I suggest, every 2-3 months, highlight 3 teams and have the community vote on which team Sanctum should reward and allocate some LST/INF toward their staking and to provide extra reward to those stakers of that project during this period. This accomplishes two things: First they give spotlight/marketing to 3 teams and what they are doing and why Sanctum and SOL community should provide more support for their project. Secondly, provide the financial support by staking SOL/INF to give a boost to stakers/holders of that project. This could have teams trying to innovate and improve LSTs and their north star by thinking bigger than just staking rewards.

Yes. Project and personal LSTs are a core monetisation primitive for Solana, and nobody understands this yet.

@Horu

I support this particular idea. Like how Drift approached the matter and how in their case a part of every allocation is to be vested. Not 9 months though, since in a span of a year there should be “at least 4 more rounds of airdrop”.

No, not in a year, there should be one airdrop per year, similar to Jupiter

[Horu]

@fplee

Potentially, yes. But I would like people to actively participate rather than just stake and forget.

Whenever people stake something they get a feeling of satisfaction - locked in and ready for what’s to come. If there is a way to combine your vision for post TGE activities and staking in any shape or form that would be great.
Maybe throw in a curve ball and make several directions in which you can be a part of next distribution (i.e. passive direction; active usage / participation - Parcl is an example of this type of approach) with active participation being slightly more incentivized.

@fplee

No, not in a year, there should be one airdrop per year, similar to Jupiter

I see, thanks for correction. In this case partially vested allocations seem to be even more appropriate.

[spring]

What a great thread!

I think it’s better to air-drop according to the proportion of points, which is fairer.

[Azrangar]

Reward real users and reward those who were in the trenches.
Let holding the token be owning a piece of sanctum. Outline the vision to the community. Let them stand behind something greater than themselves.
Let token be a gate way into building ontop of Sanctum.
Let the token be the fuel and greese that turns the wheel at sanctum.
Let the token be the fabric that unites the community.

[dgen_a]

I was listening to the Twitter Spaces tokenomics recently. My feedback and thoughts thus far are for any who is interested. In regards to the mention of 10 or so people a day coming into the server asking to set up an LST, and that it will be impossible to add all of these in. There will be some important one that are a no brainer and easily pass the vote, if that is community controlled. But maybe there there can be a few slots left open which are decided by a drawing to let a few smaller ones in which might otherwise not make the cut.

I think the idea and reasoning to rebrand to a cloud, wonderland, pets, quests IS REALLY something people can love. And I really think if the community engagement around wonderland can be put out there linked off of the website like a message board for the new user to look back on for posterity and ideas to see how the prior puzzles were solved. This would help organically grow the users, many of which may not be interested in using discord to play along. It could also attract people interested in games and solving puzzles who don’t care about crypto but then get interested because of it. TLDR let the puzzle solving interaction live on the web outside of discord.

[RayC]

1. How can we identify the best people who are long-term aligned with Sanctum and distribute tokens to them?

Users
The first step would be to define specific metrics to identify “long-term aligned” users.

One metric could be users on forums (Like this), social media (Discord/Twitter - Content creators), and people who attend AMAs & provide feedback and share their thoughts.

People love having a special discord role that displays a different colour or icon and will be proud to have it, thus creating a positive loop of them being on these social media platforms to promote Sanctum.

Contribution-based Distribution
I would argue against the idea of having a minimum allocation because whales could act as small fishes, but small fishes cannot act as whales. Thus, an entirely linear distribution (X amount of XP = 1 $Sanctum) would be ideal, but the idea must be conveyed effectively.

Additionally, setting aside a % of tokens for grants (Content creation, media, blogs, memes, etc.) will allow everyone (Regardless of the amount of capital they have) to be rewarded for their effort, or to give an additional XP boost to their capital staked.

Distribution with a Long-Term View
One idea that comes to mind would be to only release a good % of user’s rewards at TGE (Maybe 70%?) and vest the remainder for 2-3 months. The process of unlocking can be further sped up based on contribution to the project.

(Need to determine how contribution can be measured as highlighted above)

Ultimately the token itself must be used for purposes which align with the long-term vision of Sanctum. Possibly to boost rewards gained from INF (Can’t think of much at the moment)

Commenting on the yearly airdrops that you have outlined, I feel that it would be good to allocate a larger % of the supply during the bear market (Probably Year 3 post-TGE). This would be a true testament to see who is here for the long haul. (Study $Bonk)

Some guiding questions

1. How can we balance the needs of early contributors with those of future users?

2. How can we go beyond basic activity metrics to identify users who truly understand and believe in Sanctum’s vision?

3. How can we weigh contributions based on quality?

4. What incentive structure should be implemented and how can we adapt over time to encourage desired user behaviour?

5. How can we make people feel a sense of belonging and purpose when they hold the token?

Art
The implementation of pets has been largely successful and is a factor that people consider when staking their SOL. This shows the importance of good art and I believe some form of tiered NFT system would be great.

One method would be to reach out to community artists who would be willing to do commissions for the top XX% of $INF holders. These holders can submit 1 NFT if they would like to include the Sanctum logo. For example, changing the face of a Famous Fox Federation Fox to the Sanctum’s smiley cloud.

Another method would be to have a site where any user can submit a .jpeg through the site and it would return the same .jpeg with a small Sanctum badge on the shirt of the .jpeg. For example, placing the blue logo on the right chest of the Fox.

Community
Many businesses have built large communities/fan bases that revolve around their product. Some examples would be, LEGO fans who share their creations and participate in conventions and connect online. Peloton, where users motivate each other through virtual workout classes. Headspace, which curated a supportive online community through guided meditations.

The key takeaways are;

1. Shared experiences - Create events that allow users to connect (Leverage discord, or an interactive way would be to use Portals, which could be part of the AGR that I will elaborate below)
2. Collaborative Opportunities - Provide avenues for users to contribute and co-create (Ask for community feedback on proposals, actively solicit user input, understand how a user would see things, maybe set up 1 to 1 calls to understand how they use your product)
3. Recognition - Publicly acknowledge and appreciate user contributions (Feature user-created content, success stories or insightful comments on main Twitter/Discord)
4. Shared values & identity - Shared values (Making Solana a better place)

Once the Sanctum community has grown big enough, the team could look into hosting in-person meet-ups with other projects/NFT communities which add to that sense of belonging.

Some guiding questions

1. Explore ways for users to personalize their avatars/profiles with Sanctum-themed elements

2. Explore leveraging existing technology (Host events on Portals)

3. How can we cultivate a shared narrative or story around Sanctum’s mission & vision?

4. How can we allow people to meaningfully contribute to Sanctum via the token?

Grants
This ties in with the 1st question, allocating a % of supply to grans for user-generated content that educates, promotes, or adds value to the Sanctum ecosystem. (I particularly am interested in education, teaching others how Sanctum works, and possibly expanding the scope to Solana and more)

The grants aren’t limited to just social media, they could be awarded to the best community-sourced ideas for new features, marketing campaigns, or community initiatives. This ties to token holders being able to upvote proposed features or functionalities which they believe are prioritising their needs.

Some guiding questions

1. Clearly outline some of the grant categories. (Research, development, community, etc.)

2. Understand your target audience

3. Can Sanctum offer mentorship or support to recipients? (This would definitely attract outstanding talent as they have the chance to be mentored/developed/groomed by the best. Something like a scholarship)

4. How can we take governance and token utility to the next level? Jupiter is doing a great job already, how can we learn from and surpass them?

Governance Models
The team might want to explore different governance models such as quadratic voting which empowers smaller token holders. However, this can only be used with an effective sybil-resilient system. Explore options like social graphs or pseudonym parties to prevent user manipulation. (I spent a good few hours understanding the different governance models for this xD)

There are other governance mechanisms like conviction-weighted governance. I think gamification of the governance mechanism would be something Sanctum can excel at (Given the website’s UI/UX, Wonderland, and overall art style/design).

Some guiding questions

1. Think of the Sybil-resilient system and who controls it.
2. Think of the future token utility features that the community can propose and vote on

I’m all for having a fairer launch distribution.

Additional Thoughts
Expansion of Wonderland
Wonderland has reminded me of elements akin to a typical Alternate Reality Game (ARG), where users benefit from collaborating to achieve a common goal. This is not only a great community collaboration tool, but also a marketing tool as the team can experiment with ways to bring in network effects (Having to leverage the diverse background of crypto participants 1. Knowledge gained from their daily lives through jobs/hobbies/friends… 2. Potentially geographical factors). This idea could be expanded to reward bonus points to the first individuals/groups that find the answer and then to unlock a secondary reward (Eg. 2x EXP boost) there has to be a certain quota of people to use the answer. The idea of Wonderland will be great if gamification is done right, I could go into details but if the team wishes to pursue this idea it would be best not for any of it to be made public to ruin it

Some guiding questions

1. Ensure the ARG aligns with Sanctum’s vision, what kind of collaborative problem-solving or knowledge-sharing would it encourage
2. Balance the difficulty and keep it crypto-centric (Hidden messages in smart contracts, decentralised oracles, encrypted wallets seed phrase, discord scavenger hunt, Twitter puzzles, NFTs, ultimately needing the DAO to unlock - Study MadLads mint)
3. Community Feedback & Iteration, plan with a few members of the community that you can trust and get feedback from, and constantly tweak it

Thank you for taking the time to read all of that I have posted, I would be more than happy to discuss it further with you if you’re interested. I am 0x_RayC on Twitter and RayChongus on Discord, hope to hear from you!

[JamesHanley]

Great contribution, Ray. Well done.

[RayC]

Thanks James for the kind words, its my first long form content I’ve written.

There’s a few improvements to be made such as the organization of thoughts and being succinct. But hey we’re all here to grow.

After reflecting, Wonderland is literally what I described, added not much of value there. But I believe the team can explore more interactive ways for users to be engaged. I feel a large portion of users are inactive and just waiting for the key to be spread. Maybe the team could explore the idea of having a secret telegram chat which releases messages at random intervals and deletes it after a few minutes. This requires global participation to ensure the full message can be caught. Some food for thought?

[stasun]

You’re really against minimum allocation? Let’s take 2 projects on solana as an example. Jupiter, which distributed its tokens by a system of tiers, with a minimum volume to get a reward and Parcl, which made a linear distribution, put almost all tokens in the hands of whales and got the cruelest fad. And what do we see as a result? Jupiter users were happy with a fair distribution of airdrop where everyone could grab a piece of the pie and that’s why $Jup received tremendous support after the listing and is doing great now. And Parcl, whose regular users were offended by the linear distribution and the fact that all the coins fell into the hands of whales and simply forgot about the Parcl project after this attitude, as a result the coin is now hanging around somewhere at the bottom without any payoff. Therefore, for a healthy atmosphere in the community minimum reward is simply necessary. And the system of distribution of rewards by tires will always be more fair than a linear system!

[Thiago]

very good initiative, looking forward to new paths for this protocol

[RayC]

Thank you stasun for your reply, I appreciate your point of view which allows for further discussion, all towards achieving what we feel is best for Sanctum!

I do believe that there is some merit in having a minimum allocation but it might not be so applicable for Sanctum (Being a protocol which is relatively “capital-intensive”). Yes small users would be happy to receive a sizable allocation thus leading to “brand-loyalty”. However, (IMO) the difference between Jupiter and Parcel is the products itself. Jupiter offers products that almost every on-chain user appreciates and uses on a day to day basis. (DEX/Perps/Limit Orders/DCA/LFG). Currently the incentive of holding $JUP is hopefully to get voting rewards from protocols that launch using LFG. If I recall correctly, there was also no active “airdrop campaign” in regards to Jupiter which meant that there weren’t many farmers at the time.

On the other hand, not every on-chain user is interested in trading real-estate on-chain and majority of Parcel’s users were there to just farm the airdrop. Pardon me for being uninformed, but is there any incentive to hold $PRCL? To stake for less fees or whatever?

But yes, I do agree that many users were shocked seeing the top 5 wallets hold that many tokens which caused some resentment. Therefore, the Sanctum team could explore a fairer way to distribute the tokens. Such as implementing a limit on how many points one can earn per day, or introducing a curve on the amount of xLST and points earned? (But that would just incentivize whales to sybil)

Hope to hear your thoughts

[stasun]

I just want a better outcome for the whole big and friendly community, so that every person who even keeps 50-100$ in lst from the beginning of the company will get a minimum reward, this will increase loyalty to Sanctum and give incentive to further interaction with this protocol, in case the main part of airdrop will be received by rich whales, ordinary users will have no sense to interact with the sanctum protocol in the future and transfer their solana to different LSTs

[RayC]

Likewise, lets hear from the team what they think

[OrangeC]

I would like to propose combined airdrop for active users like
MPA (Max possible airdrop) = X% + Y% + Z% = 100%
X% - minimum reward for everyone who reached some threshold with XP
Y% - multiplier based reward depending on amount of funds locked and time
Z% - active participation quests etc.

From my point of view linear reward will benefit only whales, so distribution should be based on few parameters.

[RayC]

Mm this is good in theory, the hurdle would be to allow opportunities for community participation and how one can quantify your efforts. Let’s see how it could play out

[NYSoul]

Hi fplee,

Have we considered rewarding continued stakers? Sanctum is a liquidity staking, and prior to LSTs, most of the stakers were done natively to $SOL. Can we connect/find which staked $SOL were moved from native to LSTs and consider/reward them as long term staking candidates instead of stakers who have only done it on a short term basis to farm for airdrops?

Just my 2cents.

[agradus]

@fplee

As much as people would love to do Jito or Jupiter style airdrops, the situation looks very different now versus then. Having a flat welcome gift is very difficult to do due to the influx of professional sybil farms, who are smarter than most people give them credit for.

There have been some interest approaches to combating sybil farmers. Drift labeled many wallets that received a minimum allocation as sybils and required the wallet holders to manually submit a claim to receive a distribution to the wallet. Only the sybils were upset about that. LayerZero used sybil self-report to still keep 15% of the total airdrop and a 10% reward bounty for people who successfully reported sybil wallets. We’ll see how that turns out soon.

Also, a greater allocation to “OG” users allocates more of the airdrop to actual users rather than mercenary users.

[agradus]

I like this idea. One thing to consider though is that people in some jurisdictions may be resistant to converting native stake SOL to an LST because that would incur tax liability, even though they may be long-term SOL stakers that are using Sanctum.

[Horu]

@agradus

Only the sybils were upset about that.

I was upset about that my main wallet (only wallet that interacted with Drift) was marked as Sybil.

I get your point though and agree that it’s better to “overdetect” with an option to resolve cases where some earnest wallets got marked as sybil.

That being said, I still don’t think that a flat “welcome allocation” is a good idea (as was mentioned in original @fplee reply).

Regarding additional bonuses for OGs - those did receive / will receive retroactive points for holding LSTs, so thanks to that they are to receive better allocations.

[Halfa]

Let’s see how it pans out!

Launch is soon! Let’s celebrate!