Revenue Streams, Platform Fees, and GIVfi v0.1

Following the GIVeconomy research call yesterday we broached the subject of creating continous revenue streams for Giveth. :money_with_wings:

This is a huge impact discussion and likely will impact every corner of Giveth. This discourse is LONG overdue but now we’re dusted off and back in action.

I expect an exciting discussion. Let’s dive in. :diving_mask:

The Problem and the Status Quo

Giveth has been around for a while, by crypto standards it is friggin’ ANCIENT :sauropod: . Yet a twinkle in @Griff’s and Jordi’s eyes in 2016, the donation platform was officially conceived in 2017 :sparkles: . For many, many years, Griff has been the biggest and best benevolent patron of Giveth, keeping the lights on and the show rolling. We cannot thank you enough for the contributions and risks you’ve beared to keep the dream alive.:pray:

Giveth has never been as successful as it is now. We are a huge team of talented and motivated professionals and we are making waves in the blockchain industry. We have all the right pieces to take this thing to the moon and define the narratives of ReFi and BlockchainForGood. :rocket:

Our problem is that we simply do not have the funds to keep pace with the rate that our team and platform is growing. :disappointed:

The missing link in our equation is that while our platform becomes more successful, our DAO doesn’t have the means to keep pace and grow. This comes mostly to a bottom line of securing funding to support contributors, external builders and projects on our platform.

Also, at our current emissions our token is proving to be quite inflationary and we need buy back strategies to grow the market cap of GIV and create more value for our token holders.:chart_with_upwards_trend:

To that end it is time to get serious about becoming sustainable and introducing a real business model to bring in continuous revenue and liquidity to our DAO…

Goals :checkered_flag:

In my perspective, introducing any sort of fees or revenue models should serve many purposes, including:

  • Buying back GIV off the market, allowing the token price to grow
  • Accruing DAO owned liquidity
  • Recapturing distributed GIV for future programs
  • Paying contributors
  • Supporting projects on our platform, public goods, web3 events and the Ethereum ecosystem.

Solutions :thinking:

Over the course of a few GIVeconomy research calls and a few 1:1’s with a few of you I found a few viable solutions. I would like to present these as some initial steps towards generating revenue and meeting the aforementioned goals.

Fees on Donations

This is the where Giveth has the highest volume of funds being moved. This is also the clearest and primary function of the Giveth platform, making donations. I realize Giveth has always marketed itself as “zero-added fees” but this is proving to be a challenging and frankly unsustainable model. :desert:

Gitcoin Grants already have an interesting system of having a default percentage added to the donation amount that goes back to their program.

Users by default can accept the 5% fee added on or they can opt to remove it, or even increase it. This to me seems like a great way to move forward.

Another option is an obligatory fee that is leveraged on every donation, being communicated clearly to the user with the fee percentage decided by the DAO instead of the donor.

In either case a quick and dirty solution for leveraging fees is to generate two transactions for every donation, sending some funds to our DAO and the rest to the recipient. This isn’t great UX, and can be costly on Mainnet but can likely be done quickly. However protocol fee contracts and functions already exist that can suit our purpose and have been used for a while by protocols such as Aave, Uniswap and Balancer.

GIVfi v0.1

Effectively, any sort of smart contract acting as the donation intermediary would become the base for GIVfi, allowing us to add more strategies for capital deployment via upgrades to the smart contract architecture. :nerd_face:

Fees in the GIVfarm

Many protocols during DeFi Summer (2021) introduced fees on making deposits or withdrawals into liquidity mining/yield farming programs. This is not a new strategy, but it is an effective one. This would be a way of accruing DAO-owned liquidity in the form of deposited LP tokens and recapturing GIV tokens on single-asset farms.

There are two options on this route, three actually, to take fees on new deposits into the staking program, to take fees on withdrawals, or fees on both deposits and withdrawals.

Giveth could also extend this functionality to the RegenFarms program since we should recognize that the GIVfarm is not a forever product and our goal is to eventually not need farming programs for liquidity. :rainbow:

My personal preference is fees on deposits, being leveraged clearly and upfront and not changing the deal for stakers who have already deposited their tokens into our farms.

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Where Does Revenue Go?

Ideally all revenue and fees go to the Giveth Main Multisig to be redistributed.

I have heard some suggestions sending a portion to the GIVmatching Pool however I think at this point in the game we should really to focus on ourselves and our financial health before focusing on other projects. :heart:

In the Short-term…

Assuming any or all of this comes into effect, doing it properly will take time. We have a jam-packed roadmap and we’ll have to signal how urgent this is versus other planned features, decide all the nitty gritty details and then give time to the developer and design teams to work their magic. :magic_wand:

@MoeNick has been cooking up a Token Log for us to do just this sort of signalling - which can be found here:

In the short-term I want to stress we will likely need to rely on grants, donations and investors to begin accruing DAO funds, creating financial runway and moving away from the benevolent benefactor model. :broken_heart:

Polls - Time for Signalling!

Fees on Incoming Donations?

  • Default Donation Fees, user can change
  • Mandatory Donation Fees, DAO can change
  • NO FEES

0 voters

Fees on GIVfarm?

  • on Deposits
  • on Withdrawals
  • on Both Withdrawals and Deposits
  • NO FEES

0 voters

Fees on RegenFarms?

  • on Deposits
  • on Withdrawals
  • on Both Withdrawals and Deposits
  • NO FEES

0 voters

7 Likes

As a side note (and bringing to the table different conversations the team have recently had around Dao financial health), I would like to suggest two strategies regarding Revenue Streams .

Products focused revenue streams, meaning the different actions @mitch is proposing in this post, and a different action plan regarding financial partnerships. Meaning:

“In the short-term I want to stress we will likely need to rely on grants, donations and investors to begin accruing DAO funds, creating financial runway and moving away from the benevolent benefactor model. :broken_heart:

Financial health has being mentioned in the GPS sessions as a priority for the team, and I believe building 2 strong strategies covering in house actions and fund raising strategy is equally important.

As partnership building and fund raising requires a keen understanding of the ecosystem, would be good to build a working group, mentored by an experienced steward, focused in building an executing fund raising strategy. I’m confident there are some members that would like to contribute (or that are already working on this) .

Will love to hear your thoughts

6 Likes

Thanks for this clear and concise post @mitch and for your suggestion @OyeAlmond. Financial health of the DAO is at the core of its success. Happy to support in this, any way I can.

3 Likes

Agree with @OyeAlmond here, that a 2 part strategy is the way to go (product revenue streams and fundraising combined). We do the “quick wins” in the short term that can inject cash into the DAO (e.g. fundraising efforts/ partnerships/ donations), while we work on building up the sustainability side of the DAO (e.g. product revenue streams).

I’d love to be a part of the team leading these efforts :slight_smile: happy to help in any way

2 Likes

Awesome post @mitch and super critical. This has been on my mind for a looong time, so I love to see us moving forward on some action items.

One thing I want to mention that is a bit off the deposit fees for single asset staking. Single asset staking is the only way the user gets gGIV so it makes it kind of tough… should we charge a fee for people to activate their governance rights?

I’m interested in the fees for deposits in RegenFarms & other GIVfarm pools though. How would we swing that for RegenFarms? Giveth gets a cut out of the depositer into the partner DAO’s farm?

I love the opt-in fees for donations and think we should get on developing that right away… since it’s totally not contentious.

Also +1 10000% on not funneling these funds to GIVmatching. We need to keep ourselves afloat in order to even make GIVmatching a thing.

3 Likes

Ditto to this. I think we need to scale up our own fundraising both on Giveth and other platforms.

We are in the donations industry and we need to walk the talk to:

  1. Build the best donations platform.
  2. Help projects become successful fundraisers.
  3. Get income for the Giveth DAO

I love this discussion. Thanks for the energy and focus invested in this @mitch. You are the best.

I agree this is such a critical discussion, especially around the DAO financial health. I like @OyeAlmond framing of 2 strategies regarding Revenue streams. I would even say 3 strategies for DAO financial health.

  1. Revenue streams. Long-term financial sustainability.
  2. Donations. Our core industry & one of the most significant opportunities nowadays that we are not focusing on enough.
  3. Aligned investors. After all, we are a startup disrupting a whole industry. IMO, This strategy currently would be the best fix for DAO financial health, would be a great way to decentralize our governance with value-aligned actors, increase resilience and boost new partnership opportunities.

I DIGRESS… Coming back to REVENUE STREAMS

Donations by default with opt-out:
Agree with @karmaticacid… LFG, it’s the least contested. I think many people would donate to Giveth for the value they are getting.

GIVfarm
Something to take into consideration is the games that are proposing to play. Some farms are intended to throw your GIV and not take it back at least for some time. While others are temporal or intended to pitch in and take it out as the Angel Vault.

In theory I would say the ones intended to keep your funds would have larger fees because it’s a one-time fee. In practice, I think it should be seen case by case. For example, would GIVpower have a fee? I’m not sure I want to add a barrier to GIVpower or maybe unlike others, I would vote to add a withdrawal fee to GIVpower.

Others like the Angel Vault is set to be withdrawn every 2 weeks or so. This should have lower fees.

My suggestion is to have a fee factor to consider the length of the farm or the ideal time for users to have their resources on the farm. This needs way more thought.

Regen farms fee
I think for Regen Farms we are going to need to do price discovery and test things out.

I don’t see anything wrong with having a similar fee structure to the one for our own farms. But we are also charging already for to the DAO. Maybe we can have 2 schemes. 1. DAO pays more, farm has no fees. 2. DAO pays the same amount we have today, users pay fees. Giving the DAOs the flexibility will prevent bouncing possible Regen farms and learn what works best for all parties.

Fees for governance?
To @karmaticacid comment… maybe we can create a 0% APR farm with 0% fees. That would give users gGIV governance power without fees but also without APR.

Other ideas?
Eventually, we could throw a carrot for behaving in a convenient way for the GIVeconomy (using GIVpower, using GIV- & regen-farms, maybe donating to Giveth projects… that last one should be planned well as it could be biased) and have a GIVback factor.

For example, we lower the GIVback percentage to 50% and create a GIVback factor that goes from (0-150%).

If you dumped all your GIVbacks, your GIVback factor goes to 0%

If you are using GIVpower, using the farms, you are a recurrent donor, donate to the matching pool, etc. All the behaviors we want to see happening (hence, incentivize) in the GIVeconomy, your GIVback factor goes to 150% (and your GIVbacks can go up to 75% [equaling 50%*150%])

One last thing to take into account…
As a platform and organization, we are still testing hypotheses and growing our user base. IMHO, we need to be very conscious on what is the response to these fees. Usually, digital startups subsidize growth through investment and only start gaining more from users once they are mature. Going aggressively on fees might slow our growth and be more harmful than effective. Especially in web3 where so many protocols, platforms & services still don’t have fees.

1 Like

That’s a great point for single asset farms, effectively it’s the same as lowering the amount we allocate to the farms, since we’re giving GIV and then taking it back. This might not be such a useful way to collect fees

Yes, when users deposit LPs into a RegenFarm, Giveth would take a % of the deposit and hold it in our treasury.

Looking at the angel vault contract interactions people don’t seem to be withdrawing anyway, I wouldn’t change the fee structure.
@Cotabe
For regen farms - We can present the default option, one fee is for the DAO, the other fee is for the user. If the DAO disagrees we can have this as a backup - we would need to see the size of the regen farm they want to make and see how much we want. I would really really just sell the first option though as the default.

I think we’re not in a position to try and water down our possible revenue strategies or over complicate them. right now it’s pretty straightforward an implementation for all scenarios. let’s not create more headaches or bog things down in creating complex options. There’s still a long way to go as is to make this a reality