Revenue Streams, Platform Fees, and GIVfi v0.1

GIVernance
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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.

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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!

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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

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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

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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.

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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

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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.

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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
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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.

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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

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@mitch Is this thread for discussing just about the Donations, GIVfarm and RegenFarms revenue streams?
I mean other solutions can also be imagined, but my question is can they be discussed here?

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You’re welcome to drop more ideas in here for sure!

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Looks like we got some clear consensus on the soft polls!

The decisive answer has been default (and optional) fees on outgoing donations! Here’s a snapshot for some token-weighted signals from GIV holders:
https://snapshot.org/#/giv.eth/proposal/0x3d300579fe8ead589e31b4e6dc88a9381291db78b98dcf4776e777e9468e5c6e

I’ll close all the polls tomorrow after the community call however the consensus seems to be YES on fees, likely on both Regenfarms and GIVfarms alike. The trend seems to favour levying fees on deposits (staking).

If we go ahead with fees we should decide the next step: How much? What percentage?

@karmaticacid made a great point on single-staking farm - I don’t think we should charge any fees because it makes the governance, GIV rewards and token wrapping much more confusing and counter-intuitive.

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Agree that this isn’t great UX, but we might not need to reinvent the wheel.

Integrating with something like this would be enough!

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Yay for sustainable revenue streams :tada: thanks for pushing this forward @mitch you are indeed the best.

Many of you know that I’m a staunch advocate for fee-free models and open-source public goods. I have a whole talk from ETHDenver on the power of free. If we can build a sustainable model that doesn’t impose any fees, I believe Giveth has the greatest potential to become the donation app. Charging fees significantly limits this potential, and I would personally never support mandatory fees on donations.

GIVfi (1)
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GIVfi is my favorite long-term revenue stream for Giveth because it has the potential to generate billions in recurring annual revenue without charging any fees. This is powerful, disruptive, and helps us develop a strong competitive moat; one that would be very difficult to implement in Web2.

However, it’s important to recognize that this model is only really viable at scale, and equally important to question how we can fund the Giveth economy sufficiently until we can realize the necessary donation volume for this model to be sustainable.

If we add fees on donations or farming, even with our current traction, we won’t be moving the needle enough. We would still need to increase our donation/farming volume by an order of magnitude (without increasing costs) in order for these to be sufficient on their own. Further, as soon as we add fees, we harm some of our most compelling differentiators and memes, and we make it more difficult to grow and achieve the necessary donation volume. In my opinion, we trade our likelihood of building the ultimate donation platform for some short-term revenues which not only aren’t enough to cover our costs at current levels, but make it more difficult for us to achieve the necessary levels. I agree with @Cotabe’s comment that we really need to be weary of the impact that any additional fees will have on traction.

For this reason, I think the most compelling avenue for us to raise funds is through grants and fundraising. We have an amazing platform, community, and traction, and there are billions of dollars of grant funding (mostly outside of Web 3) that are seeking projects like Giveth that are building the future of giving. Benefits of grant funding vs. adding fees to our product:

  1. No distraction to the product roadmap
  2. No hindrance to our user-experience or memes
  3. We need to get the word out about Giveth more anyway, particularly outside of web3, and partnerships with established grant funding operations could help with this
  4. Potential to raise significant runway in the near term in the form of donations

Raising grant funding is easier said than done, but the reality is that the funds already exist and we are a perfect grantee. I think we should allocate more time and energy to the grant avenue before settling on any major changes in our product roadmap. +1 to @OyeAlmond’s suggestion to create a working group focused on this.

  1. Fees on Donations
    I am strongly opposed to mandatory fees, but support the optional, default % of donation to Giveth similar to Gitcoin (although on Gitcoin this goes to the matching pool, not to Gitcoin’s treasury). If/when we build this, I think it’s worth prioritizing the extra work to batch donation transactions so donors don’t have to execute two transactions.

  2. GIVfi v0.1
    Another reason I really like GIVfi is that in addition to creating a magical, fee-free revenue stream with enormous potential, it creates a new money lego for donating to causes and trusting that 100% of each donation to a cause goes to verified projects within that cause. We can also minimize the development overhead by leveraging Gitcoin’s quadratic funding module once it’s available.

  3. Fees in the GIVfarm or RegenFarm
    I’m not completely opposed to this, but currently voting for No Fees for both. I would be curious to see a model estimating how much Giveth would have actually earned from this if we had activated it 6 months ago. I’m not sure how much it would really move the needle, but I am sure it would require development work and hurt the user experience, both for farmers as well as for projects interested in RegenFarm. I think our efforts would be better expended on raising grant funding/donations.

Thanks again for getting the convo started

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Hey @willy !
Just wanted to point out that I believe a working group regarding funding is already happening. I’m not entirely sure is there are actionable yet, but I think will be a good idea to have a synch for the team that want to support? I believe this is something @yass JakeS are working on? wdyt dear team, would be a good idea to have a broader synch on this for the team that would like to support?

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Hey @willy @OyeAlmond!
Indeed as Almond explained we are pursuing all channels for grants, as well as funding from investors. The latter is much more difficult as we cannot justify the 10x return or an exit path for the VCs, so having any revenue stream is helpful to build a forecast and valuation for the purpose of these talks.

As for grants outside of web3, we normally come to a dead end for not having an entity. But I must admit I haven’t been looking too deeply in this direction. @willy do you have 1 or 2 examples of grant providers outside of web3 realm that I can take as a lead and apply for Giveth?

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gm @yass!

I’m admittedly not experienced in seeking grant funding either, aside from a few ecosystem grants for ShapeShift from other Web3 projects.

Have we tried leveraging the SDG impact fund as our entity? I would hope that would suffice, but would also understand if it complicates things a bit.

I found a few lists of grants we could consider:

We could also start with some of these blockchain-for-good focused grant programs:

Gnosis chain has significant grant funding set aside too that we could be a great candidate for:
https://messari.io/governor/proposal/bcd5f5f7-2e4b-4433-8e2c-78853b5d1424

Another thing to consider would be engaging a consultant, potentially at the beginning of the process so we can see what they think our likelihood of success would be based on their experiences with other projects: Nonprofit Grant Consultant - What are the Benefits? - Capital CFO+

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GM @willy !
Thanks alot for this answer! The Gnosis chain funding is very interesting! I will find out more about their Venture Capital fund as well as their grant and apply for both.
Also adding @JakeS who is helping out with the grants and fundraising. :slight_smile:

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Thanks Willy! I did run some numbers on our farms and project some numbers of revenue we could potentially gain.

FORK and play if you want.

As you can see I didn’t get far to realize… maybe this option isn’t worth it. We would have gained less than 10k in existing farms in fees and it would only be less going forward. The Balancer farm is set to end in less than a month, leaving only the Angel Vault as the only eligible GIVfarm.

We could implement a deposit fee on regenfarms but I think a few of you had some good points of the optics considering we already charge the DAO a fee to create the farm in the first place…

At this point I don’t feel very strongly in pursuing GIVfarm fees any further…

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Thank you @mitch and everyone for feedback on this subject of revenue. Thank you @willy for your additional insights on the issue of using fees for revenue. I saw and wrote about your no mandatory fees talk and remember it vividly, importantly. A recommended watch for anyone on this thread!
Building a Future Without Fees: Positive Sum Economies - Willy Ogorzaly at ETHDen 2022

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I had another idea on the project side of things. Often we look for creating demand and utility on the donor side but what if we looked at things from the other end of the table?

I was inspired by some current protocols and projects that require users to have some skin in the game for them to interact with a protocol’s products. Notably I found the crypto.com scheme to be pretty brilliant.

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Or some of the features we are seeing with token-gated communities or token-gated features becoming an easy to implement utility.

What about requiring project owners to deposit GIV into a contract to create a project on the platform?

The tokens deposited would be 100% refundable and when the user wants to de-list or deactivate their project they could claim back their tokens.

This would offer a clear utility for project owners and work as sort of a spam protection for the platform itself.

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