Originally published on Agora: https://agora.terra.money/discussion/7257-terra-expedition-an-ecosystem-expansion-program
Terra Expedition | An Ecosystem Expansion Program
Summary: The Terra Expedition is a revised iteration of the Developer Mining Program and Developer Alignment Program initially defined at the launch of the Terra blockchain. The original proposal suggested that 9.5% of the total LUNA supply be distributed based on TVL, but given the current state of the Terra ecosystem, TVL-based allocation would mainly benefit a few protocols and would not have the intended effect of kick-starting the Terra ecosystem. This revised proposal aims to better align incentives across the ecosystem and focus on attracting developers, onboarding users, and promoting deep liquidity.
Recap of Original Proposal
Essential app developers committing to launch on Terra will receive:
[In process of distribution] Emergency allocation (0.5% of total supply): immediately after network launch to provide for runway while they build out product. Commit to returning funds if product has not been launched in 1 year.
Developer Alignment Program (1.5% of total supply): Protocol teams that were live in Terra Classic divide this allocation weighted by the last 30 day TVL from Pre-attack snapshot - 1 year cliff, 3 year vesting thereafter. Accommodations will be made for apps where TVL is not applicable.
Developer Mining Program (8% of total supply): Essential app developers earn a share of the mining program proceeds pro-rata to the amount of TVL every quarter for 4 years.
Issues with the Original Proposal
The Developer Alignment Program (1.5% of total supply)
The value that Protocols bring to the Ecosystem should not be judged solely by one metric (TVL).
Weighing the distribution by TVL will not accurately reflect the value these dApps brought to the ecosystem and will weigh heavily in favor of DEXes that launched on Terra Classic who may not currently be actively contributing to Terra mainnet.
For example, on Terraswap, the value of mAssets would count towards TVL, but this is actually being double-counted because the value of mAssets are derived from assets held in Mirror Protocol CDPs. Current grant allocation methods are inefficient as teams can receive funding without demonstrating value
As the emergency allocation program is nearing an end, it has become clear that projects will “signal commitment” to building on Terra to receive funding, but there are those that will deliver the bare minimum or not deliver at all because this does not affect the funding they ultimately receive.
The Developer Mining Program (8% of total supply)
The Developer Mining program on the original proposal aims to incentivize projects to ship on Terra and compete for TVL. However, in order for this to be effective, there needs to be a strong underlying ecosystem of projects willing to compete. In the Terra ecosystem’s current state, there are only a handful of projects with TVL, and most of this is concentrated within the top 2 protocols.
As reported in DefiLlama, Astroport and Risk Harbor currently hold a majority of the total TVL on-chain. Proceeding with these incentives in the earlier proposed format would result in these protocols receiving more in value from the rewards than the actual TVL within these protocols - this is an extremely inefficient distribution of incentives.
The current structure of the developer mining program is neither effective in attracting developers or supporting development on Terra, as it positions TVL as the single metric used to measure value. This limits the scope of what projects may want to build on Terra and disproportionately favors DEXes (or other TVL-heavy DeFi protocols).
Revised Proposal - Terra Expedition
The Terra Expedition is a 4-year program aimed at growing the Terra ecosystem through a series of initiatives with 3 main objectives, namely:
A) Incentivising developers to build on Terra
B) Deepening liquidity on Terra
C) Onboarding users to Terra
This program will be funded with the 9.5% of the total LUNA supply that was earmarked at the launch of the new Terra chain. This incentive program will run for 4 years and will be managed by a community-elected committee that will be evaluated every 12 months.
Terra Expedition will consist of the following 4 programs:
1. Developer Grants Program | 20 million LUNA
Targeted bounty program that aims to incentivize essential app development on Terra to be paid upon successful audit and project launch on mainnet. The payout from this bounty program will be subjected to vesting terms. Some examples include:
Lending market
DEX with bribes/flywheel tokenomics
Leverage yield farming
CDP stablecoin
Financial derivatives protocol
Smart contract audit reimbursements
To reimburse audits up to $40,000 for projects launched on mainnet. Projects must request at least two quotes from two different auditing partners to be eligible for the grant.
Grants for public goods, ecosystem initiatives and other special programs
Grants that will fund public good infrastructure and services.
Ecosystem initiatives such as tutorials, workshops, etc.
Other special initiatives such as marketing, hackathons, etc.
Note: Participants who received LUNA from the Emergency allocation and have yet to deliver their product will have their bounty payout reduced accordingly.
2. Developer Mining Program | 20 million LUNA
This program will directly incentivize developers building on Terra. Any essential project which has launched an app on Terra mainnet will qualify for these incentives. These incentives will be distributed on a quarterly basis. Projects that are still eligible for vesting from the Emergency allocation will be excluded from consideration for this program.
Capped distribution per project per year will be 125,000 LUNA - Max capacity of 40 projects assuming full distribution.
In order to qualify for this distribution, teams must commit to actively developing their project and providing quarterly milestones that the committee will review and approve on a per-project basis. Prior to each distribution, the committee will review the project's milestones.
Terra Expedition committee members will use the following three criteria as a guide to determine the LUNA allocation for each project.
Open-Source: Whether the source code for the dApp is made freely available to the community for possible modification and redistribution.
Value-add to the Terra ecosystem: Determined by the committee. The committee will rate each project’s value-add and determine the portion of this distribution factor a project shall receive.
This qualifier will consider many factors, such as if the dApp has a strong product market fit in the Terra ecosystem, whether it is unique, if it has the potential to garner a strong user base, and if it creates value through attracting users,TVL, and activity to the chain.
QoQ Growth (KPI determined by type of project): Verifiable data to be provided by the developer/project.
*The committee reserves the right to update these qualifiers as it deems appropriate.
3. Liquidity Mining Incentive Program | 50 million LUNA distributed over 4 years
Objectives:
Incentivize DEX and money market liquidity
Incentivize stablecoin liquidity on Terra
Work with DEXes on Terra to attract liquidity and drive organic volume/activity.
Incentivize liquidity for different stablecoins (USDT, USDC) from multiple bridges
Incentivize Terra native stablecoin liquidity, CDP stablecoins, and stablecoins issued natively.
Encourage arbitrage by incentivizing stablecoin-stablecoin pairs, as well as stablecoin-LUNA pairs. This should create volume between stablecoin-stablecoin pairs as a result of arbitrageurs trading the LUNA-stablecoin pairs.
The committee will collaborate with DEXes and lending markets in the Terra ecosystem who can support external pool incentives.
4. User Incentive Program | 5 million LUNA
An incentive program aimed at increasing end-user adoption on Terra. This program will be more experimental and open to new ideas. Some examples of possible initiatives include:
Terra Expedition Moonwalkers: Evolving NFTs
Shortlisted group of dApps for users to engage with.
Provide users with an NFT that evolves with constant engagement over the full duration of the incentive program. Users that complete all actions within the duration of the program will receive a fully-evolved NFT.
Bridge Incentives
As an example, offer small incentives for users bridging in tokens, each time a user bridges assets into Terra.
This incentive program may also be expanded to on-ramps pending partnerships.
Funding Schedule
Note: Subject to change based on the price of LUNA as the committee requests for funding each year
Goals of the Terra Expedition
The Terra Expedition program aims to expand and strengthen the Terra ecosystem in a few key areas. The table below outlines conservative goals which the committee will strive to achieve. The committee will provide regular updates on its progress in meeting these goals.
Links to sources:
Ecosystem Projects Tracker (Excluding Bridges)
Committee Oversight
Given the requirements of indexing, processing, and assessing individual protocol impact and user activity for the 4 incentive programs above, we move to propose that the Terra Expedition program will be staffed by a 7-person committee consisting of:
GJ Flannery (Flipside | Community)
Something Else (Community)
Rebel Defi (Orbital Command | Validator)
The Babylonians (Ex-Research @ Coinbase & Huobi | Analytics)
MC (TFL)
Papi (TFL)
Tero0x (TFL)
The responsibilities of the committee include:
Identifying gaps in the Terra ecosystem to propose dApp bounties for
Evaluating submissions from project teams in consideration for grants, bounties, and other incentives
Determining the types of assets that the Terra ecosystem requires liquidity for
Assessing the suitability of incentive distribution across assets
Evaluating the effectiveness of incentive programs and proposing changes to existing, or new, programs when necessary
Committee members will be expected to commit at least 10 hours per week to attend committee meetings, engage with the community and projects, perform data analytics, etc.
All committee members, except for those within TFL, will receive a monthly compensation of 1,000 LUNA. This will be provisioned in the budget for grants for public goods.
To prevent any conflict of interest, all committee members are required to declare if they have any affiliations with projects who stand to receive any incentives from these programs. Where a conflict of interest exists, these committee members will recuse themselves from the evaluation of these protocols.
Accountability and Transparency
Upon the passing of this proposal, the committee will be appointed for 1 year. This time period is proposed to ensure continuity of relationships and processes among stakeholders (community, projects, committee). To ensure committee members are held accountable, an on-chain governance vote (text proposal) will occur every 12 months to renew or revise committee composition.
All actions performed by the committee will be communicated transparently, and any fund disbursements will be voted on by the committee. The results of these votes will be made public to the community through regular updates on Agora. The committee will prepare a monthly summary of decisions taken and funds disbursed.
The committee requests for discretion in the allocation of funds within the programs to allow for optimization of LUNA deployment as we assess program effectiveness over time. This is especially the case for the Developer Grants program as we would like to protect the interests of projects who may be building new solutions/dApps and may not want to disclose their model until it is ready for mainnet deployment.
Treasury Management (5/7 Multisig)
The multisig will be managed by a separate group that will act on behalf of the community and committee. The multisig will be staffed by 7 trusted members of the community. This will include 2 validators, 2 community members, and 3 members of TFL. The multisig members of the treasury will only execute transactions at the direction of the Terra Expedition committee.
The address of the Treasury Management’s multisig that will be used as the recipient reflected on the on-chain community pool spend proposal:
terra1chj36sy5j4p0pu4qudurrckx73qfm6udk5a2apx7lcrdsc0nelxs87zr4f
The 5 out of 7 multisig will consist of the following members:
Community Pool Funding Proposal & Timeline
We will be requesting funding from the community pool in yearly tranches. Based on our projections, we will need 30.5M LUNA in the first year. This requested amount will be reflected on the upcoming on-chain proposal. The committee will then request for the remaining funds on an annual basis based on the funding schedule outlined above.
Upon the passing of the on-chain Community Pool Spend proposal, funds will be transferred to the treasury multisig address as reflected above, i.e. terra1chj36sy5j4p0pu4qudurrckx73qfm6udk5a2apx7lcrdsc0nelxs87zr4f
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