Let get ready to rumble…
Incubator Report & Incubator v2 request for comment
Excited to see the upcoming projects from Incubator!! The only things I would change about the above are the 3mm per quarter budget and 100k per month operating costs. Given the report above and current state of the DAO it seems prudent to ask for a continuation that is more in line with current spending and you can always ask for an expansion if the growth warrants it… right now these figures are use it or lose it, so I caution against unnecessary spending just because it's available. Seeing the total costs for incubator operations have been below 75k per month I think that makes more sense as an operational budget for the time being. Since we have been being cost conscious at the DAO given the current pice action and downturn it seems excessive to ask for 3mm per quarter off the bat as a program budget when current capital assistance has been 170k by your reporting. There is a huge discrepancy here and I think we can do better.
Additionally, can we explore the ongoing costs of projects that spin up within incubator and are later funded by the DAO through an OIP. It would be nice to see these metrics tracked as well, perhaps in a table?
Keep up the good work!
Enjoying being part of this process.
I echo hohmward's comments wrt to budgeting - I think $75k (based on past participation) should be a maximum expenditure as I expect the bear market to lower the number of applicants. Our overhead will sit mostly in ensuring the success of any new partners.
Additionally, I appreciate this learning cycle (focused on 3 month period) - I would like to see this type of 3-month cycle again for continuous budget approval (or 6-month).
Looking forward to the next leg of the Incubator journey!
hOHMwardbound First of all thanks for all the help and support you have provided us over the past few months, and looking forward to our future cooperation.
As Mark already stated above, the proposed $3mm is not compounding. It is a quarterly allocation we can count on. What we do not spend stays in the treasury. Our primary goal is to bring added value to Olympus and Ohmies, not to burn through allocation. Our Due Diligence process is not only robust but also very restrictive which resulted in less than 4% of Applicants Incubated, and another 7% went to community vote as Launch Partners during Pilot.
It is important to emphasize that applicants that pass our due diligence process are not immediately eligible for investment. Those are handed over for the vote to the 7 member Committee in which majority are non-incubator contributors, and heavy hitters known to ask tough questions (JaLa, Tex, Indigo, Unbanksy). Launch Partners are on the other hand required to pass Community vote.
I hope this gives you confidence that we do not invest lightly.
On the other hand we should bear in mind that we have just started. Although Pilot was a success, the fair conclusion is that the wider crypto community is not aware of us. We are expecting to ramp up both our communication and presence in the investment community in Q2-Q3. On top of it our Incubatees and Launch Partners will be our best ambassadors - we are already seeing project referrals from them. Only thing holding us back is the market downturn. When those wheels get into motion the number of applicants, and subsequently investments will increase. Worst thing that we could do is stop ourselves from capturing those opportunities, especially when Pilot results show double digit multiples for every $1 invested.
On top of it we are suggesting widening the net with the Sporos program which by itself should mean a higher number of applicants, as well as additional full time team members.
We have already started tracking costs, as well as launched project performance. We are aiming at having more robust reports ready for Q1 report, and will share the initial table today during AMA.
Given above, it is safe to conclude that the risk for DAO is minimal because resources are allocated not transferred, the Incubator team has proven to handle given resources responsibly, and ROI so far is very attractive.
Would it be possible to stipulate at which market conditions Incubator budget would be unprofitable, and predefine the cuts? We could add those parameters to new OIP and all be clear on the conditions.
Your forum post should be consistent: include pre-launch or post launch numbers, or better yet both, but not mixed. $14mil is mention here, which includes pre-launch but you only mention costs post-launch. You did include all on the presentation today. Any time I see this kind of discrepancy, I feel like someone is trying to exaggerate with intention of misleading. I hope this is not the case and that its an honest oversight, but should be corrected and simplified so that someone reading this is seeing an accurate picture. Just a long time community member here, sorry for the dumb question: why do we have Olympus pro, partnerships, incubator, sporos, grants? All of these separate departments create ambiguity and complexity with compensation and budgets. These all exist with the purpose of expanding the EconOHMy and growing partners aligned with our goals. Why not have them under the same leadership in the DAO and leverage our talent rather than spread it thin? This would add more cohesiveness IMO. I do want to say that the numbers are impressive and to keep up the good work. I like the idea mentioned of not diamond handing everything going forward as well. Thanks again for all your efforts!
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hOHMwardbound Thanks hOHMward - we can cap this figure on administration but that will mean growth could be restricted - we think the figure is right - we are expanding and administering Sporos and the new econohmy networking will increase our costs. I don't think we would be too fussed if it is $100K or $75K it will just mean we are less effective - for example: if we have approval for the larger figure then we won't miss opportunities or have to put off internal projects that are time sensitive because of the restraint.
We have demonstrated to date we are very conservative and cost conscious when it comes to our budget - so it is just comes down to a matter of trust. We won't spend what we don't need.
I think we are happy to hear about a lower total capital budget but we think $3mm makes sense for the size we are trying to grow to - again we have demonstrated that we are responsible stewards and very cost conscious - so it is a matter of trust. We think the size is right - but if ppl want to cut it happy to discuss another figure - I think materially basing our funding decision on short term price action isn't the wei
hOHMwardbound Additionally, can we explore the ongoing costs of projects that spin up within incubator and are later funded by the DAO through an OIP. It would be nice to see these metrics tracked as well, perhaps in a table?
Do you mean like Sporos? That hasn't launched yet as a gateway - but will be part of the Incubator program
Don_G_Lover Additionally, I appreciate this learning cycle (focused on 3 month period) - I would like to see this type of 3-month cycle again for continuous budget approval (or 6-month).
I think a new six month period makes good sense
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CapriSunSqueezer Thanks Capri - we hope to have the numbers in a live format that everyone can check on whenever they want - we really like what the team at Inverse Finance have done with their transparency https://www.inverse.finance/transparency/overview
We are reporting on all partnerships with projects that have not launched yet because that is the area of responsibility we have in the DAO atm - so we could have excluded say the DAO swaps but that wouldn't reflect what we have been doing - less transparency.
In terms of the numbers the only inconsistencies would be that we identify what portion of our entitlements have already vested when we have more detail in the deck and in relation to pricing the DAO swaps - which are difficult to report on because they use TWAPs and are in OHM. For example do we include it at the value the USD value at the agreement date, the swap date or the current date? Also do we include the swaps in our budget - the man hours of arranging them cost us contributor time but the actual OHM wasn't from our budget. We included this text in our report above and more detail in the deck presentation (though as identified in the presentation recording I pointed out that the swapped OHM does not come from our budget):
Mark11 Additionally, through governance the DAO swaps for OHM with Prime DAO and Fiat DAO had a cost of OHM at the time of transfer of $500K and current cost of OHM at $237K.
In terms of your comment about spreading ourselves thin - can I just clarify Sporos is a part of the Incubator. Also we are coordinated by Strategos and account for our contributors compensation under the directions of the Operations team per person. It is important that we do have a ceiling imposed as a budget so the community governance can decide what is important and what isn't. In terms of merging Incubator, Grants and Partnerships - I don't think that is a good idea - the bigger the team is the less accountable and less efficient it is - we already take from each other what works - this current way of operating means the community can identify what programs are delivering and what programs need more attention/resources
Mark11 thanks for your response. I agree 100% with the theme of transparency; it’s definitely the way to be. I also agree that smaller teams are more nimble but if they’re working on similar categories (expanding the econOHMy and partners) it would make sense for them to be under the same leadership umbrella, to benefit directly from shared learnings, less redundant communication, coordinating efforts, etc. I see the same vision of several small teams but under a shared focal point in the DAO. These other projects are looking for assistance; if we can give these partners a streamline process (through one leadership channel, but white gloved from each nimble team along their journey) it would be a win-win for Olympus and our partners.
CapriSunSqueezer also I don’t want to get off topic from the original purpose of this. Just some thoughts here, thanks!
Mark11 Thanks. Multiples of 50x-100x is commonplace in crypto. But these multiples are just vapor as most people come to learn. Either because they held too long, or because there is insufficient liquidity to sell. With time, the price of every asset goes to zero.
This is the main risk with Incubator my view. We spend, but never get a return. Find a way to monetize the assets (OTC, CCB, or whatever) and you have self-financed your budget.
Having spoken to a lot of folks on this list personally, can agree that the partner program is vital to Olympus growth.
Also really like the section on learning and the look ahead especially around changing from never selling to responsible selling.
Some observations and suggestions below. These are my opinions and I say them in the most constructive & positive way possible. Please dont take them as criticisms.
With every project, we should try and also score them on how they further the Olympus core goal of being a reserve defi currency. e.g. APY on a pool is not utility, its zero sum in the long run. Using the currency as a base pair is core utility, using it for lending, gambling, shopping, gaming, nfts or just as a reserve are all utilities. This is a core key metric and removes bias in decisions. This metric and a scorecard should be included in proposals. This is also the #1 question asked by the community.
Publish, and hold partners accountable to using OHM as a base pair & part of their treasuries. I see this is already in the plan so good job on this.
Add more crypto natives to the team. The list looks under represented in terms of crypto native "builders". Not all partnerships will bear results in terms of money or revenue which is what a traditional VC would look at. There will be some that help with our core goal.
Add disclosure requirements for the partnership team when a new project is put up for proposal. If need be, increase base salary / funding for partnership team since they may miss out on any project launches due to disclosures.
Cross marketing with Olympus can be improved. Looks like some of the projects launch and are still actively working with Olympus, but their marketing has pivoted away once the launch goes live. I would love to see previous partners do an ama with the team and explain to us how they helped OHM become the reserve defi currency.
Add a bonus structure to the partnerships teams. Evaluate projects 6 months, 12 months from inception, and tie some compensation / bonus to the performance of the project. Performance should be rated on core goals (use OHM as reserve currency), furthering growth of OHM to new entrants and revenue "realised".
Keep up the good work.
As a VC I think it's great that the DAO is investing in early stage teams and projects. What I'm here is the mentioning of a carry structure. Contributors should be mainly incentivized by the long term success of the selected teams. Even though Ohm does not plan to sell in every case I can imagine to pay out carry if the project reaches a certain threshold (e.g. market cap > x, > x MAU, > x token price appreciation in y years). Good VCs earn most of their money through carry after 4-10 years and not at the moment of their investment.
What are your thoughts on that?
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electo thanks for valuable input. Many already on our radar. When you say "partnerships team" in bullets 4 & 6 you are reffering to Incubator partners not our own partnerships team, right?
Point 1. As we have stated we have developed robust Due Diligence process where Olympus utiliy is one of 5 main categories which include Culture fit, Olympus Values fit, Olympus Utiity, Security, Project evaluations.
Olympus Utility/Value being scored as:
Olympus (O)
Utility (U)
1 point - protocol brings utility to OHM
0 points - does not bring utility
Value ($)
1 point - protocol generates extra revenue for Olympus
0 points - does not generate extra revenue
Network (N)
1 point - protocol helps onboard new Ohmies or builds Ohmie loyalty
0 points - does not help onboard new Ohmies or build Ohmie loyalty
O = U + $ + N
Point 4. can you clarify which disclosure items you find relevant / would like to see
Point 6. keen on looking at it, but we should be aware that it could be double edged sword. Namely because most teams that require funding need it around launch, we on the other hand have capped investment limit that might become limiting factor in such case (portion on launch vs bonus).
@electo nice to see you around! just a quick note to this point
- Add more crypto natives to the team. The list looks under represented in terms of crypto native "builders". Not all partnerships will bear results in terms of money or revenue which is what a traditional VC would look at. There will be some that help with our core goal.
This is an oversight on my part, and thank you for capturing it. You're right that there is a heavy focus on each persons meatspace experience as it relates to the incubator. I won't speak for others, though I know I am not the only one, but I guess I would be an example of what might be referred to as crypto/defi native. been in and around blockchain since 2012/13 and been full time in the space since 2014. I know there are others with varying ape levels.
I just want to note though, that the contributors listed are the work horses who carry the incubator along, but that as a department it is embedded within the DAO. The DAO has between 130-200 contributors with varying ape levels and where it makes sense people are pulled in to review projects and give their opinion, insight and expertise. The same is true of ecosystem partners where relevant / needed. The ape network is stronk.
The last point, which just came to mind in this stream of consciousness, so i'll share, is that despite the caliber of the team listed is that there is a remarkable lack of ego present in the team. Why I think this is important is that this spurs a spirit of collaboration and consultation. People are quick to say if they are not sure on something and to seek to consult others. Within the context I have outlined above this is a massive superpower which incubator as a team excel at leveraging.
I'm not sure if that speaks to what you had specifically in mind, but hopefully adds some more context.
ty for the reply ser.
#1 Its nice to see this score card. I guess in my mind utility / use of OHM holds more weight than revenue currently. This is because revenue is never realised. This however I think is an education problem on my end and others. We assume like the revenue when number go up on underlying tokens, in a bad market we want all revenue rfv. I think once we have a framework to sell, this may get better.
#4 disclosures do not need to be cumbersome. As the projects grow, a lot of them will grow internally too (sub-daos, or other ohmies building), this should be disclosed if it happens from within the partnerships team. Any prior holdings of a potential partner should also be disclosed. This ties in with point #6.
#6 this is for our own partnerships team. I've spoken to them, I find them all high integrity, and I am proposing a bonus on top of any remuneration based on how well the partner projects do. This will encourage the team working on these deals and also for them to go out and scout for more. Right now we are getting an amazing deal flow, this may not be the case always as funds fight for allocations.
ty ser. Yes, the meatspace representation is high. Would love to see folks showing off their crypto relevance more than meatspace. Nothing against the meatspace folks, I was in one too.
For the last point, yes, I agree the team is great. I am proposing incentives aligned and top of current, based on performance of the team measured in project performance on a big enough timeframe (6, 12 months etc.). We all know the market is down, hence everything down, yet some projects are really good. e.g. Huge fan of vesta & redacted.
Would it be an idea to, instead of giving out OHM-nominated funds to protocols, fund projects with FRAX/DAI? This could reduce selling pressure for OHM. Just like Redacted Cartel, we could utilise DebtDAO for a loan.
Then, as a side note, it might also be a great idea to increase marketing efforts for Olympus Incubator. Actively reaching out to founders and already established protocols that could implement OHM to increase its utility.
electo imho your perspective is right. The thing to understand is that Benchmark Score Evaluation Framework is a living organism, same as market we are operating in, and will definitely be adapted as we go. Such comments as yours help us in reviewing it and finetuning. I'd expect that kind of (important) detail to become decision factor once number of applications multiplies. For now we need more quality applicants to go through entire process to pinpoint areas where framework needs improvement.
4. We already have the practice of disclosing conflict of interest to team members if that is what you were reffering to?
6. thank you for thinking about it, can't speak for entire team but my personal opinion is that we are still young and unknown so our primary concern should be delivering outstanding results in following months, not the comp which has been fair so far.
12 days later
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Apologies for the late comment, but we need to put the budget request in context. The macro crypto environment and price action for $OHM in particular are a much bigger problem than when Incubator initially passed in November. For context, here are the DAO holdings in November:
- OHM price: $892
- DAO OHM holdings: 916k OHM
- DAO OHM worth: $817M
The initial approved budget of $3.5M represents 0.4% of DAO OHM holdings at the time. Fast-forward to today… and the DAO OHM holdings are only worth $40M.
Within the above context, the DAO cannot sustain a budget of $3M per quarter. Given that the costs to-date for Incubator only total $289k over 3 months, I think it is worth revisiting the proposed budget. Obviously the ROI on our incubated projects is worthwhile ($14M), just need to figure out a sustainable funding rate given the current state of the DAO's balance sheet.