Incubator Report & Incubator v2 request for comment

Incubator Report & Incubator v2 request for comment

OIP-41 passed Snapshot vote on 10 November 2021 and Incubator was born. The OIP set out that the Incubator program would run for a trial period of 90 days, at which point the incubator team would provide a report updating the community and recommending improvements for the community to consider, discuss and ultimately vote on.

Note: As per the OIP, during this period the incubator is still onboarding new partners and working with existing partners, so long as it remains within the approved budget of $3.5M.

Achievements

The Incubator contributors have been hard at work these months taking on responsibility for relations with all pre-launch protocols. To date we have:

• 3 incubated projects (Volt, Vesta +1 not yet announced)

• 6 pre-launch partnerships (Prime DAO, Phantom DAO, Debt DAO, Jones DAO, Fiat DAO, Goddess DAO). These projects have all been vetted and negotiated by the incubator team before being put before community governance.

• 8 projects funneled to other products within the DAO (mainly Olympus Pro + Olympus Grants)

• OKR’s established

• Application funnel including robust due diligence framework established

• 80+ applications processed

• Developed a post-agreement success program

• As of the time of writing our share entitlements to partner projects are about ~$14mm consisting of:

  • ~$10mm in VSTA

  • ~$2mm in JONES

  • ~$1.7mm FDT (DAO swapped for ~$346K of OHM now worth $224K)

  • ~$130K D2D (DAO swapped for $154K of OHM now worth $14K)

  • ~$50K in PHM

• Moving forward we will update the community on the value of OHM used or locked in partner protocols and the amount of OHM in our partners’ treasuries/liquidity every quarter

Our partners

What we look for

• Innovation

• Quality solutions to a meaningful problem

• Integration with OHM

• Traction & community

What we ask in return

• A share of our partner's governance token

• That partners act with integrity

• That partners keep and use OHM wherever possible in their protocol

Budget to date

The costs of running the incubator can be broken down into contributor costs and capital assistance.

OIP-41 outlined a budget of $3.5M - with 10% allocated to contributor costs ($350K) and $3.15M to potential capital assistance for partners

DAO Contributors:

• In our first month, November 2021, the cost of incubator contributors was mostly absorbed by the partnership team with a cost of $4,100 of the budget used

• For December the cost of paying contributors was $64,509

• For January the cost of paying contributors was $50,500

This put the total cost for contributors to the incubator at $119,109 across the trial period - this is 34% of our maximum allocated from the program administration budget of $350K.

Capital assistance:

• Out of the 3 incubated projects, $85,000 is due to be dispersed for providing initial liquidity support to Vesta as VST

• A further $85,000 is due to be dispersed for the unannounced incubator project

• None of the launch partners received capital assistance

This puts the program costs for the Incubator at $289,109 which is 8.2% of our allocated budget of $3.5mm. 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.

Learnings

As a new program, we expected to have a steep learning curve and we did - we can report the following learnings from administering the program:

• Partners were less interested in accessing Olympus as a source of capital and more interested in the value accessible from our large community, becoming part of the econohmy and advice, assistance from the DAO contributors

• We quickly realized that it was necessary - for both reputational reasons and due to the stage projects were seeking to close an agreement - to delineate between being incubated by Olympus and partnering with Olympus prior to launch (launch partners)

• The fundamental difference between an incubatee and a launch partnership is how far away from the launch that partner is. An incubatee is usually in need of more support from the DAO, which justifies Olympus taking a higher % of their governance token.

• We have had some useful conversations which have highlighted that a single-minded commitment to being diamond handed may not be in Olympus’ long term interest or that of our partners - for example:

  • If we are entering a round on the same terms as other investors - but committing to never sell - we are giving away more than other participants and more than is necessary

  • It may be useful for Olympus - in consultation with partners - to OTC some of its allocations to allow other market participants to gain exposure to the project

• The number of deals that were dealt with in late January 2022 - that required a governance vote - led to community fatigue and low voter engagement. This was a large resource impost on the team to handle the logistics of governance processes. With this in mind, we propose to restructure the incubator to allow different entry points for projects at various stages of maturity

Looking Ahead - Incubator v2

Sporos, Incubator & Launch Partners

In order to maximize success we intend to restructure in order to have three distinct entry points:

1. Sporos pre-seed:

   1. The Sporos program will be the entry point for founders who have a great idea but are just starting out - the Sporos program will assist with ideation, mentoring, guidance, and funding to get the project on track
   2. Provision of funding up to $250K paid out over milestones up to launch.
   3. Olympus will generally target ~10% of the project’s tokens under a Sporos agreement
   4. We are especially keen to see applications from Ohmie founders who are solving a pain point for DAOs

2. Incubator seed:

   1. Incubator will continue to onboard high value, high impact projects that have a significant use case or integration for OHM or the econohmy

   2. Provision of funding up to $250K paid out over milestones up to launch

   3. Olympus will generally target ~6% of the project’s tokens under an Incubation agreement

3. Launch Partners - pre-launch:

   1. We will continue to partner with projects that are too mature for Sporos or Incubator but will significantly benefit from advice and assistance from Olympus as they head to the launch of the protocol. These are projects with inspiring founders and teams that want to join and align with the econohmy

   2. Provision of funding up to $150K paid out over milestones up to launch

   3. Olympus will generally target ~3.3% of the project’s tokens under a Launch Partner agreement

The flow for projects starting at Sporos stage will flow to Incubator support and then Launch Partner support as they mature.

Playbook & post-agreement success

A big value-add that we can deliver to projects is that we are constantly cycling through pre-seed to launch and have the most up-to-date knowledge of the current best practices. We have been building a modular playbook for aspiring projects to implement to get them ready. We have a robust post-launch success program that allows us to keep up to date with each partner's progress and roadblocks to success - so we can help them along the journey.

Founder mentoring program

With a number of projects that are already alumni of the incubator - we have begun inviting alumni founders to mentor newer projects joining the program. As these founders have just been through launch they are the most up to date about current opportunities and pitfalls in launching. It also has the benefit of networking partners within the econohmy.

Formalizing the network of the econohmy - a place for founders & builders

Our partners in the econohmy are and will be, the lifeblood of building out the utility and value of OHM. Joining the econohmy will be valuable as you are able to access a network of other good actors who are values aligned with Olympus. Incubator contributors will also build out a space for our partners to meet, network, and collaborate. We will also build a system to be able to find and source talent for our partners in the econohmy.

Building relationships with other DAO development programs & other stakeholders

We have begun to reach out to build relationships with DAOs programs & stakeholders that share Olympus’ values. With these strong relationships, we can refer partners to high-quality advisors, partner with aligned DAOs, or access to launch services such as PrimeDAO and Copperlaunch.

Separate track for investment rounds

Sometimes projects would just like Olympus to join their DAO round of investments which will have set terms which apply to DAO’s invited to the round - a recent example of this is Curvance. We will continue to conduct due diligence and recommend such appropriate opportunities to community governance.

Summary

We will shortly put forward an OIP requesting:

• Continuation of the program

• Approval for program budget with a maximum of $3mm per quarter and maximum capital assistance of $250K per project

• Approval of a maximum budget of $100K per month across all contributors compensation to administer and improve the program

Please join us for an AMA with the Incubator team on Tuesday 1st March at 9:30pm UTC (4:30pm EST) in the Olympus Discord.

bubbidubb Definitely something to think about. The $12mm is budget is accounted in DAO OHM not in our paid out as dollars from our RFV - so I think the better metric is that the requested budget is about 2% of our market cap. I guess the problem is as much as ppl say they want to think in terms of OHM - there would be an issue if we denominated the budget in OHM and it did a 10x and the budget would be worth $120mm - ppl would be upset with that. Partners are happy to accept OHM but they want commitments in USD for now - maybe that changes this year but not yet.

I don't expect the budget to be met every quarter and it won't roll from one quarter to the next - but if there are a lot of good projects to support we don't want to hamstring the team in a particular quarter. We want this to have a high target and really get pumping - imagine 10x projects like JonesDAO and 8x projects like Vesta every quarter - that'd be like $400mm in token entitlements every year.

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

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