The Geo Web’s partial common ownership system generates Network Fees that will be allocated exclusively to public goods, but how those fees are allocated across worthy public goods is not yet determined. This topic is opened to discuss what mechanisms we can and should launch with.
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Network Fee Allocation Product Requirements Document
Summary
The Geo Web’s partial common ownership system generates Network Fees that will be allocated exclusively to public goods, but how those fees are allocated is not yet determined. This document explores several mechanisms to most effectively allocate these funds to deliver ecosystem and public value.
Problem
Effective Network Fee allocation will always be a complex, dynamic challenge. There will never be one “right” answer. One of the founding values of the project is that mechanisms that empower more diverse and more open (real) participation will produce better outcomes.
Currently, the project does not have mature governance mechanisms to make collective decisions, nor does the core team want to exert any more centralized authority than is absolutely necessary (for legal/tax reasons and due to a belief in the power of collective intelligence).
Delaying the allocation of funds until the Geo Web community matures and initiates its own truly decentralized mechanisms would be a missed opportunity both strategically (hinders funding for ecosystem builders) and in communicating the project vision (fees paid by licensors aren’t seen as positive-sum).
Target Users
- Metaverse Explorers are AR/VR enthusiasts. They want to claim land/build in worlds that provide interesting technological building blocks and align with their view for the future.
- Public Goods Maximalists want to experiment with new sustainable models to fund digital public goods and create regenerative economic systems.
- Crypto Speculators want to find the next x1000 project (which we want to temper and direct toward positive-sum activities).
Description
Rather than relying on the core team or a multisig to make major decisions about Network Fee allocation (including not doing anything for a time), the Geo Web can launch with simple mechanisms that allow Geo Web citizens (landholders and users) to express their preferences for funding public goods. This can be done on an individual basis, a collective basis, or a mix of both.
A good solution will realize the power of collective intelligence without getting bogged down in politics and bureaucracy. It should allow flexibility for future experimentation including market-based incentives that focus on revealed preference rather than requiring explicit statements.
Land licensors should ideally see their Network Fees as a positive-sum investment in the ecosystem rather than as a strictly required expense.
While funding allocation decisions can be made periodically (as most governance decisions in web3 are today), the Geo Web’s streaming architecture offers unique possibilities to help ecosystem projects/builders/creators obtain funding consistently and in real-time.
Success Metrics
- Landholder allocation participation %
- Non-landholder participation in ecosystem funding
- Number and depth of supported ecosystem projects/builders
- Separate from the core development team
- Funding velocity
Solution Options
Licensors directly allocate their Network Fees
In this approach, each land licensor would have the ability to allocate their own Network Fee streams as they see fit.
When a Geo Web landholder claims their plot and initiates their stream, the next step in the process could be to allocate their streaming ETHx to a list of verified public goods project addresses. Landholders could reallocate their streams at any time by returning to the parcel on the Cadastre and/or allocations could be set at the address level (one address can hold multiple parcels).
This approach is straightforward from a user perspective and allows landholders to express their diverse personal preferences “without ever losing a vote.” It doesn’t suffer from Sybil-resistance attack vectors. This approach would also increase governance participation and reinforce a core social/strategic value: the public goods funding flywheel.
The list of eligible projects and default allocation (if a user starts their Network Fee stream but doesn’t submit a subsequent allocation transaction) might need to be controlled by a multisig to start, but could evolve into a more open and participatory registry with time.
Showing the live and cumulative funding streams per project would help land licensors identify where they believe that their funding is relatively more impactful based on their preferences. Because landholders are already committed to spending their Network Fees, the “free-rider problem” could potentially be diminished.
Direct allocation also limits (or eliminates) the lag between Network Fee collection and allocation because of the Geo Web’s streaming architecture. Smaller amounts of money that move with higher velocity can be more impactful than large amounts of stagnant money.
This approach effectively gives high-value landholders proportionally “more voice” in the Geo Web’s collective public goods funding. Wealthy landholders will inevitably have different funding preferences versus less wealthy landholders (just as preferences will inevitably vary across groups). Non-landholding Geo Web citizens do not have a voice under this system either.
The project should strive for more Pluralism and continue to explore novel mechanisms with other strengths, so any initial implementation should consider how different governance mechanisms could eventually control funding flows without requiring every landholder to submit a reallocation transaction.
- Pros
- Funds are allocated to worthy uses right away
- Direct demonstration of the link between Network Fees and public goods funding
- No Sybil attack vectors
- Individual preferences are directly expressed
- Other mechanisms can be recipients of funds (e.g. a QF matching bucket)
- Cons
- Which projects make the whitelist is highly impactful
- Need to have a default bucket if user allocation isn’t completed
- Potentially low-information and low-conviction allocation
- High-value landholders have proportionally more power
Mockup of the screen shown after a land claim
Citizens vote collectively on Network Fee allocation
An alternative funding allocation mechanism involves accelerating the implementation of DAO-like voting mechanisms on the Geo Web. This would likely require periodic distributions rather than streaming ones.
This approach could be based on an existing DAO tool like Snapshot, or we could build a custom solution that interacts with a Superfluid IDA.
Snapshot uses Block Height to determine voting eligibility for proposals. Since Geo Web parcels can change hands and change their For Sale Price at any time, there might be a “misallocation” of votes depending on the voting criteria unless we built more complex time-weighted criteria.
A question to explore technically is how the voting units in an IDA could be reallocated (up, down, or to another voter) when a parcel changes hands or price.
The fertile space for experimentation beyond “One Person/Dollar/Token, One Vote” (like quadratic voting and conviction voting) is the main reason we’d want to go down this route. We can expand the eligibility to non-landholding citizens. We can also dampen the voting power of “whales” to make decisions more democratic while still allowing voters to express high conviction/preference.
Sybil resistance will be a challenge for any voting system. If the voting criteria/calculation for landholders is per parcel rather than per address, it may neutralize one Sybil incentive attack vector (a parcel’s For Sale Price is backed by a real money stream). This would skew voting power toward landholders in general and specifically to those with wide holdings, but at least those holdings would need to be backed by real ETH payments. We would need to make sure to balance this with ways for “committed” non-landholding citizens to patronize the network and earn more voting power.
To maximize participation, voting could take place immediately upon land claims or the use of a Spatial Browser. It could resemble the screen proposed in the direct allocation section. (Note: Block Height or time-weighted considerations would still need to be reconciled.)
- Pros
- Non-landholding citizens can participate in decision making
- Voting power doesn’t have to increase linearly with Network Fees paid
- Start exploration of governance mechanisms that will be needed in other aspects of the project
- Pluralism
- Cons
- Administrative and development overhead
- Lag in funding allocation
- Sybil resistance challenges
Network Fees are allocated with quadratic funding rounds
Gitcoin has proven Quadratic Funding’s product market fit in crypto.
Using Gitcoin Aqueduct (if available) or a sponsored quarterly side round, the Geo Web could allocate all of its funds effectively and with little overhead. Gitcoin would administer the rounds using their existing infrastructure and expertise (marketing, pairwise funding, Sybil resistance tools, appeals process, etc.) Implementation might be as easy as sending all Network Fee streams to a multisig which periodically funds the appropriate QF matching funds contract.
This approach would open the public goods funding decisions to anybody who cared enough about the Geo Web ecosystem to donate their own money to an eligible project. We wouldn’t need to start defining “who is in and who is out” of the Geo Web.
There would be an unavoidable delay between collection and allocation (dynamic QF streaming isn’t a thing yet), so we’d lose some funding velocity.
We’d want to clearly message to landholders what their funds are being used for, so we don’t lose the link between payment of Network Fees and supporting public goods.
- Pros
- Low overhead
- Wider participation and more funding
- Partnering with the Gitcoin ecosystem
- Proven effective allocation mechanism
- Cons
- QF funding is a perpetual Sybil arms race
- Gitcoin Aqueduct isn’t productized yet
- Lower funding velocity
- Potentially obscures the link between your Network Fees and the impact they have
Development
TBD
Product Backlog
- Cadastre commissions
- Spatial Browser incentives (per user)
- Real estate development incentives
- Supporting the decentralized content layer
References
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Great read!
As mentioned on the community call, I really like the idea of a combination of systems. Maybe something like aggregated allocation or gitcoin/quadratic funding by default, then offering direct allocation as an option to those who want more control.