Creator Coin Restrictions

Tech/Network Upgrades
#1

I wanted to advance a discussion that’s come up in various forms regarding restrictions and rewards around Creator Coins. I’m breaking this up into two separate pieces with this first one looking at restrictions and will have a follow up regarding rewards. The intention is to start a discussion in each of these areas that can inform governance proposals around appropriate advancements of our design.

Current State

Creator Coin restrictions are currently spread across multiple parts of our tech stack with some inconsistencies between what is represented in the display and what is allowed by the system.

Existing controls:

  • Flow control
    • Initial version described at a high level here https://medium.com/rallynetwork/introduction-to-creator-coin-flow-controls-73bee3159249
    • Creators associated with each coin are subject to a token bucket based limiting algorithm
    • Max sell allocation = 0.25% of circulating supply for that symbol
    • Conversion of creator coin to side chain RLY by the user under flow control deducts allowance from this sell allocation
    • Any conversion of side chain RLY to creator coin adds allowance until reaching the max sell allocation at a 1:1 rate (1 CC minted = 1 CC added to allowance)
    • Any conversion of creator coin to side chain RLY adds allowance until reaching this max sell allocation at a 10:1 rate (10 CC burned = 1 CC added to allowance)
    • Any transfer of creator coin between side chain accounts adds allowance until reaching this max sell allocation at a 100:1 rate (100 CC transferred = 1 CC added to allowance)
  • Compliance and risk based limits
    • All users can redeem CC for mainnet USDC subject to a 300 USDC per transaction and lifetime cap
    • Redeem to USDC is no longer available for a user once cap is reached
    • Low limit intended to provide convenience for users without creating price risk or large arbitrage opportunities between sidechain and mainnet RLY
  • Creator floor limits
    • In addition to flow controls, creators are subject to a soft floor imposed by the UI
    • Operates in conjunction with flow controls to restrict creator behavior
  • Bridge limits
    • Max bridge out per day across all users = 1MM $RLY
    • Max bridge out per transaction = 100K $RLY
    • Max bridge out per user per day = 100K $RLY
    • These are intended as simple risk thresholds while we observe bridging behavior between mainnet and side chain
  • Rally.io credit card purchase limits
    • $100 max purchase on credit cards; no lifetime cap
  • No cap on conversions from sidechain RLY to Creator Coin beyond creator centered restrictions
    • Users and creators operating on a Creator Coin other than their own have no restrictions on conversions to/from sidechain RLY

Re-design Objectives

  • Simplicity and consolidation
    • Usage limits tend to be interaction specific and spread across the tech stack
    • Better delineate which limits are appropriate at which layer of the tech stack
    • Simplify overall description of limitations
  • Support creator income use cases
    • Current flow based limit would require a high level of interaction from creators at a micro scale in order to keep a regular income stream flowing from transactional use cases
    • Ensure we’re able to support the income case with a more practical interaction schedule (i.e. monthly)
  • Clarify creator floor
    • Creator floor approach is an undocumented stop intended to minimize risk at launch that hasn’t been an issue yet based on high touch relationships with creators
    • Ensure whatever is done here is documented and appropriate without assuming the same high touch relationships with creators
  • Protect token holders from creator based manipulation
    • Programmatic protection against creator’s use of genesis supply to manipulate economy
    • Subjective protection from scammy tactics by a creator
  • Protect token holders from user based manipulation
    • Large, early purchaser can accumulate material percentage of circulating supply that rivals the creator
    • Excessive price volatility (upside and downside) can make token less attractive for transactional use cases
  • Encourage long term holding and transactional usage over short term value extraction
    • Probably more appropriate for the follow on topic regarding rewards but including here to the extent some aspects of restriction design could help here

Proposed Changes to Restrictions

  • Modify Creator flow control
    • Increase max allowance to 10% of circulating supply
    • Build to allowance based on time instead of community activity
    • Allowance still subject to vesting restriction below
  • Introduce Creator vesting of genesis supply
    • Initial supply of coins unlocks for creator use over 12 months
    • Unlocked supply still subject to flow restriction above
  • Add flow control to all users
    • No vesting based restriction for general usage but introduce flow based transfer and sell restrictions that mirror creators
  • Add slip based fee for Creator Coin buy/sell conversions
    • Tax all buys/sells of creator coin based on how far we move along the bonding curve with the transaction
    • Fee is calculated in creator coin and transferred in full to creator
  • Empower development team to iterate on specific parameters used for flow controls, vesting schedule, and slip based fees
    • Clarify parameterized design and ranges within which development team can operate to optimize these controls
  • No change to:
    • Compliance and risk based limits for USDC redemptions
    • Credit card purchase limits
    • Risk based bridge limits
2 Likes
#2

If the allowance were increased to 10%, would the transfer of creator coin to side chain accounts remain 100:1? I’m not great with numbers, but does this mean that a creator could move their entire supply of coin to side chain accounts?

#3

I understand the need for flow controls and I appreciate the thought and effort put into this. I think this is an improvement.

Putting myself in the shoes of a creator, it’s difficult to fully adopt creator coin knowing I can only ever access a small percentage of its value. Creators need to be able to support themself and grow their business. On the flip side I completely understand the need for flow controls. I don’t have any changes to propose at this time, this is only observation - food for future thought. Perhaps a staking mechanism where fans can stake a creator’s allowance so that the creator can take some value out for a specific purpose (eg a musician wants to record a new album and they need $ to do it).

These flow control changes feel like a step in the right direction. Thank you.

2 Likes
#4

No, the 100:1 was the rate at which a creator accumulates towards max allowance. Each transfer of 100 creator coins in the current system increases the allowance the creator can interact with by 1 up to a maximum of .25% of total supply. In the new system, this 100:1 ratio would no longer exist. The maximum would increase to 10% and the creator would accumulate towards max allowance based on time instead of activity.

#5

Want to make sure I fully understand your point here because this is one of the things I was trying to address with the more explicit vesting. While it’s true that there will be a period of vesting and the flow control limits the amount of coin a creator can transact in at one time; this does explicitly make it possible for a creator to unload 100% of their genesis supply over time.

I’m curious if that’s unclear in the proposal or aspects of timing on the unlocks/ability to sell contribute to your concern regarding access to value. This seems like something we definitely want to get right so I appreciate the perspective and would like to try to make improvements here.

Further Flow Control ideas to stabilize creator coin economies
#6

I see. I don’t know that it’s unclear so much as it’s a lot to digest - I’m speaking for myself only. I would benefit from seeing an example along with the proposal.

#7

Finalizing proposal based on discussions here, in discord, and live calls in response to the proposal.

Edited to include exclusions.

Proposed Changes to Restrictions

  • Modify Creator flow control
    • Increase max allowance to 5% of circulating supply
    • Build to allowance based on time instead of community activity
    • Allowance still subject to vesting restriction below
  • Introduce Creator vesting of genesis supply
    • Initial supply of coins unlocks for creator use over 12 months
    • Unlocked supply still subject to flow restriction above
  • Add flow control to all users
    • No vesting based restriction for general usage but introduce flow based transfer and sell restrictions that mirror creators
  • Add slip based fee for Creator Coin buy/sell conversions
    • Tax sells of creator coin based on how far we move along the bonding curve with the transaction
    • Fee is calculated in creator coin and transferred in full to creator
    • Fee is a configurable proportion of the RLY liquidity that will be removed from the pool based on this trade
  • Empower development team to iterate on specific parameters used for flow controls, vesting schedule, and slip based fees
    • Flow controls to begin with max allowance of 5% of circulating supply with a build to max allowance occurring over 30 days; development empowered to modify max allowance between 1 and 10% and build time to max allowance between 7 and 60 days
    • Vesting schedule to begin with by vesting creator genesis supply monthly over 12 months; any modifications to be resubmitted for a governance vote
    • Slip based fee to begin by taxing sales of a creator coin the percentage of the total liquidity pool available for the coin removed by the transaction. This is adjusted by a scalar factor that will begin at 1 (i.e. if your trade will remove 10% of the liquidity pool, the trade will incur a 10% slip fee transferred to the creator); development empowered to modify scalar between 0 and 1 for experimentation
  • Allow configurable exclusions to support known transactional use cases
    • “transfer to” exclusion ensuring commerce and donations are not unnecessarily restricted
    • “transfer from” exclusion ensuring air drops or other activities generally related to token distribution are not unnecessarily restricted
  • No change to:
    • Compliance and risk based limits for USDC redemptions
    • Credit card purchase limits
    • Risk based bridge limits
2 Likes
#8

Thanks Amit. I was talking with Mike and he mentioned that under these changes a user who purchases coin will need to wait ~30 minutes before converting or sending. Is that accurate? I don’t see that reflected here. Apologies in advance if I was was misinformed or (more likely) misunderstood.

#9

Great write up and synthesis of the input from the community conversations.

I saw somewhere that the Bridge out has a max maybe 1MM / daily RLY. Would it make sense to introduce a similar cap, at say 20-25% of circulating supply at the Creator coin level? So something like 4-5x individual max allowance/day.
Given these revised flow controls that extend them to fans, I think it would be difficult to reach that cap…but my thinking is that in the worst case scenario, such a threshold would act as a sort of circuit breaker if there is a run on a given CC. This cap would buy time for the team/community to investigate the cause of the exodus and ensure that remaining holders aren’t left holding the bag in case of unforeseen circumstances. I could see under the worst case scenario (creator gives up on a coin, passes away, fraud etc…) this would allow an equal distribution of remaining RLY collateral based on holdings to be distributed to CC holders, with the possible exemption of any proven bad actors including the Creator themselves.
I imagine there are some good counter arguments to adding such controls, but additional protections for communities seem quite positive.
Whether or not this is included, look forward to seeing the proposal for this core set of flow controls up soon!

2 Likes
#10

I think I understand what you’re referring to and it isn’t a specific rule so much as built into the control system.

Consider an “average” coin on the network right now as one with around 115K circulating supply and a price of around $1.50. With a max allowance of 5% of circulating supply accumulated over 30 days, a first time purchaser would be able to sell or transfer 0 coins immediately following purchase and they would build towards a max allowance of 5750 coins they could sell or transfer at a rate of about 8 coins / hour. So if they wanted to sell or transfer about $5 worth of coins, they could do so about 30 minutes after purchase.

This reminds me that previous discussion also led to including 2 exclusions to the flow control system:

  1. Create configurable “transfer to” exclusions that would enable approved transactional use cases without limitation (i.e. donate to creator)
  2. Create configurable “transfer from” exclusions that would enable approved transactional use cases without limitation (i.e. gift coin wallets)

Intent being for each creator to have a “transfer to” exclusion for their own coin and primary wallet that would allow and transactional use cases they drive to operate without the delay described above.

#11

Interesting. Especially in the case where a creator coin would need to be discontinued…

Why don’t we put a pin in this suggestion for now and evaluate some risk and extreme event options in a subsequent design revision?

#12

Good call. I don’t want to slow your roll on getting this proposal live.